Why Hold Gold In An IRA?
Why choose carrying actual physical gold in an IRA? Consider the fact that your retirement plan is at risk – and if you’re like us, there is perhaps nothing more precious and valuable! An unfortunate reality is that we live in difficult and unpredictable times, perhaps moreso than anytime within recent memory. These tumultuous times require remedies for the economic and political volatility we face now and in the future. As you know, gold has always been considered a top remedy against economic crisis. Now, individual retirement accounts are customarily based upon upon a specific cluster of stocks and/or mutual funds that are part of the foundation of the economy at large. So, when the economy sustains damage and those investments suffer, IRA values can decline commensurately. But gold can often outperform the economy – for example it has outstripped the Dow by over 390% over the past decade. When viewed in this light, the question of “why gold?” answers itself.
What Is A Self-Directed IRA?
A Gold IRA is by definition a self-directed IRA, meaning you command the investment decisions for your own account. One benefit of the Self-Directed IRA is that you can take an increasingly active role in deciding the asset mix you want to increase your holdings. Rather than becoming locked into a given asset chosen by a custodian, you can make decisions about your risk tolerance and revise your account to control gain and loss. A precious metals IRA can help hedge your holdings against a vulnerable market and smooth the fluctuations inherent in world markets.
Is It Best To ‘Transfer’ Or ‘Rollover’ My Retirement Plan?
Your first option should be a “transfer,” which is a process you can do at will with your current IRA – in a transfer transaction the assets move directly from the old custodian to the new custodian. You can make transfers as often as you would like. Bear in mind that the funding check from the ‘losing’ IRA custodian needs to be made out to the trustee or custodian of the ‘gaining’ IRA account.
An alternative is the “rollover” option. A rollover happens when you personally receive the distribution check from your current IRA. In turn, you deposit the dispersement to your new IRA plan custodial account. Be aware of the time restrictions – you must re-deposit the funds into the new IRA within two months (60 days). A severe tax penalty accrues if you miss this 60 day grace period, and you’ll be accountable for tax and penalties on the money, which in this scenario would be considered taxable funds. Additionally, the same money can be rolled over only once a year (i.e. every 12 months) in order to preserve the tax-deferred standing of the savings.
Is My 401k Eligible?
Did you know that lots of 401k’s are qualified to be converted to an IRA backed by gold and silver? If you have a 401k that’s under the management of a previous company or if you’re over 59 1/2, it’s often true that you can move your retirement savings to a precious metals IRA– without any tax implications or penalties.
By moving an older 401k to and IRA with gold or silver, you’re transferring to a Self-Directed IRA, which often means you’ll gain even more control over your investment choices. Plus, you have the assurance that your retirement is reserved in hard, tangible properties, which can provide defense against the dollar’s ongoing loss in value and stock market volatility.
The process of moving your 401k to precious metals may seem daunting in some ways, but don’t let it scare you off if you want to benefit from the scenario.
Tips For Investing In Precious Metals
1) Evaluate your options
When purchasing precious metals, you have a number of options to pick from. You can buy gold and silver bullion for physical possession. You can include gold assets withing an eligible IRA. You can purchase numismatic gold coins, platinum, palladium and so on.
Each option has its own features and advantages, so you’ll want to put in the time to discover about them all. Doing proper research about the options, and finding a trusted advisor that you can rely on, are also good steps to take.
2) Choose a great gold company
This step is important since it will almost certainly affect every other element of the financial investment process. When investing in precious metals, you should be sure to utilize a trusted company that concentrates on the sale of gold, silver and other metals. And you want to be sure that the company has your best interest at heart as well as protecting their own interests.
Evaluate this company the same way you would a business partner. You will need to have confidence that your new “partner” will help you make the very best choices for your needs and goals. Expect the company to assist you with every step of the process, and make sure you choose someone that is able to answer your concerns and supply personalized advice when requested.
Without an experienced and knowledgeable firm, you can run into expensive problems – not good – so make sure to confirm the qualifications of your chosen firm prior to moving forward.
3) Weigh the advantages
Individuals purchase precious metals for varied reasons, it’s hard to list them all here. Depending on your scenario and how you decide to invest, gold and silver can help you:
- Diversify your portfolio against collapse.
- Protect your investment against volatility the stock market.
- Protect your money for retirement (or while you’re currently in retirement).
- Hedge versus inflation and a declining dollar.
- Protect your wealth for the future, so you can live tomorrow as you do today.
- Potentially grow your financial investments tremendously if precious metals continue their bullish trends, as analysts are forecasting.