401K plans

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How is the best way to protect 401k funds? It is best to go to a money market fund, and hold tight? Is crazy to pull the funds out early and get hit by the tax consequences?

-- Scott Saunders (chengsls@aol.com), September 06, 1998


"Is crazy to pull the funds out early and get hit by the tax consequences?"

Maybe, maybe not. If you think things are really going into the tank, it may be better to pay up front and hold cash. This would allow you to buy gold/silver later if that was your choice. Can't hold physical gold in a 401 or IRA.

Tax consequence isn't as bad as you might think. Difference between your bracket now and what it will be when you retire (plus 10%penalty). No guarantee that rates won't be much higher in the future.

-- alternatives (justa@thought.com), September 06, 1998.

am I right in assuming if you pull your ira, you will lose a third to the government? mines woth about 9k. so if I pull it, Im only gonna get 6k?

-- ed (edrider007@aol.com), September 06, 1998.

I'm not a financial expert (nor do I play one on TV), but one option for some 401(k) holders is to borrow against the value of the account without actually cashing it in. That gives you the cash up front in case everything tanks, or if y2k is nothing more than a speed bump you repay the loan and the only cost to you is the interest, which will be far less than the tax liability from cashing out the whole account. Depends on your plans for the money, of course.

-- J.D. Clark (yankeejdc@aol.com), September 06, 1998.

Gold, silver and platinum bullion coins can be held in an IRA. Only certain coins like American Eagles, Canadian Maple Leafs, and Austrian Philharmonics are allowed. Call American Church Trust at 1-800-228-8825 and request their IRA packet. Once the IRA is estalished, you can buy from the dealer of your choice and the coins are stored at Wilmington Trust in Delaware. Smart move! Once people figure out that the stock market is going down, down, down... and the computers just might do the same thing in 16 months PM coins will probably get VERY popular. One thing's for sure, you'll know you have a Y2K compliant investment!

-- anon (anon@anon.net), September 07, 1998.

But can you get to that bank in Deleware, and, if so, can you get to the funds (gold) inside that bank? If both = "yes", is it convenient enough or would somebody elsewhere need an alternate?

-- Robert A. Cook, P.E. (cook.r@csaatl.com), September 07, 1998.

You can use funds from an IRA to purchase gold and silver within the constructs of the IRA. The metal is now held in one of 2 banks in New York. Republic Bank is the one that the American Church Trust is currently using. I have already had experience buying gold within an IRA, and you are only allowed to purchase coins minted by U.S., no bars allowed, no other country's coins either. Before you go and move your money out of your current IRA, check with them to see if they will purchase and hold your coinage (at Republic) as trustees. Prudential Securities has this option.

-- K Golden (kgolden@solar.stanford.edu), September 07, 1998.

If you are even considering the option of transferring IRA funds to a self directed IRA, I would get the paperwork rolling. It took me 3-4 weeks to fund my IRA at the Church Trust. Also, request withdrawal documents immediately from whomever you are going to assign as trustee. You want to be able to move those coins at the drop of a hat. On the IRA withdrawal forms there is an option to have the taxable amount withheld, or you may opt to be personally liable in the next tax year (1999). Republic Bank of New York is NOT compliant. I have already asked them.

A little friendly advice: If I were you, I wouldn't vacillate much longer on this. Gold and silver may soon be out of your financial reach. If metals do rise, it will also mean that the value of your dollar will be tanking in it's over-all purchasing power.

-- K Golden (kgolden@solar.stanford.edu), September 07, 1998.

Borrowing from your 401K:

http://cnnfn.com/yourmoney/9706/16/yomo_401kcars/#TOP http://www.dtonline.com/tip/1996/tip071596.htm http://quicken.excite.com/focus/articles/889226688_11262

Just remember, if you are going to borrow 1/2 of your 401k value right now, you are doing so under emergency circumstances. Most of the fatherly borrowing/investment advise attached to these articles do not apply.

-- K Golden (kgolden@solar.stanford.edu), September 07, 1998.

Gee, how can so many people misread a simple statement.

I said, "You can't hold physical gold in an IRA or 401K." Yes, you are allowed to let a BANK hold gold. YOU can't hold it.

Let's see now, if I'm buying gold/silver for use later, do I really want it in a bank vault where I can't get at it? Maybe I'd like it in my possession? End of point. You can't hold physical gold in an IRA/401, so if you wnat to do this you need to cash out.

Re: the 30% question. You owe 10% when you cash in, and you have to pay taxes, at your current rate, on what you cashed in. If you're in the 28% bracket, that's 38% the first year. [On the other hand if you hold the same amount until you reach age 60 and cash it in, all you pay is the 28%.........assuming you're in the same tax bracket and assuming that the rates haven't increased (they never decrease, do they?). It's a question of when you pay the tax. Of course, once it's out, you end up paying tax on everything you make on it from then on. Not a problem in a declining market.

-- alternatives (alternatives@justathought.com), September 07, 1998.

If you quit your job you have the option to cash out your 401k which is what I did. I was quitting anyway so it worked out fine. 20% went to the govt outright and I'll be hit with a 10% penalty come tax time. I bought a bag of pre-1964 junk silver with half of the money and the other half is in the bank being used for other resources. I strongly suggest buying gold and/or silver for physical delivery. Silver is good because of it's lower denominations and will be easier to use if there is still a medium of exchange when our economy tanks. Ask Warren Buffet why he bought 20% of the world's tradable silver for physical delivery. Pickins are gettin slim folks, the big boys are playing their last hand.

BTW, I think it is much crazier to leave your money in the stock market. Especially your life savings.

-- Yoda (jibble@jabble.com), September 08, 1998.

This message is written as I have read many postings in the greenspun forum regarding positioning in precious metals with investment accounts including IRA and other retirement accounts. The alternative to purchasing Gold Eagles is to purchase shares of Central Fund of Canada Limited (est.1961). The shares qualify for inclusion in retirement accounts and might be the alternative that you have all been searching for. Central's shares trade on the AMEX (CEF) and the TSE (CEF.A). They are backed by over 97.5% with physical gold and silver bullion that is stored in Central's segregated vault within the vault complex of Canada's second largest bank the CIBC. The bullion is audited on a semi-annual basis and is fully insured with an "ALL RISKS" insurance policy. Central is the most cost effective way, that I know of, to purchase, store and insure bullion at under 1% per year. I invite you to review our website located at www.centralfund.com and would welcome any calls at 905-648-7878 at anytime. Central Fund continues to fulfill its mandate as "The Sound Monetary Fund".

-- J.C. Stefan Spicer (sspicer@nas.net), November 01, 1999.

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