What Is a Gold IRA Rollover

401K Gold Rollovers Explained

A Tax-sheltered Investment

To understand why gold rollovers have become so popular, you have to understand the dynamics of using gold in an IRA or individual retirement account. Typically, a traditional or Roth IRA is made up of stocks and securities, mutual funds, and bonds. Any contributions that are made to the account are considered tax-free. Therefore, a gold backed IRA, basically, is a tax-sheltered investment.

The Main Difference between a Regular IRA and Roth IRA gold bullion stacked

One of the main differences between a Roth and traditional IRA is how the income tax is deferred. While the upfront contributions are tax deductible in a traditional IRA, the tax is paid upfront on the Roth account. Withdrawal restrictions are more lenient with a Roth as well. You have to begin taking out distributions from a traditional IRA when you are 70 1/2 years of age. However, if you own a Roth account, you can keep making contributions as long as you want.

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Established Limits for Contributions

Contribution limits for IRAs are indexed to inflation. However, the income limitation for 2014 has been set, as in 2013, at $5,500. Anyone who is 50 or older can increase the contribution by $1,000 annually.

A Self-directed IRA Account – Ideal for Precious Metals Investments

Gold is a precious metal that can provide the leverage and security you need for your IRA account. If you feel somewhat uncomfortable about relying on stocks, then you can rollover a part of your IRA into a gold 401k IRA. Use the precious metal to safeguard your retirement savings from inflation too. You can buy gold through an IRA, provided that the trustee is willing to accommodate you in this regard. Gold is most easily invested in a self-directed type of account.

How the Gold is Delivered

A self-directed IRA allows you to choose how the funds will be invested, and therefore the investments that are chosen are not selected by a trustee. Also, your gold is delivered to an assigned depository. You can’t receive the gold yourself, or you’ll be assessed a penalty.

Rolling Over the Funds

So, a gold IRA rollover is simply a method of transferring or rolling over the funds from a regular or Roth IRA into an IRA that has been designed to hold gold or precious metals. The rollover, which is IRS-approved, is tax-free. Therefore, the transaction must be handled by a credible IRA company that is authorized to conduct the transfer. Because most traditional IRAs will not permit you to hold precious metals, you will need to roll over the funds.

Find a Custodian to Conduct the Transaction

Therefore, the first step in the process is finding a reputable custodian to facilitate the process. Make sure he is a noted professional in this respect. All the documentation should be provided without any type of confusion or hassle. Paperwork should be completed and processed within the established time frame of 60 days.

Secure the Services of a Precious Metals Dealer

Again, the IRA account should be self-directed, and therefore be designed to hold precious metals. You’ll also need to secure the services of a gold broker or a company that deals in precious metals. The company or individual you retain will be the IRA trustee’s point of contact for buying the gold.

Rollover and Purchase Requirements

To avoid any penalties, you must reinvest your IRA withdrawal within a 60-day period. Again, you can’t hold the gold yourself or it will be considered a disbursement. Only custodians who are authorized to do so are allowed to store gold on your behalf in a designated and IRS-approved depository. Gold must be 99.5% pure in order to proceed with a purchase. The precious metal cannot consist of collectible coins or be numismatic in nature.

Gold Holds Its Value over Time

Diversifying an IRA in this way is popular for a number of reasons. Not only does gold provide an added level security in an uncertain economy, it reduces any risk with regards to devaluation. Returns are maximized when you include gold in a retirement account as well. Historically, gold has outperformed other types of investments. Also because gold is scarce, the precious metal is often stockpiled. As a result, it’s highly unlikely that the value of the metal will tumble now or any time in the future.

A Safe and Practical Financial Option and Choice

People are no longer relying on their 401K or IRA for security in retirement. To lessen the impact of economic fluctuations, you need to diversify. That’s why a gold rollover is a safe and practical financial option and choice. The gold ira company we recommend is located in the side bar and the only company we recommend for rollovers and for purchasing gold and silver coins.

 

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