Gold and
Silver for Retirement
By David Morgan
Individual Retirement Accounts
(IRAs) can be funded with physical gold and silver, yet
very few investors are aware of this fact. They are
exempt from all capital gains taxes, so if your
investments perform well over a long period of time, it
can result in huge savings.
Diversifying your
retirement portfolio with precious metals is
fundamentally required if you properly understand asset
allocation (see
Ibbotson study).
Additionally precious metals normally rise during
periods of unsettling events such as wars, terrorism,
inflation, deflation, downturns in the stock market and
the US dollar. Precious metals usually yield large
profits in these circumstances.
What is unique about this plan
is that you can take physical possession of the
actual gold or silver when you make your withdrawals.
That’s correct! You can cash out in real
honest-to-goodness gold and silver instead of fiat
dollars. This is the most important feature of all.
Down the road, in this generational bull market in gold
and silver, the odds are in your favor that you will
want and need the physicals when it’s time to access
your investment.
Once you decide that you want
to include precious metals in your retirement planning,
you need to determine how much you want to invest. How
much depends on your annual contribution, your personal
goals and your individual investment philosophy. Factors
to consider are your age, total assets and risk
tolerance.
Very few institutions are set
up to handle the precious metals component of retirement
plans. One of the leaders in the field is GoldStar Trust
Company. GoldStar Trust Company for investors who want
IRAs that will accept precious metals. GoldStar serves
as custodian for approximately 20,000 self-directed IRAs
with assets in excess of $700 million.
GoldStar is not a coin dealer,
but it will work with dealers who buy and sell precious
metal coins and bullion for your IRA on your
instructions.
Establishing an IRA with
GoldStar Trust Company
Setting up a self-directed IRA
with GoldStar is easy. I will be discussing this at the
Money Show in Las Vegas in May. Afterwards there are
only three steps to follow.
1. Submit the paperwork.
2. Fund the account.
3. Direct your broker which precious metals to buy.
The
metals are stored at HSBC Bank USA’s New York precious
metals depository, which is one of the world’s largest
and is used by COMEX and other major commodities
exchanges. Annual storage fees are charged at a flat fee
of $90 per year regardless of the size of the account.
After that, GoldStar’s annual maintenance fee is only 8
basis points of your IRA’s asset value, with a minimum
of $50 and a maximum fee of $250. Investments and
liquidations are also subject to a $40 fee per
transaction.
Steps #1 and #2 involves
completing the proper forms to transfer the funds to
GoldStar. Normally, the funds are transferred directly
from an existing IRA or Qualified Retirement Plan.
In Step #3, the IRA investor
directs a dealer which precious metals to buy.
What is eligible for a precious metals IRA?
American Gold Eagle gold coins are approved for IRAs.
Other gold coins, to be eligible as IRA investments,
must be at least .995 fine (99.5% pure) and be legal
tender coins. This provision puts Canadian Gold Maple
Leafs, Australian Kangaroo Nuggets, Austrian
Philharmonics, and the Perth Mint’s Lunar Series on the
approved list. Also approved are minimum .995 fine gold
bars fabricated by refiners who have been approved by
The Commodities Exchange (COMEX).
Conversely, many gold coins, such as Krugerrands (91.67%
pure) and old U.S. gold coins (90% pure), are not legal
investments for IRAs.
American Silver Eagle silver coins are approved for
IRAs. Other silver approved investments must be .999
fine, which makes Canadian Silver Maple Leafs,
Australian Kookaburras, Mexican Libertads, and even .999
fine silver rounds also eligible. Bullion bars are
acceptable as long as they were fabricated by COMEX-approved
refiners. This is necessary for the bullion to be stored
and recorded at the custodial facilities of HSBC.
Pre-1965 U.S. 90% silver coins are not eligible for
IRAs.
Platinum coins are eligible for your IRA as well.
American Eagle platinum bullion coins, including proof
versions, are most commonly used in IRAs. Also
acceptable are minimum .9995 fine platinum legal tender
bullion coins such as the Australian Koala, Canadian
Maple Leaf, Isle of Man Cat, and Isle of Man Noble.
Platinum bars that are minimum .9995 fine and fabricated
by refiners approved by The New York Mercantile Exchange
(NYMEX) are acceptable as well.
Last
but not least, minimum .9995 fine palladium bars
fabricated by refiners approved by NYMEX are accepted.
The distribution golden bonus!
Precious metal investments offer a stable foundation for
safety and security. Once an investor reaches age 70½, a
required minimum annual distribution will apply. Here is
where a little planning comes in handy! Believe it or
not, when it is time to receive your required
distribution, you can actually take it in the form of
metals from your IRA account.
Very few
institutions are set up to handle the precious metals
component of retirement plans. One of the leaders in the
field is GoldStar Trust Company. GoldStar Trust Company
for investors who want IRAs that will accept precious
metals.
You will be
responsible for any shipping charges from GoldStar if
you choose that option.
Some Frequently Asked Questions (FAQ’S)
“Can I put gold and silver coins I already own in my
IRA?”
No; regulations
concerning
IRAs prohibit that.
“Can I hold the metals myself?”
No; regulations require
that metals be held by an approved depository. Even
GoldStar cannot hold the metals;
consequently,
GoldStar has arranged for HSBC
Bank USA’s precious metals depository to secure the
metals.
“What is the maximum IRA contribution for 2008?”
The maximum contribution
for 2008 is $5,000. However, taxpayers age 60 or older
may contribute $6,000 annually. If you question the
amount you may contribute, check with your tax advisor.
“When can I make my IRA contribution?”
You may make your
IRA
contribution anytime during the year for which you claim
the deduction, or during the following year before you
file your income tax form. If you file for an extension,
you must make your contribution on or before April 15 of
the following year.
Mr.
Morgan has followed the silver market daily for over
thirty years. Much of this Web site,
www.silver-investor.com,
is devoted to education about the precious metals.
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