Holding gold in retirement accounts

Discussion of the Gold portion of the Permanent Portfolio

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pugchief
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Re: Holding gold in retirement accounts

Post by pugchief » Thu Jun 01, 2017 9:05 pm

ochotona wrote:Sophie, are you maybe at the point where you should slow or even stop the growth of your tax-deferred space? There is a possibility that it could grow too big. By that I mean, when you have to take the Required Minimum Distributions, you might progressively get bumped to higher and higher tax brackets as you are forced to take out more and more as you age. Look at an RMD table sometime to see what I mean. I'm facing a similar situation. In 2018 I think I'm going to go to some combination of Roth 401(k) and converting my IRA paper gold to metal with regular after-tax savings.
What difference does it make? If Sophie is already in one of the top brackets, better to defer as much as possible now, and worry about retirement brackets later.
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Re: Holding gold in retirement accounts

Post by dualstow » Thu Jun 01, 2017 9:07 pm

If it's not a Roth, there is such a thing as having too much in non-taxable.
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Re: Holding gold in retirement accounts

Post by ochotona » Thu Jun 01, 2017 9:20 pm

dualstow wrote:If it's not a Roth, there is such a thing as having too much in non-taxable.
Now, it does all depend on what amounts you have saved by the time you hit the RMD age, but if you're projected to be quite affluent you really don't want to kick this can down the road. You want to plan for the tax implications distribution phase even as you busily squirrel it away today.

Also, as bad as the Federal debt is, in the future tax rates could be YUUUGE. The government might be in an existential struggle to pay the interest on the debt. Tax rates are low now, and if Trump succeeds, that could be even lower... but they won't stay low forever.

Pre-pay the taxes now, by buying gold with after-tax money, and stay out of that mess.
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Re: Holding gold in retirement accounts

Post by sophie » Fri Jun 02, 2017 7:11 am

ochotona wrote:
dualstow wrote:If it's not a Roth, there is such a thing as having too much in non-taxable.
Now, it does all depend on what amounts you have saved by the time you hit the RMD age, but if you're projected to be quite affluent you really don't want to kick this can down the road. You want to plan for the tax implications distribution phase even as you busily squirrel it away today.

Also, as bad as the Federal debt is, in the future tax rates could be YUUUGE. The government might be in an existential struggle to pay the interest on the debt. Tax rates are low now, and if Trump succeeds, that could be even lower... but they won't stay low forever.

Pre-pay the taxes now, by buying gold with after-tax money, and stay out of that mess.
Ochotona this is a really important question and it's come up in other threads too. Well ok, high tax brackets are worth being in :-) but mine is a total of 40% thanks to NYC and NY state tax. I guess that doesn't matter if I stay here, because I'll be paying those local taxes after retirement anyway, and it's a good bet they'll go up due to the demographic trends of pension & Medicaid recipients.

The problem is that the benefits of tax deferral are hard to beat even if future taxes go up. I ran some spreadsheet calculations for an earlier thread hoping to disprove this, i.e. to give myself an excuse to short my retirement savings accounts, and even at modest gains and relatively short time horizons tax deferral won every time.

Because I came fairly late to the high tax bracket game, the RMDs aren't going to be quite as bad as you might think. And if they're that high, this is again a pretty nice problem to have.

Are most of you shorting retirement contributions in order to buy gold? I'm curious to know.
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Re: Holding gold in retirement accounts

Post by dualstow » Fri Jun 02, 2017 7:18 am

Re: your last line- not at all. I max out my Roth, and while I no longer contribute to my 401k, it's unrelated to gold.

Straying a bit: At least your treasuries are safe from NY tax. Do any local taxes apply?
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Re: Holding gold in retirement accounts

Post by sophie » Fri Jun 02, 2017 7:29 am

Local taxes are exempt too. It's why I should be buying short T bills right now, instead of parking money in an online savings account.

Low income sure makes things simpler, but I believe you're in a lower cost living area than I am....plus, if you are self-employed you get to do all kinds of tricks to lower your AGI. I hope that's why you're in such a low tax bracket?
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Re: Holding gold in retirement accounts

Post by dualstow » Fri Jun 02, 2017 7:40 am

I have the savings of someone with high income, and the income of someone with no savings. ;-) My accountant sharpens his pencil on a few things, but in general we're just not huge earners in this household.
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I want the dancing Delta faucet ad guy to slip in the shower and experience a groin pull
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Re: Holding gold in retirement accounts

Post by sophie » Fri Jun 02, 2017 7:49 am

Meaning you are a wise person, which indeed you are. Congrats on the high savings, it really is an accomplishment.
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Re: Holding gold in retirement accounts

Post by dualstow » Fri Jun 02, 2017 8:14 am

Hah, thanks. I get way more praise from you than I deserve, but I'm not saying stop, either. (afrosmiley)
RIP Adam Schlesinger (Fountains of Wayne). Dead at 52 from coronavirus.
I want the dancing Delta faucet ad guy to slip in the shower and experience a groin pull
New drinking game: have a drink every time someone on the radio or TV news says "data"
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Re: Holding gold in retirement accounts

Post by ochotona » Fri Jun 02, 2017 11:03 am

I have a pot of money which I set aside for retirement with each paycheck, and I have the flexibility (the curse?) to allocate it between Regular 401(k), Roth 401(k), HSA, and after-tax.

I max out the HSA, that's a no-brainer. It's the best thing since dim sum.

I have been maxing the Traditional 401(k) to get the most tax avoidance today, because I not only want to save for retirement, but to economize on today's taxes and save as after-tax much cash as possible, because my industry is still unstable and I could have to eat my cash pile.

As things get better at work, and they are slowly, very slowly, I will be wanting to "tax diversify" my 401(k), and I'll turn to Roth 401(k). Maybe in 2018.

I also want to convert gold ETF in the IRA to after-tax metal, that could be a 1-5 year project, depending on how fast I want to buy. But I bought the ETF at $1250 or so, so if gold runs up much higher, I sort of don't care.

So I have a few cross-currents and projects that conflict with each other. The usual!
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Re: Holding gold in retirement accounts

Post by DragonJoey3 » Fri Jun 02, 2017 2:36 pm

Sophie,

I too feel your pain. I have been wanting to buy physical gold for a while now but all my investments just barely fill the large amount the gov allows me to defer ($18,000 in 401k, $11,000 in roth IRA's, $6,750 in HSA, etc...) All told I need to invest over $35,000 and possibly more than $40,000 in a year to have anything left for taxable investments (definitely a first-world problem). That being said I have considered not maxing some-thing tax-deferred in order to have the protection of physical gold holdings.

The largest concern would be hyper-inflation (which I think is a likely scenario, but that's just my paranoia ;) ) In that case, if gold goes to say $5,000/oz or $10,000/oz I suspect the tracking error would become quite substantial and some ETF's might even collapse.

I don't have a good answer for you, but wanted to let you know that I too occasionally worry about how much of my gold is "just paper"

~DragonJoey
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Re: Holding gold in retirement accounts

Post by Hal » Fri Jun 02, 2017 10:00 pm

ochotona wrote:
dualstow wrote:If it's not a Roth, there is such a thing as having too much in non-taxable.
Now, it does all depend on what amounts you have saved by the time you hit the RMD age, but if you're projected to be quite affluent you really don't want to kick this can down the road. You want to plan for the tax implications distribution phase even as you busily squirrel it away today.

Also, as bad as the Federal debt is, in the future tax rates could be YUUUGE. The government might be in an existential struggle to pay the interest on the debt. Tax rates are low now, and if Trump succeeds, that could be even lower... but they won't stay low forever.

Pre-pay the taxes now, by buying gold with after-tax money, and stay out of that mess.
And remember the Government can always change the rules!

Have a look at the link to a 2010 document for some chilling bed time reading....

http://www.aph.gov.au/binaries/library/ ... uation.pdf
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