Numismatic tax benefit

Well said. I'll add a bit.
Use a CPA and/or a lawyer that deals with this type of stuff. Some lawyers don't understand tax laws and some CPAs don't understand the hobby tax laws.

 

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I read from the irs website that is it justified and only with the exception of coins that is only minted by the US Mint. You will not loose you tax exempt designation regardless it is a prohibited transaction with the qualifying exception of US Mint coins

 

Irs Publication 590-A. Look it up.

 

If you take distribution on gains, it will trigger a 10% penalty on the amount plus additional tax in your at your income tax bracket.

 

It's clear to me the OP rolled over his 401(k) into one of Lear's infamous Silver IRA's. They put his retirement cash into Canadian bullion (Snowy Owls), allowable under IRS rules, so the collectibles clause of publication 590 does not apply.

You obviously disagree and feel he has bought collectibles in an IRA for which he is liable for taxes immediately, as noted in publication 590. If that is what he's done, then I agree with you - as I stated in my first post.

I don't have a dog in this fight, so I'll conclude by wishing the OP and his accountant good luck.

 

Your trustee also must have an IRS approved designated status. Each trustee must meet reporting requirements to have IRS designation

 

You also have to check their yearly designation or you will be force to move to another trustee to be able to transact business.

 

I'm not sure but I believe the snowy owl coins are "limited edition" type pieces and would be considered numismatic "collector" coins and not just straight bullion coins. They may not be allowable in a precious metals IRA.

I can see the potential for a LOT going wrong here.

 

https://www.valuewalk.com/2018/04/lear-capital/:
"
Lear Capital
I’m not going to critique Martenson, who runs a web site called Peak Prosperity that is devoted to an investing strategy based on, among other things, a belief that natural resources are being depleted and our government is overextended as a result of quantitative easing.

But I caution anyone against buying precious metals from Lear Capital. It is not an SEC-registered investment advisor and its web site states that there is no fiduciary relationship between it and its customers."

 

Well them, the type of asset doesn't matter... more from P590A:

 

If you sell your coins to a coin shop - that is a purchase by the shop of inventory. Business is not required to file a 1099 on inventory purchases. You sell your coins to an individual - (private sale) - filing a 1099 is not required. Consign to sell through an Auction House or some other agent type relationship - a 1099 is required if the aggregate sales for the year is greater than $699.00. But whether a 1099 is filed or not - you are still required to report the sale and recognize any gains on your tax return.

 

If I perused things correctly.
Lear is selling the snowey owls for $41 each for 1-1/2oz.
In the future, or they could just offer spot price for them, of which case today that would be $15/oz or $22.50 for 1-1/2oz. Add to that the annual storage/admin fees of let's just say $160.

So figure out your costs today, plus storage costs per year,
and the potential return on investment if using today's price as an example,
and that will help you determine where the silver spot price needs to be in the future to approx break even excluding additional transaction fees, etc.

The future valuation of a 1-1/2 oz silver coin is unknown as it's numismatic value may drop and be based on strictly the price of an ounce of silver, excluding any fees/commissions, etc. you never know; just have to hope for the best.

 

And if they are not an IRS approved IRA trustee (and that is assuming you can even put snowy owls in a precious metals IRA) then what you have done is simply taken an early dispersal of the 401(k) account and you may owe a 30% tax hit on the money.

 

Lear does not appear on the latest (April 1, 2018) list of IRS approved nonbank trustees. https://www.irs.gov/pub/irs-tege/nonbank_trustees_list.pdf

Which is not to say they haven't hired somebody who IS on the list to be the actual trustee (for a fee, of course)...

 

I did a fair amount of research before I transferred the 401k to a precious metals IRA with Lear. There should be no tax penalty for that. That info came from both Lear and multiple advisers from the company that held my old 401k. It says on both sets of paperwork zero taxable amount on the tax forms. I can't keep that silver on hand. It's kept in a vault through them until I'm 59.5 I can sell or take p/l and return it to cash, but they'd still be holding my cash unless I want to pay a tax penalty.

Most of why I'm asking is because I'd like to start collecting coins a few at a time and look at it as an investment or wealth preservation tool, plus I enjoy collecting coins anyway.

Best I can tell is it's like cash, it's not being disclosed to the IRS at all transaction points. It would be a post tax investment and you'd still need to be honest and claim the true capital gains when you sell. However unlike alot other investments, the is no electronic or paper trail that states what you bought and sold for. Whereas if you buy and sell a large gold bar your probably gonna have to report it.

So basically it might be better to hand down 50k of metals to your kids than a 50k house. The house is registered with the government taxes are due on it annually, and they can easily calculate the capital gains because they know what you paid, what it's worth etc.

 

Until they subpoena the records...

I am xxxx a Special Agent with the IRS. On information and belief, Lear Capital is acting as an unregistered custodian for unlawful precious metal accounts purporting to be IRA accounts, fails to report transactions as required by law and conspires with clients to evade reporting and filing taxes that are legally due.

 

I must be honest here. Transferring an IRA, 401K, 403B, or any other investment portfolio and switching it to a precious metals-backed investment was not a wise move for either long or short term or for tax sheltering for any reason.

 

No it's not.
Many end of the world believers may make you think it is, but it isn't.

Try to go buy a loaf of bread or a tank of gas with silver coins. You'll get FACE value. ie, an American Silver Eagle is all Silver (at least $15 value right now) with a $1 face value on it. So it's actually worth $1 just like cash, assuming they recognize it and accept it.

You have to convert Precious Metals *to* Cash in order to *have* cash.
With that conversion you may pay conversion premiums/fees, or what not dependent upon your situation

Of course, you'll get multiple opinions on this. But to prove a point, take an ASE (or Snowey Owl) to a grocery store and try to spend it just like cash.

 

My friend, please listen carefully here...very carefully...

1. The ONLY rare coins or collections a person might want to invest in (might!) are coins that maybe 1 or 2 people on this forum can afford (e.g. Fred Weinberg). I am talking coins and collections that make national and even international headlines. I am talking about coins that most certainly would auction for well over $100,000 and collections in the millions of dollars.

2. I am going to be blunt: Investing in rare coins that most of us can probaly afford, and especially bullion pieces like ASEs, gold 1 oz. Buffalos, along with common Peace Dollars, Morgan's, etc., for their silver content, is beyond a stupid thing to do. You will get LESS than the going rate for their value because dealers have to make money taking them off your hands when they go and cash them to wholesalers. You will not get the going rate unless you unload them individually to someone and pass off this scam to someone else.

3. Lear Capital charges ridiculous fees and pays their representatives poorly, who then employ "nice-guy pressurse tactics" to build trust and get gullible people to believe their marketing scheme so they can get paid more.

4. Check auction prices for rare coins on Heritage Auctions. Sometimes over 20 years a rare coin in the same grade doesn't move much. Then you have to figure out how to go about selling it. (A) if you start a brick and mortar business, you have overhead. (B) if you rent a table at a show, you have overhead. (C) if you want to create a website, you have overhead. (D) if you want to have a top-tier online or in-person company auction it, you pay fees of around 15%-25%. (E) if you bring it to a dealer, they give you less than what they have been auctioning for to make money as they now incur these risks and fees or it sits in their store until that very rare occurrence someone with money to burn wants it.

Either way, investing in coins for profit is stupid, stupid, stupid. Very few people know what they are doing without being dishonest to unload their garbage inventory. And fewer than that know what to do who actually are 100% honest, understand how to buy, what to buy, how to build and keep relationships, and how to market them to make money.

Please SERIOUSLY reconsider your decision. You did not make a wise one.

I have many coins I paid $900 for and more. I enjoy them and love showing them to others, especially my crazy and mind-boggling rare errors. But I do not view them as investments. Will I get back more than I paid for them? For some, very likely. For others, possibly. For the rest, not likely. But that is not why I bought them. I will at least get something back unlike the fishing trip I took to Lake Erie when I go to sell them. But I am prepared to get less than what I paid because I don't care. It is a hobby, and you need to understand that, especially when you have high hopes of going to unload them and think you are going to rake in even modest profits.

Heed this advice: When looking to sell your bullion coins and rare coins after you bought them for investments, someone in the room is going to be a sucker. If you do not see anyone that is, the sucker is you!

 

Makes no sense to me to put coins or bullion into an IRA or 401K.
IRA's are best for investments such as stocks and bonds that generate interest/dividends/income.
With the protection of the IRA or 401K, the taxation on income from those investments is deferred, so you can then get more return on your investment as it is protected inside the IRA. Outside of an IRA, your bonds and high yield stock create taxable income each year.
Bullion does not generate interest/dividends. So in my opinion bullion/coins should never be considered as an appropriate investment within an IRA or 401K.
Disclaimer, I am not an accountant. I just crunch numbers.