What is a GOLD Backed IRA?

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Dallas Piscopo Jan 10, 2018

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How is it going? This is Dallas Piscopo with AztecGoldSilver.com. So, what is a gold-backed IRA, or Individual Retirement Account?

So if you’re familiar with what a traditional IRA is, that’s basically Individual Retirement Account that you could save in up to, I believe it’s $5,700 a year for an individual. It’s a little bit more if you’re like over 60 years old.

But traditional IRAs, people are usually consist of stocks, mutual funds, other investment vehicles that are savings accounts. And the main advantage of these savings accounts is are the tax advantages, being that with a traditional IRA, you don’t…what you put into it is not taxed or it’s tax deductible.

And at the end, when you take your money out of the IRA, after…you know, when you’re ready for retirement years down the line, then you’re taxed at that future rate whatever it may be. So that’s a little bit of a disadvantage because, I mean, who knows what the tax rate or your tax rate is gonna be when you’re 60, 65 years old?

And that’s as opposed to a Roth IRA. The advantage there is that you could…you are taxed for the, what you put into the fund, but then you’re not taxed when you pull out later on. So that’s a better way of kind of locking in your tax rate early and then not have to worry about it later on.

But anyways, going back to a gold backed IRA, well, that’s basically the same structure as a traditional IRA, except for stocks, mutual funds, or whatnot and other paper assets, you have physical gold and silver that can be stored in that account and be built up over time.

Now, again, you get the tax advantage of the money that you use to purchase that physical gold and silver is not taxed. But again, when you cash out years down the line, then you’re gonna be taxed at the rate of whatever that may be.

A downside of a gold backed IRA is that you have to have certain… first of all, you can’t just have any gold or silver bullion or coins. They have to be IRA IRS approved investment grade pure fine physical gold and silver. So I’ll have a link to a list of those approved gold and silver bullion which are readily available. It’s not like you can’t get your hands on them, but you’ve just got to make sure that you get…you have to use these approved gold and silver bullion.

And then it has to be stored with a certified custodian. So under a traditional gold backed IRA, you can’t hold the physical gold and silver yourself. It’s stored with a certified custodian, and a lot of times, you know, that’s probably not gonna be very close to you.

You can arrange to actually see the physical gold and make sure you have it, but that may be kind of an inconvenience maybe not…being that it’s not gonna be that close to you. So, you know, that’s a downside.

When I buy physical gold and silver, I like to have control over the storage, whether if I have it myself or I have it stored securely in a vault of my choosing that I could have access to. So that’s kind of a disadvantage.

But there is a little kind of a tax loop around that, which is called a…it’s like a checkbook IRA LLC. And so basically what you’re doing is you set up like an LLC company and then you assign that LLC company as the custodian, as the manager of the physical gold and silver.

And so, a lot of people do this. And by doing so, they could actually receive the physical gold and silver and store it yourself. And I understand a lot of people do that store it at home or a safe or a place of their choosing. And I know a lot of IRA companies will help you set that up, but just a fair little warning, this is kind of a gray area for the IRS.

And as of lately, it seems like the IRS may be cracking down on things like this. So, if you’re going to choose the checking LLC route and take possession of the physical gold yourself, you know, as of right now, it can be done.

But is it legal? It’s a little shady. And so, I’ll actually link to an article that goes into that a little bit more where it seems that the IRS is kinda sending out some messages that that’s not in spirit with the IRA, you know, Savings Account Law that they put into place. And they may be cracking down on stuff like that.

So personally, I don’t know if I’d take that route. It seems a little risky, it seems a little uncertain. And if I’m going to start…the physical gold and silver that I buy myself, I like to buy it myself, I like to take possession of it. I like to store it in a vaulted storage of my choosing. And so, as of right now, I’m not too interested in a gold backed IRA. But it could be a good option depending on your investment goals.

So, I hope that helps. And if you’re interested into start buying physical gold and silver, check out my resource guide where I list the best online dealers of physical gold and silver that have the cheapest rates, they’re fast, secure, and you don’t have to worry about getting scammed. I’ve used them many times myself. To get that free resource, go to AztecGoldSilver.com/golddealers.

Wall Street Journal article on storing gold in your IRA at home

IRA approved physical gold and silver bullion

Looking for more detailed info on gold backed IRA’s?

Below is a thorough video on gold and silver IRA’s and how to get started…

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Dallas Piscopo