If you’re just starting to open IRAs or wondering if it’s time to rethink your IRA investment strategy, a gold IRA is worth considering. Transferring a portion of your IRA to gold can help you sidestep the volatile stock market. Of course, gold itself is volatile, but gold’s surge of more than $ 1,300 per ounce on May 2, 2016, the highest since January 2015, caused many people to take a new look at the metal. .
“IRA accounts can invest in virtually any investment asset, such as stocks, bonds, real estate, private equity, etc. A gold IRA is just a fancy name for someone who has chosen to invest in gold,” says Daniel Sentell, former Director of Communications for Broad Financial, a Monsey, NY-based financial services company that offers Gold IRAs.
If you already have an IRA or 401 (k), either regular or Roth, you have the option of rolling over some or all of your investment in a gold IRA. With 401 (k) s, rollovers are generally allowed when you change jobs (and you have to decide what to do with your retirement money at the employer you leave) or when you retire. With an IRA, you can switch to a different custodian more freely.
Different tax rules and treatments apply, depending on whether your retirement money is funded with pre-tax dollars (traditional IRAs and 401 (k) s) or after-tax dollars (Roth IRA and 410 (Kansas).
“Gold IRAs can be traditional or Roth options,” says Sentell.
To learn more about the differences between Roth and regular retirement accounts and the rules on rollovers, read Should You Reverse 401 (k) Rollover Errors, Common IRAs, and> Know the Rules for Roth 401 (k) Rollovers.
The question at hand is that when you decide to roll over some of your retirement money, should it turn to gold?
Gold rules
A gold IRA can only be invested in real gold, be it coins or bullion. Consider whether you want to have a physical investment in your portfolio rather than a stock, mutual fund, or exchange-traded fund that tracks a gold index, says Brett Gottlieb, investment advisor representative and founder of Comprehensive Advisor in Carlsbad, California <Con A physical asset, such as gold, is actually buying the item itself, not a piece of paper that represents the item or a fund that contains the item. Like when making a major purchase, it pays to shop around.
“Even though gold is priced normally, there are margins depending on whether you want gold bullion, coins, proofs, etc.,” says Sentell. “Likewise, each form of gold presents its own set of requirements when an investor has to sell the gold. It pays to educate yourself so that you know what you’re getting into.”
That education includes knowing that the fees are associated with this type of retirement account compared to another type of IRA or retirement vehicle.
The fees an investor will face include:
The seller’s fee (surcharge).
Sentell says that the margin can vary by gold product and vendor. However, this is a one-time fee.
- Retirement account setup. There is also a one-time fee, which is charged to establish your new IRA account. This also varies by institution.
- Custodian fees. Federal law requires that each IRA be in the hands of a custodian. Custodians are financial institutions that monitor and protect the assets in an IRA account. For that protection service, they generally charge an annual fee, as well as any associated asset or transaction fees.
- Storage fees. Gold purchased by gold IRAs is held by a qualified storage facility for which storage fees are charged. However, Sentell says that consumers who open a Checkbook IRA, a self-directed gold IRA that does not require custodian management, can purchase Gold Eagles, a currency minted by the US Treasury, with their retirement funds. and hold them personally, setting aside custodian and storage fees. (Other types of currencies are not included in this tax code exception, outlined in Internal Revenue Code 408 (m).) Checkbook IRAs require complicated financial setup and are currently under scrutiny, according to some financial experts. .
- Making it happen Since gold IRAs are not a one-time investment entity, they are simply a regular IRA with gold as an investment asset, the renewal process is the same as for any other retirement fund.
- “Setting up these types of accounts and transferring assets is a relatively straightforward process that most reputable companies can help and handle without worry,” says Gottlieb.
- You typically complete an account application (either online or on paper), and the account is usually established within 24 to 48 hours of the application completion and receipt. “Once all parties receive the signed transfer request, the two custodians will contact each other to transfer the funds to the new custodian and fund a new gold IRA,” says Gottlieb. When funds are available in the new IRA account, an account representative will review the current precious metal options that a consumer can purchase. “You advise them the exact type you want to buy and the prices are locked in at that time,” Gottlieb adds.
The Bottom Line
If you are contemplating a retirement asset transfer to a gold ira company, or any investment account, it is important to consider your overall financial plan and goals. “You should consider all possible options for your retirement assets and determine how much of your overall portfolio should be invested in each of the various categories,” says Gottlieb.
In general, it is never a good idea to put all your eggs in one asset basket. Watch
Introduction to investment diversification
No one can predict how the stock market will perform or where the price of gold will go; Gold prices have been particularly volatile in some years. When gold is rising, you must also decide whether to buy at the top of the market, or close to it, if you invest at that point. Waiting might make more sense. For more information on what to watch out for, see Discussion: Should You Get a Gold IRA? If gold seems like a solid option for you, Sentell suggests that you transfer no more than one-third of your retirement funds to a gold IRA.