The Golden IRA

Question: Why does gold and silver make sense in your retirement plan?

Answer: As the ultimate long-term store of value, gold and silver coins and bullion may very well be the ultimate retirement asset. Among the primary asset classes most often used in retirement planning - stocks, bonds, annuities and savings accounts - the tangible king of metals stands out as the only one that does not rely on the performance of another individual or institution for value. Charles DeGaulle, the famous French president, once said gold "has no nationality and is eternally and universally accepted as the unalterable fiduciary value par excellence."

What better way to save for retirement than with the ultimate savings vehicle - precious metals. No one ever went broke holding gold or silver. The same cannot be said of paper assets. We invite you to establish your gold retirement plan through Kettle Moraine, Ltd..

Question: Could you list the type of precious metals products that qualify for this program?

Answer: As of January 1, 1998, the Internal Revenue Code allowed IRA investment in a wider range of precious metals. Investment is permitted in both coins and bullion of platinum, palladium, gold and silver, provided they meet stringent fineness requirements.

These requirements are that the product be essentially 100% pure precious metal. The IRA trustee or custodian, who must store and account for the precious metals, may have further restrictions. Goldstar Trust Company (GST), for example, must limit the investments to broadly traded, fungible products, which can be recorded and stored at our designated depository, HSBC Bank of New York.

Question: Could you walk us through the process of how an investor would open a precious metals IRA account?

Answer: There are really three phases to getting precious-metals into an IRA. These are:

1. Establishing the IRA Account.
2. Funding the IRA with cash.
3. Investing the IRA funds in precious metals.

First, the IRA must be established at a financial institution that is willing to make an investment for the customer in platinum. Secondly, the IRA must be funded by an annual contribution, a transfer or a rollover. Finally, The IRA custodian must purchase the precious metals and hold them in safekeeping for the customer. KML will provide you with the forms necessary to open the account, as well as forms to effect a transfer or rollover. Once the account is opened and funded, the customer gives the IRA Custodian specific instructions regarding the metals to purchase, the price and the dealer. The Custodian makes the purchase (through KML), and the metals are shipped to HSBC Bank of New York.

Question: What if the investor already has an IRA account?

Answer: An existing IRA may be used to invest in gold, silver and/or platinum, provided the IRA Trustee or Custodian will allow the investment and will agree to store the metals. Usually a Self-Directed account is required. In this type of account, the customer gets to select the investments, rather than just taking whatever the IRA Trustee is selling. Most banks, mutual funds and other types of institutions that sell a financial product will not allow the customer to direct the investments, beyond choosing among the offerings of the institution.

Goldstar Trust Co. does not sell any products, and acts strictly as Custodian for Self-Directed IRA accounts. Customers may direct investments in gold, silver and/or platinum, CDs, stocks, bonds, U.S. Government securities, notes, and several other types of investments.

Question: What is Goldstar Trust's role in this type of IRA?

Answer: GST serves as Custodian for Self-Directed IRA accounts. They have no investment authority for the accounts, and work strictly from instructions given by the customer. In a precious metals IRA, GST invests in metals as directed by the customer, hold the investments, send semi-annual statements to the customer, and file the required reports to the IRS. GST does not give or receive any compensation to or from the precious metals dealers, and we do not sell our customer lists.

GST does not provide financial or tax planning advice, but they can assist with compliance with IRA rules and regulations. Of course, investors should always work with appropriate legal and tax advisors to manage their IRA investments.

Question: Where are the metals physically stored?

Answer: GST currently utilizes the HSBC Bank USA of New York for storage of precious metals and is recognized worldwide among these services.

Question: How do investors sell their metal when they are ready to take distribution?

Answer: Again, there is often confusion regarding selling assets and taking distributions. Assets may be sold by the IRA (through Kettle Moraine, Ltd. as your designated precious metals brokerage) at any time, regardless of whether a distribution is planned. Likewise, a distribution may be taken regardless of whether not assets are sold.

When an asset is sold, GST simply holds the cash in the IRA until the customer directs another investment or requests a distribution. Selling precious metals works the same way as purchasing. The customer gives written instructions to GST regarding what to sell, at what price and through which dealer. GST makes the sale, and waits for further instructions.

When customers take a distribution from their IRA through GST, they have two choices; The assets in the account may be liquidated and distributed in cash, or they may be withdrawn "in kind," which means the actual asset itself is sent to the investor. This allows the investor to decide if it is better to sell at the current market price, or take a distribution in kind and sell at a later date, outside of the IRA. The amount reported to the IRS as a distribution is the cash amount distributed, or the fair market value of the asset taken in kind. Of course, the customer may not wish to take the entire account balance all at once. A Required Minimum Distribution for a person over age 70 will only be a portion of the total account value, so it may be that the customer will take a cash distribution in some years and in other years, take a distribution in kind.

Question: What are the advantages to investors in this type of IRA? What are the costs?

Answer: A Self-Directed IRA with GST has several advantages. They are one of the few financial institutions in the country to handle precious metals accounts, which allows investors to hold hard assets in their IRAs. However, since GST also allows many other types of investments, customers can have one IRA account, with one consolidated statement showing all investments.

Currently, a precious metals IRA at GST will cost about $180.00 the first year, comprising a $50.00 account setup fee, a $90.00 fee for the first year's storage at HSBC Bank USA of New York , and a $40.00 transaction fee for the purchase of metals. Thereafter the annual administration fee for an IRA at ACT is 1/8 of 1% of the asset value of the account, with a $50 minimum and a $150 maximum. The annual storage fee is $90, therefore the ongoing annual cost ranges from $140.00 to $240.

Any charges, fees or commissions on investments directed by the customer will be charged to the account. GST fees are billed on the anniversary date of the account, while the HSBC storage fees are billed on a calendar year basis.

Question: What types of IRA accounts qualify for inclusion of precious metals?

Answer: GST offers the following types of IRA accounts:

Traditional - May be fully or partly deductible, depending on income and participation in employer sponsored pension plan. Tax deferred growth, but distributions are taxable.

Roth - Never deductible. For contribution limits, click here Tax-free growth, qualified distributions not taxable.

SEP - Simplified Employee Pension plan. Generally has the same requirements as a Traditional IRA, but contribution limits are higher - 25% of total compensation up to $40,000 per year.

Simple - Generally has the same requirements as a Traditional IRA, but contribution limits are higher - up to $10,000 per year, plus employer contributions.

Question: What are the advantages to dealers in recommending this type of IRA?

Answer: There are several advantages to precious metals dealers who recommend this type of IRA to their customers. Perhaps the greatest is the fact that the average person has much more money available for investment in his/her IRA than in a checking account.

The past several years have seen a large number of people laid off or given early retirement as corporations cut back or "downsize" their operations. There are billions of dollars in retirement accounts that may be eligible for rollover to IRA accounts. GST is in the IRA business, so the dealer doesn't have to be. Once the dealer determines that the customer has funds available for investment in an IRA or other retirement plan, he can simply supply the GST toll-free phone number and wait for the paperwork to be completed. Payment to the dealer is usually made by wire the day after the assets are delivered into the hands of the storage facility.

Finally, our people are knowledgeable, courteous, efficient and friendly, and are always ready to answer a question or help a dealer solve a problem.

~ Establishing Your Golden IRA ~
Investors wanting to discuss setting up an IRA through KML are encouraged to call 1 - 623 - 327 - 1778. If, after getting your questions answered, you choose to proceed, your KML representative will assist you in completing the necessary paperwork, which includes an application and other necessary forms. KML will then submit to you the completed package awaiting your signature.

You may contact us by phone at 1 - 623 - 327 - 1778 or via email through this web-site. A representative of KML will contact you upon receipt of your basic information for a more detailed overview of your specific needs.

Once the account is established and funded, you may direct Goldstar Trust Company, through Kettle Moraine, Ltd. to purchase and hold the precious metals of your choice in your IRA. Always contact your dealer with questions about your precious metals, and contact GST with questions about your IRA - although history has proven that KML will go the extra 1000 miles to insure a smooth transition for you - our clients.