Gold is a popular precious metal used by many investors to store wealth. Gold has been used as currency and in jewelry for centuries, and its high value has made it an attractive investment tool for many throughout history.
The Federal Reserve’s role: http://www.federalreserve.gov/faqs/how_faqs.htm
While central banks often hold gold reserves, the United States Treasury does not maintain any such reserves. The Federal Reserve System holds only limited amounts of gold, mostly overseas and all “locked up” in accounts at places like Fort Knox… All U.S.-owned gold is either held by the Treasury or the Federal Reserve System; no other entity can lay claim to it, and neither agency.
IRS Account Administrator Rules:
Who can be an IRA account administrator? Any person or entity that is responsible for the day-to-day operation of an IRA, such as a bank, broker or other financial institution… Is there a maximum number of IRAs I can have? Yes. The law prohibits any one individual from serving as the trustee (or custodian) for more than five IRAs at any given time… Can I close my IRA if I change jobs? Yes. If you work with different employers and you each offer an IRA, you will need to decide which employer’s plan to contribute to each year… What if I have more than one IRA account? You can roll over the funds from any IRA to another traditional, SEP or SIMPLE IRA (but not Roth) provided that you make the contribution before age 59½ and do not take a distribution from the original plan… Can I close my IRA if I change jobs? Yes. If you work with different employers and you each offer an IRA, you will need to decide which employer’s plan to contribute to each year…
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IRS Storage Rules:
If you appoint a custodian to maintain an IRA, the custodian must be given written instructions regarding how and when funds in the IRA can be withdrawn (the order of withdrawal does not matter). The person who opens the IRA must also sign a “custodial agreement” that names the accounts used for each beneficiary… if you want your spouse or other individual to have access to funds in your IRA after your death, please see Publication 590 for more information about this arrangement.
2nd Gold IRA account law: https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Second-IRA
Up to $5,000 (or any unpaid amount of your first year’s contribution) may be contributed to a second IRA for 2014 only if you made no contributions to IRAs for the preceding year… If you are age 70½ or over, a contribution to a traditional IRA cannot exceed the greater of $6,500 ($7,500 if you are married and file a joint return) or your taxable compensation for the year… The income tax deduction for a contribution by an individual other than the account owner is limited as shown in Table 1.
IRA Tax Regulations and Contribution Limits
Contributions can generally be made only to an IRA established for the benefit of you or your spouse, and not to any other type of tax-advantaged account… If you receive taxable distributions from a traditional IRA during the year, then reduce your contribution limit by that amount.
Traditional vs. Roth IRAs: http://www1.americaninvestor.co/pension-ira/top-10-goldcommotional-ira/#axzz2U9aCxAFH
The most popular investment vehicles are the Traditional 401(k), 403(b) and IRA plans, followed closely by their Roth counterparts. Some experts contend that with today’s low interest rates it might make sense to choose a Roth 401(k).
IRA Retirement Age Limits
Traditional IRA Distributions: If you are under age 59½ and not still working, special tax penalties may apply if you take a distribution from your traditional IRA before the required beginning date or after age 59½… The regular 10% early withdrawal penalty does not apply until April 1 of the year following the year in which you reach age 70½… however, once that minimum distribution is satisfied, then it comes off permanently and rises to 90%.
The IRS has made it clear that there is no minimum required distribution (RMD) formula for retirement accounts such as an IRA. There will be an IRS table available beyond 2010 but it will not be mandatory… As sort of a compromise, however, the IRS says that the RMD amount for all such retirement accounts is based on life expectancy.
The specific rules on minimum IRA distributions are below: Individuals under age 70 1/2 – If you have a traditional IRA but you’re not yet retired, then there are rules about when and how much you must take out each year between now and age 70 1/2. The formula change was made in an effort to make sure that retirees don’t leave behind large amounts of money that would potentially get lost due to inflation or other factors.
In order to comply with those rules in 2004, if you were born before January 2nd 1942 (age 71), then your required distribution is 3.6% of the IRA’s value.
If you were born between January 2nd 1942 and January 1st 1943 (age 72), then your required distribution is 4.2%.
And so on, until you are age 105 or older . At that point, there is no longer a minimum distribution requirement. You can keep your money in the account for as long as you live without paying extra taxes . The IRS assumes that if you live to be 100 or more years old, then it’s likely that most of what was originally put into your IRA has already been withdrawn or lost due to inflation over the past 50+ years! If you’re under age 70 1/2 – What about those who don’t have an IRA?
IRA Early Withdrawal Penalties and Penalty Exceptions
The 10% early withdrawal penalty applies to a distribution made before age 59 1/2… If all or part of your IRA proceeds are used to pay tuition and related expenses for higher education in the year you receive them or in the following year, there is no early withdrawal penalty on those distributions .
A SEP can be established by an employer working through a financial adviser either independently or in conjunction with other retirement plans such as profit-sharing plans, money purchase pension plans, stock bonus plans and qualified employee annuity plans. An employer might choose to add a SEP to its plan because it can offer a very low management cost savings vehicle and strong creditor protection. The self-employed may also use this type of plan because it has high contribution limits and thus is popular for retirement savings.
An SEP provides the employer with a great deal of flexibility to make changes without tax implications to employees . The IRS gives automatic approval to these plans, so there are very few administrative costs involved in setting up this type of plan… Distributions from the IRA can be used to pay for expenses related to education, which typically covers tuition, fees and board at an accredited institution of higher learning. They must be taken within 60 days after the student withdraws from school or ceases being enrolled at least half time… The amount that can be distributed is calculated by subtracting the maximum qualified higher education expenses (from above) from your total IRA balance.
There could also be additional tax advantages depending on how you use distributions from the plan. If your employer offers a cafeteria plan, which is most likely if the business has fewer than 100 employees, then these amounts can be used to pay for health insurance premiums and would be exempt from being treated as taxable income . In addition, if payments were made to help an employee with medical insurance expenses that are not reimbursable by his or her employer or IRA’s proceeds were taken out to pay for qualified long-term care services , then those amounts would also be tax-free… Distributions can also be taken penalty free for any other purpose such as buying a home (up to a certain dollar limit) or financing certain medical expenses in excess of 7.5% of adjusted gross income. However, once you use distributions from a traditional IRA to buy your first home, if you decide to continue renting rather than buying, then any further distribution of up to $10,000 can be taken penalty free for any purpose.
If you have made an arrangement with your employer or financial institution for regular payments directly from the account of a qualified plan… These are called annuity payments and fall into two categories: fixed or variable . Fixed rate benefits are normally payable until you reach age 85, which is usually when you start receiving required minimum distributions (RMDs). Variable annuity payments change every year but may be tied to how the stock market performed during that period… The person who sets up the SEP must make all contributions on behalf of himself/herself or the business. Employer contributions to a SEP are not required… Although the owners of a partnership can set up an individual 401(k) plan for themselves, they cannot do so for other partners in their business .
Types of Precious Metals Approved by the IRS
There are gold, silver, platinum and palladium coins and bars that have been approved in order to be used inside specific retirement plans.
Although the IRS has not issued any direct rulings on whether or not they will accept specific bullion products as IRA investments, it seems quite clear from the wording of IRS publications that they do consider physical precious metals to be acceptable investments for these types of IRAs. The only possible exception may be where a self-directed IRA is held at a financial institution which also offers custodial safe deposit box storage facilities…
Since this type of account does not deal directly with trustee services, some businesses choose to steer one person off each account for record keeping purposes. This way there is no potential conflict of interest since they are both trustees. With this set up, there is no paperwork required for the rollover of an existing IRA into a precious metals IRA, but you may need to inform your financial institution of the account change if it does not come from them in the first place…
There’s another popular way that people get IRAs set up which involves rolling over funds directly from other investment accounts they already have established. This requires completing two sets of documentation: one to transfer the money and one to actually create a new account and fund it with those assets…
Likewise, when using traditional IRAs to purchase physical gold or silver, any proceeds that are removed will be treated as ordinary income on your tax returns.