Casey Files:
Sending Your IRA Gold on
an Overseas Vacation
By the editors of BIG
GOLD
Casey Research
Mar 18, 2009
In a recent article: 'Should
You Put Gold into Your IRA?' we considered the pros and
cons of putting gold bullion into a self-directed IRA and detailed
how to do it. But the arrangements we covered were entirely domestic.
What about having your IRA
hold gold offshore? It can be done, but before you go to the
trouble, ask why. Your IRA would still be subject to U.S. law,
and your IRA custodian would still be in the U.S., regardless
of where the assets are.
One possible reason is protection
from future creditors, especially of the lawsuit variety. If
your IRA exceeds a million dollars, or if you live in the wrong
state, or if you inherited the IRA, it may be available to anyone
who successfully sues you. There are some rather complex arrangements
that can move IRA assets (gold or anything else) offshore and
make them far more difficult for a creditor to reach. But if
that's your motive, we'd think twice about the loss of control
that such programs involve.
An entirely different reason
would be to sidestep some future legal interference with gold
ownership - if, for example, you think President Obama may become
FDR Redux and embrace draconian measures, such as prohibition
of ownership, penalty taxes, confiscation, or forced sale at
an official price, as in 1933. No preparation for these possibilities
can be completely reassuring, since we can't anticipate exactly
what the new rules might be. But something as simple as wrapping
the gold in an IRA and storing the metal in a different jurisdiction
could allow you to be one of the few remaining Americans who
lawfully owns gold.
One easy way to go about this
is for your IRA to hold the metal in the form of a Perth Mint
certificate. Not all IRA custodians will do this, but some will.
Check our prequel article or the
names of gold-friendly IRA custodians or contact one of Perth's
Approved U.S. Dealers, like Euro Pacific Capital (www.europac.net).
[Peter
Schiff's company] They'll
help.
The more sophisticated approach
is to use an offshore limited liability company (LLC). Your IRA
would own all of the LLC, while you would be the company's manager
and have direct control over its affairs. The LLC, having but
one owner, would be eligible for establishment as a "disregarded
entity," so that its assets are treated, for income tax
purposes only, as being owned by the IRA. As manager of the LLC,
you would file such an election with the IRS, then open an account
for the LLC with a suitable foreign institution, and use the
account to buy gold.
Is that worth doing? If you
want to have gold in an IRA, perhaps because your IRA dominates
your financial picture, or if you're worried about the possibility
of gold confiscation, it may be. The costs are the homework you'll
need to do, and annual expenses of $2,000 or so, depending on
how good you are at shopping.
To start, you'll need an IRA
custodian (which will be a U.S. institution -- it's your company
that's offshore, not the custodianship), one that specializes
in such arrangements. We've identified some possibilities, and
while we don't know any of them well enough to give our wholehearted
endorsement, you can begin by looking into the Entrust Group
in Paoli, Pennsylvania (www.theentrustgroup.com).
The custodian will get the
offshore LLC formed for your IRA. Then you can convert all or
a portion of your IRA assets to cash and transfer the money to
the new custodian, who will invest it as a capital contribution
to the LLC. From there on, you, as manager of the LLC, will run
the show. You can buy Perth Mint certificates for the LLC or
you can have the company purchase bullion from Kitco, Asset Strategies,
GoldMoney, or any other seller of your choice. They will then
help arrange storage with a vaulting company such as Via Mat
International in Zurich, one of the oldest and most reputable.
Probably not many investors
will want to go this route. But if you're one of the few for
whom it makes sense, these are the steps to follow.
***
One caveat: gold is certainly
a safe haven and much preferable to some of the unstable investments
around, but the fact is, it's a non-interest-bearing investment.
But there's a strategy that smart investors - like Steven Lehman,
the Federated Investors fund manager who beat 99% of his peers
last year - are following now and you can too.
If you want to know how to
squeeze up to four times more gains out of gold, click
here to learn more.
###
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