Advice on pulling retirement account

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Dr Durden
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Advice on pulling retirement account

I've been on the fence on this for about a year and I need a little nudge based on the feedback from those that have done this before. This is one of my retirement accounts, I have three others. It's not much, but it's something.

Goal is to put all the money into physical gold.

I'm going to lay out the details and let you have at it. I sold all the funds in the account back in April, so right now it just sits in cash.

- Traditional IRA in a variable annuity contract

- $14k total value, $11k premiums paid in

- 1.5% surrender charge (-$200 on the $14)

- 10% income tax bracket

The way I look at is that the account has earned ~27% and it will cost me less than that (~22%) to get at all those FRN's which could be a lot more safe a) in my hands b) in an asset with zero counterparty risk (ie gold) which is more than likely to outpace any paper investment by the time I'd need the money at retirement anyway.

What am I missing here? I'm not the type to make hasty decisions based on fear, but do think this could be a win in the long run.

Edited by admin on 11/08/2014 - 06:06

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JRigs
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Looking forward to

Looking forward to knowledgeable responses to this. Traditionally this option is considered a really bad idea but seems like traditional wisdom may not apply these days.

ouchtouch
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Why not a self-directed IRA

There is no need to take the tax hit.  Just transfer it to a firm that administers self-directed IRA's and buy gold and store it in a PM depository.  Look at your favorite PM dealer and see who they prefer to deal with.  The process is simple: Fill out the forms with the self-directed IRA administrator and they will arrange to transfer your funds to them.  Tell them what PM depository you want to use and have them open an account there.  Call your PM dealer and order the metal, with delivery to the PM depository.  Tell the IRA administrator to pay the PM dealer (usually fax an invoice).  You now own metal in a vault.  The downsides are, of course, theoretically your IRA administrator could mess with your account.  Also, less privacy.

MonkeySmoke
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cashed out

I cashed out my 401k  this year and paid the 10% penalty and an additional 20% tax, the amount that I cashed out was about double the amount listed above. First and foremost, 401k's were never designed as a retirement vehicle, they were designed as a corporate loophole. It is not a vehicle designed to provide for ones future. My wife was really pissed when I first brought up cashing out, however, she is starting to see that I may have made a very prudent decision. She has allowed me to diversify some of her investments into TRX and PSLV. As of today she is very happy with the PSLV and is concerned about TRX; however, she does understand the criminal element affecting TRX and knows exactly what I mean whenever I remind her of the "Angels".

I purchased a large amount of silver, over the past several months and the past couple of months I have purchased a small amount of gold. As of today, I have recouped the 10% penalty and by years end I should be able to recover all the tax liabilities paid out. I still have a little cash on hand for lead, water and food. I will not sell any of my metal. I like what Santa said earlier this year, "...in the future you will not sell your gold, you will use it for goods and services..." this was said in an interview on KWN. None of this is advice, merely what I believe works for my family. As JD at Fort Wealth told me when I spoke with him at the very beginning of this transition, I will never forget these words--"It is a very lonely place when these types of decisions are made. At the end of the day, you are the only one that can make it." Thank goodness, my wife is starting to better understand the method behind the madness. I hope this helps. We are all in this together.

Dr Durden
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ouchtouch wrote: There is no

ouchtouch wrote:

There is no need to take the tax hit.  Just transfer it to a firm that administers self-directed IRA's and buy gold and store it in a PM depository.  Look at your favorite PM dealer and see who they prefer to deal with.  The process is simple: Fill out the forms with the self-directed IRA administrator and they will arrange to transfer your funds to them.  Tell them what PM depository you want to use and have them open an account there.  Call your PM dealer and order the metal, with delivery to the PM depository.  Tell the IRA administrator to pay the PM dealer (usually fax an invoice).  You now own metal in a vault.  The downsides are, of course, theoretically your IRA administrator could mess with your account.  Also, less privacy.

Thanks, I'll look into this for my other accounts.

For this account, I need cash in hand as 50% has already been spent.

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Dr Durden
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MonkeySmoke wrote: First and

MonkeySmoke wrote:
First and foremost, 401k's were never designed as a retirement vehicle, they were designed as a corporate loophole. It is not a vehicle designed to provide for ones future. 

While that might be true, I don't have a 401K. I'm self-employeed. The account in question is a Traditional IRA. I also have a ROTH and two SEP IRA's.

Glad to hear you've recouped your paper losses, though..that's encouraging. I know, I know I *should* have done this awhile ago but my crystal ball was in the shop at the time. ;)

I haven't been able to get ahold of my CPA in the past few days, but when I talk to him about it I'll report back. My main concern right now is getting bumped up a tax bracket with the additional money reported as income. 

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rckymtn
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I'm seriously considering

I'm seriously considering doing the same thing.  I have 2 IRA's and 1 401k all that I control since I'm self employed.  Total assets are about $200k+.  One of my IRA's is about $18k which I will be cashing out tomorrow.  Its post tax money so my only penalty would be on the profits I've made which are basically nothing so really no tax hit at all or penalty. 
 

As for my other 2 accounts, I'm going to wait till the end of the year and see what kind of income I will have made.  If one of them puts me into a higher tax bracket which surely my 401k would I'll likely wait till 2012.  Now if my other IRA doesn't push me into another bracket I might just take the hit but with that one I'll have to pay taxes and penalties since it was a SEP IRA that I rolled over when I was a LLC. 

As for the gold/silver IRA, depending on how much gold/silver you have it might be a good or bad idea.  I basically think you don't own anything unless you hold it and would be worried if the world falls apart you are then relying on someone you don't know to do the right thing "give you your gold".  Unfortunately I don't have much faith in other people and could easily see you never getting what was yours.  I would be very very cautious with this and maybe see if there are any good ones near where you live so you could drive down there if you had to.  Honestly, I probably would never do this but I admit I've thought about it.  Since I own a decent stack of gold and silver maybe just rolling my other IRA into that and not taking the tax hit would be a okay move.  Still worries me though but everything else does too.
 

Good luck

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Dr Durden wrote: MonkeySmoke

Dr Durden wrote:

MonkeySmoke wrote:
First and foremost, 401k's were never designed as a retirement vehicle, they were designed as a corporate loophole. It is not a vehicle designed to provide for ones future. 

While that might be true, I don't have a 401K. I'm self-employeed. The account in question is a Traditional IRA. I also have a ROTH and two SEP IRA's.

Glad to hear you've recouped your paper losses, though..that's encouraging. I know, I know I *should* have done this awhile ago but my crystal ball was in the shop at the time. ;)

I haven't been able to get ahold of my CPA in the past few days, but when I talk to him about it I'll report back. My main concern right now is getting bumped up a tax bracket with the additional money reported as income. 

Also remember that even if it bumps you up a bracket you are only paying that higher rate on the money that puts you in that bracket.  So if you are at $80k and the next bracket is $90k, and cashing out your IRA puts you at $95k, then you only pay the higher tax on that $5k...I'm pretty sure thats right but you might want to confirm.  You can also google 2011 tax rates and you can easily find that info.

Dr Durden
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I sent in my contract

I sent in my contract cancelation today. I should have a check by the end of the week. 

The money I've made shorting this bloated swine we call the stock "market" will make the IRS ass-raming feel a little better, I guess. 

I'm paying in this year on taxes which means next year will be a refund year. Hopefully by the time I get there, I'll be a head by a comfortable margin.

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JRigs
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You're probably kicking

You're probably kicking yourself for not doing this two weeks ago. I didn't have the balls. At this point it's nearly a wash for me - I don't even want to check in on it now. But if we get a QE3 bounce that brings it back to life a bit I sure won't miss that opportunity twice.

Dr Durden
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JRigs wrote: You're probably

JRigs wrote:

You're probably kicking yourself for not doing this two weeks ago. 

Sold the funds in the account in April market peak and have been sitting in cash since. I've let it ride since 2005 and it's done ok, but of curse it's all paper and too risky going forward.

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Great day! I got my check in

Great day! I got my check in the mail. Wow, look at all this fiat!

It did cost the $200 to surrender the contract, which is no biggy as I view this as the cost of my stupidity for tying this money up in the first place.

I elected not to withhold the penalty fee so I'll be dealing with that next year.

So for now, it's time to pay some bills. I have a load of sub $30 silver and $1500 gold to pay for. Thank YOU JP Morgue for paying for $15000 worth of real money today so I can pay you in devalued $$$ confetti tomorrow. You're truly a victim of your own fraudulent practices in this case. So suck it!

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