A Step By Step IRA Rollover To Gold Guide (2020)
What is a Gold IRA?
Gold IRA is meant as an Individual Retirement Account that permits to hold physical assets in their retirement portfolios. Mostly, both traditional and Roth IRA allow to hold cash, bonds, and stocks, but the Taxpayer Relief Act of 1997 expands the types of investments in an individual retirement account and agrees to include limited types of precious metals.
Such IRAs are “Self-Directed” IRAs, and only Gold, Silver, Platinum, and Palladium are allowed. Learn more detailed information on our Gold IRA Guide page.
History of Gold IRA
Due to the recession time in 2008, investors become more interesting towards Gold IRAs. In 2007, and in 2009, the market hit by economic recession and lost around 50% of its value. The investors’ retirement portfolios are also hit very hard, and recorded drop in values.
Unlike stocks and bonds, gold prices moves up, and this makes Gold IRAs a significant protection against inflation. These precious metal IRAs (Gold IRA) are very useful for those who want diversification in their portfolio, or for those individuals who are much concerned with economy and stock market drop.
It’s free to open an account and registration takes less than a minute. There’s no obligation to trade.
What is a Gold IRA Rollover?
If you currently have a retirement account such as 401(k), or you have an active investment portfolio to stocks, bonds, any other assets. Then you can easily convert some part of it to precious metals, like bullion coins, or gold bars to get protection against the unpredicted economy crisis. This whole procedure is known as Gold IRA Rollover.
It is easy to move funds from your regular IRA to a Gold IRA, and a rollover is much secure and gives tax-benefits on your retirement savings. If you have a 401k and wish to invest in precious metals, then you need to open a Gold IRA Rollover account because 401k accounts do not have an option to invest in precious metals.
How are Rollovers works?
There are mainly three ways to do rollover:
- Direct Rollover: A direct rollover means the transfer of retirement assets from an employer retirement account into other retirement plans such as IRA. A direct rollover occurs on some special conditions like when need to move money from an old retirement plan into the IRA.
- Trustee-to-Trustee Rollover: If you want to roll over your current IRA, the trustee of your IRA gives the option to roll over to the trustee of other IRA.
- 60 Day Rollover: A check with an amount for your rollover is issued to you. If you invest this amount into another IRA or retirement plan within 60 days, then no tax will chargeable.
Mostly, the investors choose to invest some part of their retirement saving into Gold IRA rather than whole savings. In this case, that part of retirement savings will be subjected to some special rules related to Gold IRA Rollover.
Gold IRA Rollover rules
Traditional 401k retirement savings accounts allow s trustees to invest only in traditional assets such as bonds, stock, mutual funds. On the other hand, the IRA allows trustees to invest in both types of assets. Trustees can allocate your retirement savings into real estate, mutual funds, stocks, bonds, and even in precious metals like gold and bullions.
All trustees are not the same; some of them are not permitted allocation your savings to real estate and precious metals. Hence, due to you do not have control over your assets allocation, you may need to open a self-directed IRA and then transfer your assets to that account to invest in precious metals (Gold IRA).
401k to Gold IRA Rollover guide- Step by step!
Once you open your Gold IRA, the next step is to contact your 401k retirement account administrator to start the Gold IRA Rollover process. After that, you need to choose between direct and indirect rollovers. In an indirect IRA rollover, you need to withdraw funds from one account and then deposit in another one.
On the other hand, with direct IRA rollover, the funds are directly transferring from one account to another. Direct IRA rollover is much simpler and easier and comes with a very low risk of IRS penalties.
With direct IRA rollover, from the date you receive funds, 60 days will be provided to you for the allocation of money to your custodian, or Gold IRA Company. If you are not able to allocate the money within 60 days period, the funds will be taxable when you withdraw it. If your age is 59 years old, or younger, then a 10% early withdrawal penalty will apply.
You will also need to fulfill the requirements of your 401k company. Once you do that, the company sends a check of funds either to you or to your Gold IRA custodian. At this point, you will complete your 401k to gold IRA rollover.
* Setup a 401k to Gold IRA today; simply follow the instructions on this link IRA Account Setup
401k to Gold IRA Rollover- Is it good option?
Are you interested in diversifying your current retirement savings account? Do you want a retirement saving option which is not related to paper currency (Dollar), or the stock market? If yes, then moving your 401k to gold IRA rollover is best for you.
Gold IRAs or other precious metals investment options come high in demand when gold prices move in the opposite direction of the stock market during the great recession of the 2008 year. So, when your other investment plans go down, then your gold investment profit goes up. Many investors add gold in their investments to get protection against uncertain tremors of the economy.
Finally, investing in gold is always a good option to diversify your current retirement plans. This means the purchasing of pure gold physical gold coins, bars, or bullions from Gold Companies. If you are looking to maximize your 401k funds without taking the stress of stock market fluctuation, or economic crisis, then 401k to gold IRA rollover might be perfect.
Gold IRA Custodian- How to choose them?
Finding a trusted Gold IRA Custodian that fulfills your all requirements is very difficult task. To make yours this task easy, we show you below some important things which are very helpful for you while researching for a custodian.
- Custodian must have valid license: IRS made a publicly available list of the entire custodian for the gold investors, which helps them to ensure that they select a licensed holder gold IRA custodian.
- Custodian’s limited investment options: Many custodians restrict the investment of their clients. Limited the investment can’t fulfill the requirements, and you should change your current custodian and choose another.
- Charges competitive fee: Be ensuring that your gold IRA custodian is not taking too much charge from you. Before choosing custodian, pre-calculate all the fees payable by you for the required services.
- Custodian must be experienced: Make sure that the custodian must have a long experience of many years in his business.
- Good client support: Once you are ready for the investments, there still many processes to be completed. A good custodian always provides support to their clients and explains everything about their investments and various transactions.
- Check existing clients: The best way to find out a potential custodian is to check their clients. Good gold IRA custodian always tries to help you to become a more successful investor by providing the right advice.
How much Gold should i own in my portfolio?
When you are deciding to invest in Gold IRA Rollover, it is very important to understand that how much funds you need to invest? There are lots of investors who want to know how much gold should they need to own in their portfolio? In reality, the answer is much harder.
As per top expert investors (e.g. Kevin O’Leary, Tony Robbins, Ray Dalio) suggested that it is best to hold a small amount of gold in your portfolio. Generally, they recommended not investing more than 5-10% of your portfolio in precious metals, like Gold IRAs.
Below are some strategies suggested by the most popular and professional investors around the world. Hope it works well for you!
- Diversification: If your current portfolio is related to stocks, bonds, and mutual funds, then allocating 5-10% of your portfolio to precious metals can help you to protect and diversify your portfolio.
- Lose trust on Dollar: If you lost the confidence in the dollar or other paper currencies, then it’s the right time to allocating 10-20% or more to invest in precious metal IRAs.
- Future profit: if you think like other high earners investors that price gold price touches the mark of $5k per ounce in the coming years, then allocating 20-30% of your portfolio to maximize your future profits.
Of course, it is best to invest in precious metals. You can hold physical precious metals in the form of gold bullion, coins, or gold bars. Another best option is an investment in gold IRAs, ETF, which you can simply hold in your portfolio for future security.
It is not advised to invest in Gold Stocks and Gold Mutual Funds because these investments are based on circumstances, and not meant to be held permanently.
Ready To Start Your Gold IRA Rollover?
If you are ready to roll over your IRA into Gold IRA, this is a good time to take a plunge into it. Before to start, it is very important to find out a reputable Gold Company and Gold Dealer that offer competitive pricing, and IRA approved products.
You could visit to your local gold retailer, but it is recommended to do some research over the internet because it gives you more options and you can compare the rating and reviews of different gold dealers.