Using an LLC to hold IRA Gold...

[Pennybug]

OK... after gathering enough feedback from you guys and other financial advisers... I've decided that sometime in the near future I'm going to move a portion of my IRA funds to Gold/Silver (better sooner than later too!). I have researched several ways of going about doing this... and it seems as if there may be a "back door" way into being able to hold onto gold/silver in an IRA setup.

Basically, the idea is that you establish an LLC. The LLC then becomes the director and custodian of your IRA (including the custodian of physical silver/gold). In doing this, as the CEO of the LLC, the LLC (AKA... "I") would be able to 1) physically hold the gold and 2) be able to roll over the funds from the existing IRA into gold/silver of my choice (or rather the choice of the LLC I own) without incurring tax penalties. Seems kinda complicated... but in the end... it would give me all the desired results! It would also open up the door to being able to buy gold tax free in the future as well as getting a mac daddy safe as a business expense. As far as the tax burden on the LLC, basically I'd charge myself $1/year (or something like that) in holding fees and would consider charging others (primarily family members and close friends) a small fee for holding onto their stash as well. That way I can 1) make a profit on the LLC in conjunction with the other listed benefits and 2) can offer friends/family a tax free way of buying gold/silver. The first reaction may be that I am talking about opening a bank in essence... but in actuality it would not fall under the same guidelines since the profits would only exist through fees encountered for physical protection of IRA approved assets (whereas this does make up a portion of a banks function, ultimately this is not a banks mainstream of profits). Yes... I would have to keep up with IRS regulations on what is eligible for deposit (for example... purity/country types... not allowing members to deposit their existing gold... etc.)

Anyone out there done this before? Any thoughts? I don't want to break any laws or anything... but it seems legit based on my research thus far. I may be missing something though...

[highroller4321]

So does the LLC "own" the gold or is the main goal of the LLC is to be a "storage company" for the gold?

[Rodebaugh]

Great thinking! Seems like a solid idea to me.....the only way to hold your IRA Bullion.

[oktyabyr]

I like the idea. Never thought about that. Let us know how that works out. Def a good idea if so.

[Pennybug]

So does the LLC "own" the gold or is the main goal of the LLC is to be a "storage company" for the gold?

I'm still trying to kinda understand that point myself before I go through with this. I do know that in order for me to "use" the gold or transfer it to FRN's for me to use... it would fall under the same guidelines as a IRA withdraw (taxes and penalties would apply). I have seen that if the LLC owns the gold, it has an added bonus of placing a protective legal hedge around the gold from personal lawsuits and alike. In other words... for all the gold/silver owners out there right now... if you were to be sued... your gold can be taken from you... just as my IRA could be right now too! However... if the LLC is the owner... that is NOT subject to be taken in a lawsuit since it belongs to the LLC and therefore could only be taken if the LLC were sued. I question how taxes on the LLC would occur if it is the owner since it would have to be seen as a profit (even though it would be for a tax exempt IRA purpose).

While I like the idea of the LLC owning it better... I'm still researching it (AKA... reading tax code and alike reading )... but a large part of the primary goal, as you stated, is to be the storage company.

I'll clarify this as I get a better understanding of it.

[oktyabyr]

Well, as a storage company, The gold would still belong to the owner. The company would just be the custodian. As the IRA, then its still subject to seizure, no different than any IRA. But it sounds like a good concept. I like the idea of a precious metal IRA, just not the idea of someone else holding it form me. If I directed the company that was directing the IRA, then I would have access to it, and not have to worry about someone just deciding to seize it. Even if they "wiped out" the value, I would still have the physical.

[Pennybug]

Here's kinda where this idea got started from... for those interested.

http://irallc.org/

I've still got to understand the implications of maintaining a company directed 401K in conjunction with this (if that's possible) as well as other potential "benefits/downfalls" of doing this.

I can see where this might open the door to allowing firearms as a business expense! After all... I'm sure that you'd have to make proper arrangements for protecting the LLC assets!

[Hades12]

I spoke to a company about setting this type of system up for Real estate, cost was 500 or 1500 per year to have it and 1500 to open it up. There were lots of rules and it sounded like a real pain.

[Pennybug]

I spoke to a company about setting this type of system up for Real estate, cost was 500 or 1500 per year to have it and 1500 to open it up. There were lots of rules and it sounded like a real pain.

I could see where doing that would be a LOT more hedache though rather than simply dealing with Gold. I would think that once you understand it (as I'm trying to do)... that it would not be that big a deal. I dunno... you may be right with this situation too! While I don't want to re-invent the wheel (meaning I'd like to follow someone elses tracks with this)... I also can see where going through a secondary company can skyrocket the costs in doing this.

Good point though... I may find it to be more hassle than it's worth. BUT... I could also find it to be pretty easy and WELL WORTH IT TOO! After all... If I just close the IRA now and take the penalties and buy physical gold... I'll loose around 3K. That alone already makes it worth my while!

[TXBullion]

I spoke to a company about setting this type of system up for Real estate, cost was 500 or 1500 per year to have it and 1500 to open it up. There were lots of rules and it sounded like a real pain.

those cost could be minute depending on what type of property/portfolio you are working with. Also, from by basic understanding of IRAs, the potential benefit could outweigh the costs significantly

[justoneguy]

if you were to be sued... your gold can be taken from you...

My gold, what gold?, you are quite mistaken sir.
i have no PM for you.

[highroller4321]

So does the LLC "own" the gold or is the main goal of the LLC is to be a "storage company" for the gold?

I'm still trying to kinda understand that point myself before I go through with this. I do know that in order for me to "use" the gold or transfer it to FRN's for me to use... it would fall under the same guidelines as a IRA withdraw (taxes and penalties would apply). I have seen that if the LLC owns the gold, it has an added bonus of placing a protective legal hedge around the gold from personal lawsuits and alike. In other words... for all the gold/silver owners out there right now... if you were to be sued... your gold can be taken from you... just as my IRA could be right now too! However... if the LLC is the owner... that is NOT subject to be taken in a lawsuit since it belongs to the LLC and therefore could only be taken if the LLC were sued. I question how taxes on the LLC would occur if it is the owner since it would have to be seen as a profit (even though it would be for a tax exempt IRA purpose).

While I like the idea of the LLC owning it better... I'm still researching it (AKA... reading tax code and alike reading )... but a large part of the primary goal, as you stated, is to be the storage company.

I'll clarify this as I get a better understanding of it.

*I am not an expert but I believe this is how it works*


If the LLC owns the gold it is conisdered inventory. You will have to have a record of what the LLC paid for it and than when the gold gets sold you have to record that as well. The profits than get taxed at the full rate instead of at capitol gains rate because its a company holding instead of a personal investment. And no you can't sell the gold at a discounted rate because things of "known value" have to be sold at or near "fair market value".

I don't know if you can even do it but the LLC needs to be the holding company and the gold just belongs to you on a personal level. I am 95% sure that this is something very very very complicated to get set up. I belive there are less then 10 "certified" places that allow you to invest your IRA in physical gold. (Perth Mint in Australia is one of them). I don't know if you can set it up to just have your own LLC hold your own gold and no one elses's and not have to be regulated/certified.


If you are serious about doing this you should invest some time talking to some intelligent tax lawyers and see what their take on things is. I believe if it was simple and easy everyone would be doing things like this.

[SteelCityCopper]

Highroller makes some good points. If you plan on creating an LLC also plan on filing a quarterly tax return for both state and local regardless of how much profit/losses were recorded. Also add on a quarterly federal return if you estimate federal taxes to exceed $1k for that calendar year. In addition to these returns add on a mandatory annual return at the local/state and federal level regardless of whether you were profitable. Once you open that LLC, government sees it as a business regardless of the purpose and how you run it. Fun stuff

[Hades12]

This is who I spoke to, they will be happy to talk with you and discuss what can and can not be done.

http://www.guidantfinancial.com/default.aspx


I have looked at my 401k rollover a few times thinking about pulling it out to buy rental property. but it has increassed by 75% over the last two years and 6% in the last two months makes it feel like a mistake to take it out.

[Copper Catcher]

The IRA holds only one asset and that asset is the LLC according to this article:

An Open Opportunity IRA, on the other hand, lets you act. The IRA owns just one asset—a limited liability company (LLC). All the investing and earning happens inside the LLC.
http://www.thedailybell.com/1256/Terry- ... Haven.html

You might want to also read the following:
This outlines some drawbacks: http://www.noradarealestate.com/blog/th ... investing/

Legitimacy of The IRA LLC Strategy by Debra Buchanan
http://www.iraaa.org/learnmore/viewarticle.aspx?aid=34

[Pennybug]

This is who I spoke to, they will be happy to talk with you and discuss what can and can not be done.

http://www.guidantfinancial.com/default.aspx


I have looked at my 401k rollover a few times thinking about pulling it out to buy rental property. but it has increassed by 75% over the last two years and 6% in the last two months makes it feel like a mistake to take it out.

Thanks for the heads up here! Didn't know guidant was into this. Seems like the folks to talk to about this. I'm going to call them later on and see what they say. I suspect you may be right in the fact that it will be too big of a headache. I have some other 401K funds that I wouldn't roll over... so this would only be a portion of my funds. My 401K is doing quite well too! While EVERYONE else was freaking out in 2009 and selling their stocks... me... I was buying more!:mrgreen: That approach is paying of pretty fast now... and the economy still hasn't turned around yet enough to see it really take off! (if it ever does... hence the transfer of an IRA to gold).

... and I just saw your post too coppercatcher... again... thanks for the heads up as well!

[SteelCityCopper]

The IRA holds only one asset and that asset is the LLC according to this article:

An Open Opportunity IRA, on the other hand, lets you act. The IRA owns just one asset—a limited liability company (LLC). All the investing and earning happens inside the LLC.
http://www.thedailybell.com/1256/Terry- ... Haven.html

You might want to also read the following:
This outlines some drawbacks: http://www.noradarealestate.com/blog/th ... investing/

Legitimacy of The IRA LLC Strategy by Debra Buchanan
http://www.iraaa.org/learnmore/viewarticle.aspx?aid=34

Good info. I wonder if one would still be required to file returns (not pay taxes) per the state and federal schedule since an LLC is a legal entity (a good chance this may be a different case since it is owned by the IRA). I didn't see any of the articles address this topic but I may have missed it... a real possibility Let us know what you find out! Interested in learning more about this.

[Pennybug]

The IRA holds only one asset and that asset is the LLC according to this article:

An Open Opportunity IRA, on the other hand, lets you act. The IRA owns just one asset—a limited liability company (LLC). All the investing and earning happens inside the LLC.
http://www.thedailybell.com/1256/Terry- ... Haven.html

You might want to also read the following:
This outlines some drawbacks: http://www.noradarealestate.com/blog/th ... investing/

Legitimacy of The IRA LLC Strategy by Debra Buchanan
http://www.iraaa.org/learnmore/viewarticle.aspx?aid=34

Good info. I wonder if one would still be required to file returns (not pay taxes) per the state and federal schedule since an LLC is a legal entity (a good chance this may be a different case since it is owned by the IRA). I didn't see any of the articles address this topic but I may have missed it... a real possibility Let us know what you find out! Interested in learning more about this.

IMHO... we should ALL be interested in this! Someone pointed out that if it were easy... everyone would be doing it. While that may be true... this also seems to be a very non-conventional way of PM investing... and may be that way simply due to others lack of awareness in the ability to do this. I'll keep everyone up to speed though.

[Snake42]

Sounds pretty brilliant man. I am very interested to see how it turns out for you.

[Sheikh_yer_Bu'Tay]

It sounds like a great idea! Keep us posted how it works out!

[Pennybug]

OK... after looking into it INTENTLY... I've decided that it's not as easy as it sounds I don't think. Yes... In theory it may work that easy... but I have been advised by SEVERAL investment firms and tax folks not to do it! Seems that the 3rd party custodian thing the IRS ba$t@rds have set up throws cog in the whole thing. Seems a 3rd party MEANS a 3rd party PERIOD.... I dunno though. I'm betting the politicians have some way of getting around this...

I think for now I'm just going to buy physical stuff here and there and leave my 401K where it is and my IRA where it is (for now) and my metals... well... I move them around sometimes!

Maybe missing out on something here... but that's ok... I'm not an eggs all in a basket kinda guy anyhow.

[68Camaro]

Just a thought, if your 401K allows. It won't be PM you can personally hold, but if you want to take advantage of any price-run-up, and ensure that the PM behind it actually exists, you might want to put part of your 401K into Sprott Physical Silver, PSLV. I have the ability to actually trade directly inside my 401K, which allows me to buy that.