investing 401k in coins

Does anybody have a recommendations on how and where to use the 401k to buy coins?

 

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I don't have any info, but it would seem to be a bad idea. It is much easier to buy GLD, SLV, CEF or any similar security instead.

 

You should give this a lot more thought. As Cloudsweeper points out, it is a very bad idea to invest your retirement savings into something so speculative. Coin collecting should be viewed as a hobby. There is no better Investment than a 401K for investing in your future.

 

Maybe a portion invested in PM's wouldn't be a bad idea... the actual metal, not the ponzi scheme they call SLV and GLD...

 

Be sure to investigate the Roth IRA if you have sufficient income to fund it also. If the custodian of your 401(k) has a brokerage unit it is quite possible to use SLV, GLD, etc. as a trading vehicle. Check out Goldcorp ( GG) also. It made a margin of over $1200 per ounce of gold this last quarter due to the high value of copper and silver that almost offset their gold production cost. IMO only.
Jim

 

Howdy,

I don't believe you can with a 401. I know you can with an IRA but you have to deal with a custodian and it's a royal pain. Much better to do what cloudsweeper and the others have suggested and buy securities for your 401 and keep your coins separate. In my case, I have my coins and physical bullion stash AND have a huge chunk of my 457 invested in various precious metals securities. With a 401, you have deferred taxes and that's key if you want to buy one of the bullion ETF's. This is because the bullion ETF's like GLD and SLV are taxed at the 28% collectible rate (ouch). For a taxable account that needs some real bullion, check into CEF Central Fund of Canada. It's a closed end fund but have never had an adverse tax determination so are still taxed at 15%. It holds both gold and silver bullion at about a 55/45 split. I own it.

Now, precious metals mutual funds normally consist of all mining stocks and no bullion. Tocqueville Gold TGLDX is an exception in that it owns miners of all the metals like silver and platinum but also holds around 7% in gold bullion.

Nice plays that I like are more of the precious metals ilk than the pure play gold funds. TGLDX, UNWPX (U.S. Global), even Vanguard VGPMX. Nice ETF's are GLD (gold bullion), SLV (silver bullion), GDX (gold miners), GDXJ (junior miners), SIL (silver miners).

just some thoughts and as a disclaimer I own everything mentioned and also SLW (silver wheaton).

peace,

rono

 

I have a book called "planning your rare coin retirement" - David L Ganz

I bought used off from amazon, might be worth your time.

I have to confess i don't understand how the whole numismatic IRA thing works yet.

and like others said I wouldn't put all eggs in one basket. I'd also buy PM's coins like maples and eagles, and bars and junk silver.

 

If you own CEF in a taxable account, there is the added complication that it is taxed as a PFIC. You can get capital gain rate if you file Form 8621 in the first year you own the shares and make the "QEF" election. If you don't, the gains will be taxed as ordinary income and allocated back to each year you owned shares sold at a gain. Then interest is charged on the gains attributed to prior years but not paid until the sale up to the point where you have to pay 100% of your gain in taxes and interest.

Now, maybe the IRS will catch you and maybe they won't. But, personally, I wouldn't own CEF or any other PFIC in a taxable account.

Edit: Keep in mind that I am not a tax professional, only an investor with some experience with PFICs, so don't take this as tax advice. Your accountant may differ with this opinion.

 

I'm with sweeper on this one. Investing inPMs are one thing, which many of us do. Investing in coins is very risky. If you decided to invest a retirement in rare coins, !0% of your total portfolio would be the most I'd invest. But, it's only what I would do.

 

Howdy,

Here's the tax scoop on CEF.

http://www.centralfund.com/pfic/PFIC2010.pdf

Is it a good way to own bullion? It's better than the bullion ETF's like GLD and SLV. Are there issues with the tax status? Sure, but nothing TurboTax can't handle.

That said, I think that bullion is best if held in hand. Buy it, take possession, and store it safely.

I own CEF in a deferred account and Tocqueville TGLDX in a taxable account. It's mostly mining stocks but does have a little bullion and is taxed as other mutual funds. It's been pretty tax efficient for the years that I've owned it.

There are those that swear by holding gold in their IRAs. Pat Heller of Liberty Coins (local dealer and Numismatic News contributor) is one of them. However, he's a huge gold bug and that may influence him. I disagree.

peace,

rono

 

I checked the Turbo Tax website and it doesn't look like Turbo Tax Delux includes for m 8621. Everyone should check this out for themselves since I don't use that product.

 

OK...so here's another scenario. What if a person has been frugal all their life and has enough saved up for a comfortable retirement...but the majority of his/her money is in a 401K and is presently "cash poor"?

They want to continue collecting a set of (oh...I don't know...let's say First Spouse coins), but can't keep up with rising gold prices. Would it make sense (in this scenario) to purchase the coins with 401K $$?

 

no way, most stocks are back up. gold is really high right now.
I think you'd be better off buying silver with new money and liquid cash.

 

Well, that depends on how your account is set up. I know they say not to borrow money from your 401K, but I've never understood why. I had to borrow money from mine several times and the way my account is structured the loan amount doesn't take away from the overall invested balance because I was essentially taking a loan from myself that I had to pay back, tax and interest free. But, personally, I don't see why you'd do this to buy coins. Save some money on the side and buy that way. Why risk additional future security on speculative gambling?
Guy

 

Yeah, don't do that.....

 

In this scenario, I wasn't talking about taking out any money from the plan nor taking a loan; I was talking about making a direct investment in the coins as part of the 401K plan. I thought I read somewhere that you could do that...but I don't know the details.

I was thinking that since First Spouse coins are called "Bullion" coins, they would be valued as bullion in a 401K...and taxed at the bullion price when redeemed. If that were the case, I would think it would be advantageous to buy the coins in the 401K...vs "outta hide".

 

Plans vary. Mine does not allow for that.

 

those spouse coins are diculously way over spot and gold is really high now.
crappy time to buy em.

numismatics IRAs require you to have them in "custodial situations".

meaning ya can't fondle em like scrooge mcduck

just buy the spouses as the mint makes em with paycheck money

or buy silver like I said.

 

HEY!! I resemble that remark!

 

Ya know? Now that you mention it.........