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If you’re interested in investing in a gold IRA but are afraid of the associated tax liability, consider opening a new retirement account that allows you to roll over funds from another investment vehicle, like an IRA or 401(k). This will allow you to diversify your portfolio without having to pay taxes on any gains, while still giving you the ability to buy precious metals. Let’s look at why investing in a gold IRA is such an appealing option and how it works.
The Basics of a Gold IRA
Before you can roll over your retirement account into a gold IRA, you need to know what it is. A gold-backed individual retirement account—or IRA—allows investors to invest in gold that they expect will gain value while they hold them. Because these accounts work similarly to other IRAs, anyone with an existing 401(k) or traditional or Roth IRA can open one. That makes rolling over an existing investment vehicle—which may involve paying some sort of tax—easier than starting a new type of account from scratch.
If you want to move your existing retirement account into a gold-backed one, you first need an existing account. If you have a 401(k) or any other type of traditional or Roth IRA, you can roll those funds over into a gold-backed version. It’s not quite as simple if you want to transfer an existing mutual fund or stock portfolio; however, it is possible. Before doing so, check with your financial advisor on whether it’s feasible based on what type of holdings you have and how long they’ve been held. Additionally, contact a company that offers gold IRAs directly for more information.
While you can roll over a traditional or Roth IRA into a gold-backed one, there are different eligibility requirements. A Roth IRA has income restrictions, but anyone with income can open a traditional one. There is no such restriction on rolling over funds from an existing 401(k). Additionally, you must hold gold-backed IRAs through an approved custodian—check with your broker for more information.
The Advantages of Investing in a Gold IRA
An individual retirement account, or IRA, is an investment that allows you to set aside funds tax-free for investing in gold. This tax benefit allows your savings to grow faster over time. While IRAs are primarily used by individuals who want to invest for retirement, they can also be used as a way of diversifying your portfolio. There are two primary ways you can use an IRA for diversification purposes—withdrawing funds from another retirement account and opening a new gold-based individual retirement account. The first option is called a rollover; with a rollover, you can take money out of another traditional or Roth-style account you have and deposit it into your new IRA investment vehicle.
Tax and Penalty Free Rollover to Gold IRA
When you make a rollover, you can transfer funds without paying taxes or penalties on any gains. If you don’t have an existing traditional or Roth-style account, you’ll have to pay a 10 percent early withdrawal penalty if you’re under age 59 1⁄2. However, there are certain exceptions when early withdrawals are allowed; for example, if your primary home has been damaged by a natural disaster such as flooding or fire. Be sure to discuss all potential early withdrawal penalties with your financial advisor before investing in gold.
It’s important to note that you must be at least 59 1⁄2 years old when you open your account. You also have a certain amount of time, called a rollover period, during which you can transfer funds into your new account; these periods vary based on your circumstances. For example, if you are taking money out of an employer-sponsored retirement plan, such as a 401(k), then you will have 60 days following your withdrawal during which time you can complete a rollover. If it is not completed within that time frame, then any gains will be subject to taxes and early withdrawal penalties.
How it Works
A gold IRA rollover is a type of transfer from an existing self-directed retirement account that occurs when you move funds from another investment vehicle into your gold IRA. It can be completed with minimal taxes or fees but requires you to transfer all of your retirement account’s assets—not just those used for investing in precious metals. You must have an existing self-directed retirement account (such as an Individual Retirement Account, 401(k), Simple IRA, or Keogh) with a financial institution or trustee before transferring its assets into a new one. It is also important to know that once these accounts are transferred, it may take as long as 30 days for them to reach their full value in your new investment vehicle.
With a gold IRA rollover, you are moving funds from one type of retirement account—such as an Individual Retirement Account (IRA)—to another. A traditional IRA is one in which your contributions may be tax-deductible, but its earnings will be taxed when withdrawn after age 591⁄2. However, once rolled over into a self-directed IRA, you will not have any taxes withheld on earnings or withdrawals; only dividends earned from investments or interest earned on savings will be taxed at ordinary income rates. You may also prefer to use a Roth type of retirement account; these are funded with after-tax dollars but distributions are not taxable while they remain within your account.
When you complete a gold IRA rollover, your new account will be held by a financial institution or trustee that holds retirement accounts. You can then deposit as much money as allowed under IRS regulations. For example, if you’re 50 years old, you can deposit up to $6,000 of taxable income—and an additional $1,000 if you are 55 or older—into your new self-directed account each year. If you choose a Roth type of retirement account for your transfer instead of a traditional one, there is no maximum limit on how much money you can invest each year; only those earnings from dividends or interest paid out will be taxed at ordinary income rates until a distribution from your account occurs.
Choosing the Right Company
Are you ready to start investing in a gold IRA? It’s an important decision that could impact your future. You’ll want to carefully consider every option you invest in gold. Goldco Precious Metals is one of our top picks because it offers a variety of investment options, fair pricing, great customer service, and professional services. To learn more about how you can get started with your own gold IRA rollover account, click below!
If you want personalized service and professional advice, Augusta Precious Metals is one of our top picks. As a smaller business, it offers attentive service to all investors at all levels. With investment options for IRAs and physical metals, Augusta’s choices can fit your needs. It also offers easy online access, great prices, 24/7 customer support, and professional services that include preparation of tax returns, seminars about precious metals investing from seasoned experts, pre-arranged delivery scheduling to make sure you get your metals promptly after purchase—and much more! Learn more below.
Our Top Trusted Gold IRA Company Picks for 2022
Our recommended Providers are researched and vetted by us and many top consumer organizations. This is the short list of the most consistent companies we could come up with. Request information from them below.
#1: Augusta Precious Metals
Our Rating: 10/10
✅ ZERO complaints with the BBB and BCA
✅ Highest reputation and customer satisfaction in the industry
✅ Non-commissioned sales team
✅ Transparent pricing with up to 10 years of fees waved – with certain minimum investments
✅ NFL Legend Joe Montana actual customer before becoming their spokesperson
❌ No way to setup online
❌ The minimum investment for IRA is $50,000
Our Rating: 9.9/10
✅ Low annual fees on IRAs
✅ Excellent Customer Service
✅ Free storage is available for non-IRA precious metals
✅ Highest levels of customer satisfaction in the industry
✅ Incentives available for certain purchase levels
❌ Signup process can only be done through a specific link
❌ Setup online not possible
❌ Minimum investment for IRA $25,000
#3: Birch Gold Group
Our Rating: 9.9/10
✅ Great company commitment to education and communication
✅ Impeccable customer service
✅ Silver, gold, platinum and palladium available
❌ Signup process can only be done thought a specific link
❌ Certain fees are not disclosed up front
❌ No buyback guarantee of precious metals
#4: Noble Gold Investments
Our Rating: 9.6/10
✅ One of the best no questions asked buyback programs in the industry
✅ Free delivery of your precious metals to your door at any time
✅ Over 20 years of experience in the precious metals industry
✅ Gold, silver, platinum, and palladium available
✅ One of the lowest barriers to entry – ideal for smaller investors
❌ High annual fees for low balances
Things to Consider When Choosing an Investment
There are many different types of investments that you can choose from. Before deciding what investment vehicle is right for you, be sure to evaluate how much risk you’re willing to take on, how much time you have available to manage your portfolio, and how much flexibility you need when it comes to accessing your money. As a general rule of thumb, the higher the potential return on investment, typically, that is going to be accompanied by a bit more risk involved with that particular investment vehicle. For example, if investing in stocks is high up on your list of options, be sure that you are comfortable taking on stock market risk—that is there will be volatility with regards to market performance.
There are a few more things you need to keep in mind if you’re interested in investing your money into gold. Before deciding whether or not a gold IRA rollover is right for you, be sure that your state allows for precious metals to be held within an individual retirement account. In addition, it’s important that you know exactly what kind of tax treatment applies to IRAs because different precious metals will have different tax implications.
How Do I Roll Over My Retirement Account Into a Gold IRA? You have two options when it comes time to roll over your current 401(k) or another eligible retirement account into a gold or other precious metal-backed individual retirement account (IRA). The first option is rolling over funds into an existing traditional IRA.
Examples of Precious Metals Investments
Precious metals are typically categorized as gold, silver, platinum, or palladium. These assets have held their value throughout history and continue to provide valuable protection against inflation. Some other forms of precious metals include coins, ingots, beads, and jewelry. A gold IRA rollover can allow you to invest in any of these forms. Choosing which type of metal you should purchase will depend on your investment goals, such as protecting your portfolio from inflation or gaining a greater return than what is currently offered by traditional investments like stocks and bonds. The most commonly purchased precious metals are gold bullion bars or coins as they offer stability when compared with many other types of investments.
While gold is often thought of as a safe investment due to its lasting value, be careful when purchasing bullion. Make sure you are buying from an authorized dealer as not all dealers offer top-quality gold bars or coins. It’s also important that you buy from a reputable dealer with a long history of excellent customer service, especially if you don’t have experience investing in precious metals. Look for information on the dealer’s policies such as return guarantees and price matching if anything goes wrong with your order.
Getting Started with a Top Gold IRA Company
Once you’ve decided that investing in a gold IRA is right for you, your next step is choosing an IRA custodian. There are hundreds of custodians out there, but not all are top-rated companies. Make sure to choose a reputable company with a long history. Since it is hard to verify claims made by companies on their own websites, we recommend checking third-party review sites like Yelp or Trustpilot for detailed information on each company’s services, fees, and other features. Our gold IRA rollover partner -Goldco- was rated 5 stars across many review sites, meaning they do everything from properly managing your account to answering customer service questions over email. Request a free guide from Goldco Below!