Gold IRAs – Frequently Asked Questions
#1 – What Exactly Is a Gold IRA?
A Gold IRA is a self directed IRA which, in accordance and compliance with IRS rules, allows you to include gold in its physical form. This offers you the opportunity to invest in gold in a very tax effective way and to protect your retirement plan from the ravages of inflation. It can provide the security you need not just for you but for your family and loved ones too.
Nowadays investing in gold is not a privilege confined to the rich and famous. Anyone has the opportunity to buy gold right now but the only way you could do so as part of your retirement account is to have this very specific type of IRA that allows you to hold physical gold as part of your portfolio.
Gold IRA Growth Example:
#2 – Can I Only Include Physical Gold?
You’ll be able to hold other precious metals as well including silver, platinum and even palladium. So this account is not just for gold, and most experts recommend including at least gold and silver into this type of precious metals IRA because of the huge growth potential for both of these commodities. In fact you are not just restricted to precious metals either (more about that below).
#3 – What Are The Benefits Of a Gold IRA?
- Protection Against Inflation
The main reason why you want to include gold in your IRA is that it’s a fantastic way to protect your retirement portfolio and all of the investments inside of it from inflation and economic turmoil. The one thing that happens when our money gets inflated is that it becomes less valuable and this has a knock on effect on the value of all our traditional types of investments.
What do not become less valuable, and historically have never been affected by inflation at all, are gold and precious metals. Precious metals and gold in particular typically go up in value when the economy is struggling and as the US dollar becomes weaker and weaker. So it obviously makes sense to want to have gold as part of your retirement plan to safeguard its value and investing in gold is one of the best things to do to protect yourself against a struggling economy.
As the value of gold goes up, so does the value of your Gold backed IRA. Gold went up in value for 12 years in a row between 2001 and 2012 and although there has been a pull back more recently, the overall trend over time is upwards. A lot of people are seeing this current price pull back as a good buying opportunity, particularly as gold is best viewed as a long term investment. This is also why it is so suitable to include as part of your retirement plan.
While many retirement plans have fallen in value or at best stood still over recent years, seasoned gold IRAs by comparison are a lot more valuable than when they were first set up.
- Tax Benefits
Another factor not to be overlooked is the tax benefit. There are legitimately no tax consequences and no requirements to declare your precious metals IRA to the IRS. Plus there are no tax penalties or implications when you transfer assets to another suitable retirement or investment plan.
- You Can Invest In Gold With No Money Down
Transferring or rolling over part or all of an existing retirement account such as a 401k into a Gold IRA effectively enables you to invest in gold without having to find the surplus cash to do so. This is because you will be using funds that are otherwise locked away from you and may well be under performing in their current investment format.
#4 – What Is The Difference Between an IRA Transfer and an IRA Rollover?
Irrespective of whether your existing plan is a 401k, 403b, TSP or any other type of IRA or retirement plan it could be transferred or rolled over to a Gold / Precious Metals IRA.
There is much confusion between IRA transfers and IRA rollovers. These are quite different even though a lot of people think they are the same thing.
With a transfer into an IRA account you are in effect closing down one investment vehicle and moving everything from it into one centralised investment place or location. You are aggregating or grouping your investments into a different account that already exists.
With a rollover on the other hand you are moving one IRA into a different one.
If you confuse the two processes you could well waste money in fees and lost tax benefits.
With both transfers and rollovers you are moving funds from one account to another and the funding scheme is the same. The fundamental difference is that with a transfer you sacrifice one account for another whereas with a rollover the original source account can survive.
Additional funding is another important consideration. With a transfer you have the option to add new funds or just transfer across from an already existing collection of funds. With a rollover you are just taking funds that already exist and rolling them.
Transfer: Provided the assets go from one custodian to another custodian you can do this at any time with an existing plan. In this scenario the check or transfer is sent by the custodian of your existing account directly to the custodian of your new precious metals retirement account. There is no limit on the amount of transfers you can do.
Rollover: When you already have a 401k or IRA, irrespective of whether it is a Roth or a traditional one, you can choose to rollover just a part of it or the whole of it into a Gold IRA. Typically 401k’s are rolled over when you change employment (and you need to decide what to do with the funds that have accumulated in your retirement fund with your previous employment) or when you reach retirement.
A rollover takes place when the proceeds of your existing retirement account are withdrawn and sent to you, and you then deposit these funds into the custodial account of another retirement account. Provided you redeposit the funds within 60 days there are no tax implications or penalties on the withdrawn money. The same money can only be rolled over once in any 12 month period for the tax deferred status of your retirement fund to be preserved.
Tip: All this may well sound confusing. Since there are different regulations involved for transfers and rollovers and there are implications for getting things wrong it is essential that you know completely what you are doing or if not that you get help from someone who does. It is for this reason that we recommend working with a precious metals company which has expertise in IRS rules and regulations and retirement plans in addition to expertise in precious metals.
#5 – Can I Transfer or Rollover My Thrift Savings Plan (TSP) Into a Gold IRA?
If you’ve worked for the Government, either as a civilian or in the uniformed military then you most probably have your retirement savings invested in a Thrift Savings Plan (TSP). You might be unaware that TSPs give you very limited flexibility to diversify your savings since the government has total control over them. It might surprise you too that your TSP is most probably costing you money.
The good news is that there is a solution. You can easily and simply take the control back from the Government by transferring or rolling your TSP account into a Gold IRA. This will enable you to include physical gold and other precious metals in your retirement fund. If this is something that might be of interest to you, you will find comprehensive information on our page TSP Rollover To Gold: Converting Your Thrift Savings Plan To a Gold IRA.
#6 – Do I Have To Transfer Or Rollover The Whole Of My Existing Retirement Fund?
You have the option of making full or partial rollovers or transfers. The choice is yours.
#7 – What Kind Of Investments Can I Include?
This is basically going to be a self-directed IRA, so you will have the flexibility to invest in any type of company or stock that you want, as well as precious metals. You don’t have to just buy gold and put it in this IRA. You can put all of your investments in this vehicle. This is the only type of retirement account that lets you keep gold and other precious metals as part of your holdings.
You won’t be able to buy gold as a retirement option any other way, so don’t let this confuse you at all and think that you are only opening this because you’re specifically going to use it just to buy gold.
What most people like to do when setting up this type of retirement account is to buy their gold from a reputable online dealer who also specialises in retirement investing. Having just one party to deal with everything makes the whole process much quicker, more convenient and more straightforward. So this is certainly something you want to keep on the lookout for.
#8 – What Types of Bullion Can I Include?
You are permitted by the US government, under the terms of the 1997 Tax Payer Relief Act, to hold certain types of bullion and rare coins in a gold / precious metals IRA. The requirement is that the bullion you hold is at least 99.5% pure and that it is held in an approved depository which is in a different location to your IRA custodian. Below is a list of what is eligible to be held in retirement accounts.
#9 – Am I Restricted To Just One IRA?
No, which means that if you choose you can have a Gold IRA in addition to any other IRA or IRAs that you already have. The total amount that you can invest in any given year does not change however.
#10 – Can I Take Possession Of The Gold In My IRA?
Up to the age of 59½ in accordance with IRS rules your gold must be insured and stored in your name at an IRS approved depository. From that age and above you are entitled to take possession penalty free.
The Gold IRA Company that you choose to work with should be able to arrange storage at the depository on your behalf and will deliver your metals directly there.
#11 – Do I Have To Pay Any Taxes or Penalties When Transferring?
No there are no such costs associated with transferring a traditional IRA into a precious metals one.
#12 – What About Fees?
Fees can be very reasonable provided you select the right company and you understand what’s involved and therefore know the right questions to ask them. The fees involved cover the initial set up, annual maintenance of your IRA, and insurance and storage of your metals.
We recommend that you choose a company that offers flat annual fees rather than scaled ones (fees that are a % of the value of your fund). That’s because with the latter your fees will be on the increase all the time your fund is appreciating. We also recommend that you choose a company that offers segregated storage of your metals and who do not charge a premium for this type of storage nor an insurance premium for it.
Some companies may waive the initial set up fees.
#13 – What Is The Gold IRA Transfer/Rollover Process?
This will differ from Company to Company. To see an example click here: 4 Step Process
#14 – How Long Does The Transfer/Rollover Process Take?
You may be pleasantly surprised to learn that the whole process can be completed very simply and quickly (around 2 weeks) if you work with a gold company that also specialises in retirement accounts and can therefore handle the entire process for you.
#15 – How Do I Get Started With a Gold IRA?
The first step is to choose a Gold IRA Company that you feel comfortable with. Our aim here on this site is to educate you as much as possible about gold and precious metals IRAs and about investing in gold in general. Plus we share with you the results of our own research into the different companies offering Gold IRAs.
It’s your retirement and future on the line though so we consider it essential that you don’t rely entirely on third party reviews and ratings, and that you check out a few of the websites and speak to a few companies yourself on the phone to get a feel for them and how they operate.