Taking money out of retirement funds to purchase cards

[raulus]

Originally Posted by BobC

And then take it a step further and try to get it as a retirement account asset. To my knowledge, that would not be allowable right now, but things do seem to be changing a lot as we move forward.

Thanks BobC.

Under current law, collectibles are prohibited in 401ks and IRAs. See IRC Section 408(m). So Congress would have to change the statute. Based on the fiasco of having crypto in 401ks, I don't expect they'll be motivated to make any changes here.

[BobC]

Originally Posted by raulus

Thanks BobC.

Under current law, collectibles are prohibited in 401ks and IRAs. See IRC Section 408(m). So Congress would have to change the statute. Based on the fiasco of having crypto in 401ks, I don't expect they'll be motivated to make any changes here.

And exactly why I said MAYBE in the future. LOL

They do currently allow somewhat non-traditional things like precious metals to be held in IRAs, which definitely falls into Warren Buffet's non-productive asset category. That is the same category cards would fall into, non-productive assets. So you never know. if enough people start pushing it as an alternative asset for retirement account holdings, they may get Congress to okay it one day. At least it is a tangible, physical asset, unlike Bitcoin and other such completely intangible investments/assets.

[Peter_Spaeth]

Originally Posted by BobC

And exactly why I said MAYBE in the future. LOL

They do currently allow somewhat non-traditional things like precious metals to be held in IRAs, which definitely falls into Warren Buffet's non-productive asset category. That is the same category cards would fall into, non-productive assets. So you never know. if enough people start pushing it as an alternative asset for retirement account holdings, they may get Congress to okay it one day. At least it is a tangible, physical asset, unlike Bitcoin and other such completely intangible investments/assets.

Bob, what's the difference between an IRA where you "own" physical gold or just owning an ETF in your account like GLD? And in the case of the former, where is the actual gold and who has possession of it? It's a weird concept to me, although I guess I was vaguely aware of it as an option.

[BobC]

Originally Posted by Peter_Spaeth

Bob, what's the difference between an IRA where you "own" physical gold or just owning an ETF in your account like GLD? And in the case of the former, where is the actual gold and who has possession of it? It's a weird concept to me, although I guess I was vaguely aware of it as an option.

Yeah, I know. Not really a huge difference, but to me at least, the fact there is a physical asset that eventually backs something up, like an actual piece of gold, makes a big difference as opposed to say Bitcoin, where there is literally nothing physically backing it up. Even when you own a share of stock in a company, you technically own a piece of the actual physical assets that company owns.

[raulus]

Originally Posted by BobC

And exactly why I said MAYBE in the future. LOL

They do currently allow somewhat non-traditional things like precious metals to be held in IRAs, which definitely falls into Warren Buffet's non-productive asset category.

I'm sure you saw the case with McNulty v. Commish, where the couple got hammered for holding gold in their IRA and storing the gold at home. They were keeping about $411K in gold at home. Apparently it was based on some brilliant idea on the internet from a shop selling gold online. The couple made a few other missteps, and ended up paying over $300K in taxes and penalties on their IRA of about $700K.

In terms of any gold held in your IRA, basically you can't have unfettered access to the gold, because the law requires independent oversight by a third-party fiduciary. So even if Congress amended the statute to permit cardboard to be held in retirement accounts (a pretty big if), barring a change to the independent oversight from a third-party fiduciary requirement, you couldn't keep your cardboard at home to have and hold and enjoy.

Naturally, as you noted, the vault approach would seem to likely solve the sticky wicket of needing independent oversight by a third-party fiduciary, although I guess we can debate how much oversight you're getting from a vault, and the more cynical among us might even question the fiduciary aspect.

[basesareempty]

I am Old School and am in the market for the ups and downs but with the current down turn in the market and what appears to be an impending recession at best, I have often thought what if I took out a company sponsored 401k Loan where I pay the amount back through payroll deductions with 6% interest that also goes to my account. I then could use the loan to pay off a vehicle, credit cards, buy tangible assets( cards, gold or silver) or whatever? 6% return in the current market is not to bad considering I’ve lot about 22% in the last 18 months or so???

[autograf]

Originally Posted by basesareempty

I am Old School and am in the market for the ups and downs but with the current down turn in the market and what appears to be an impending recession at best, I have often thought what if I took out a company sponsored 401k Loan where I pay the amount back through payroll deductions with 6% interest that also goes to my account. I then could use the loan to pay off a vehicle, credit cards, buy tangible assets( cards, gold or silver) or whatever? 6% return in the current market is not to bad considering I’ve lot about 22% in the last 18 months or so???

We took about $30K from a 401k right before the HUGE downturn in 2008/2009 for an adoption. Then paid it back over a 5 year period with the 6-7-8% interest, so it worked out pretty well ultimately. The rest of the money in the 401k was growing strongly during that period but we didn't lose the base amount on the $30K since we'd pulled it out. Just a matter of timing. Not sure that it would be that easy to really PLAN it to turn out well.............

[Yoda]

Tom, did the kid(s) turn out to be a good investment? And perhaps that is them behind you in the photo. Philippine American maybe?

[x2drich2000]

One risk to consider with a 401k loan is what happens if you lose your job or want to move on to a different job. Many plans will require you to either pay the loan back in full very quickly or will consider the loan a disbursement subject to the tax and penalties discussed previously in this thread.

[BobC]

Originally Posted by raulus

I'm sure you saw the case with McNulty v. Commish, where the couple got hammered for holding gold in their IRA and storing the gold at home. They were keeping about $411K in gold at home. Apparently it was based on some brilliant idea on the internet from a shop selling gold online. The couple made a few other missteps, and ended up paying over $300K in taxes and penalties on their IRA of about $700K.

In terms of any gold held in your IRA, basically you can't have unfettered access to the gold, because the law requires independent oversight by a third-party fiduciary. So even if Congress amended the statute to permit cardboard to be held in retirement accounts (a pretty big if), barring a change to the independent oversight from a third-party fiduciary requirement, you couldn't keep your cardboard at home to have and hold and enjoy.

Naturally, as you noted, the vault approach would seem to likely solve the sticky wicket of needing independent oversight by a third-party fiduciary, although I guess we can debate how much oversight you're getting from a vault, and the more cynical among us might even question the fiduciary aspect.

Right you are Nicolo. I've mentioned on the forum before how the easiest way to determine the difference between an investment and a collection is where one stores/keeps their items. Investments in a vault or safe deposit box, collectibles on the walls/shelves of your office or man cave.

On the occasions where someone starts a thread about showing off their man cave/collectibles at home, I've mentioned how someone not wanting their items to be considered as collectibles instead of possibly being investments some day, maybe shouldn't be posting images on a public forum of all their stuff on the walls or shelves of their office/home. For all we know, there is an IRS agent who had been a forum member for years. LOL