Investing in precious metals like gold, silver, palladium, and platinum is probably the most prudent choice you can make. Every investment portfolio should include a secure form of investment and precious metals are among the securest forms of safeguarding your wealth for a later period of your life. Most people wrongly assume that simply saving money in an IRA or 401(k) account is good enough but that couldn’t be further from the truth. A traditional IRA is subject to the whims of the economy which means that all your savings could be rendered useless if the stock market suffers a huge crash or there are a lot of uncertainties in the financial world just when you need the money. That is why you need to invest in Gold IRAs. It is a bit complicated but with the right guidance, you can safeguard your wealth with confidence and that is what this guide will help you achieve.
Is A Gold IRA Rollover Right For You?
Long before the current economic and financial systems were established gold and other precious metals have been seen as one of the most secure forms of wealth. This hasn’t changed in present times. If anything, its status as a secure form of investment has only been reinforced. Even though a lot of this can be attributed to the physical characteristics of gold, from a purely monetary perspective, it is just as good as it appears.
Gold And Other Precious Metals Are A Safe-haven During Times Of Political Unrest And Unpredictability:
We live in volatile times where the political situation can take a turn for the worse in the blink of an eye. The economy is usually one of the first avenues to suffer in such a situation. This results in the devaluation of the currency and all your hard-earned savings could lose a big chunk of its value in a matter of hours. Gold does not suffer in a similar manner. Time and again, it has been able to retain its value even when paper money goes for a nosedive.
It Can Be A Great Way To Increase Your Wealth:
People tend to assume that this security comes at the price of slow growth and since part of the reason people make investments is to grow their wealth, doing so in gold and other precious metals can seem counter-productive. However, that is not the case at all times. In fact, under the right set of conditions, you can make just as much profit in gold and other precious metals as you would in other forms of investment. You might have to wait longer to get the same level of growth but it is a surefire way of increasing your wealth without any of the risks.
You Can Go Through Inflations And Deflations Without Breaking A Sweat:
Inflation is perhaps the single scariest word for any investor. However, if you do not want to spend sleepless nights worrying whether the economy will crash and the inflation rates will go up then a Gold IRA is the way to go. The US Dollar and other currencies can rise and fall quite rapidly. This can also affect your purchasing power quite adversely when the economy is weak. The worst prospect for any investor is to have the wealth but not be able to spend it when the need arises. With Gold, these are concerns that you will never have to worry about.
What Is A Gold IRA?
If you already have a traditional IRA, then a gold IRA wouldn’t be all that difficult to understand. It is an IRS-approved depository of precious metals. Traditional IRAs hold paper assets while Gold IRAs holds physical bars and coins of precious metals. It is tax-deferred and allows the holder to create a safe haven for their wealth.
These are just a small part of the appeal of Gold IRAs. Here is a list of all the reasons why you should invest in Gold IRAs
- One of the golden rules of investment is to never put all your eggs in the same basket and Gold IRAs are one of the best ways to diversify your investment portfolio
- It is the securest form of investment which means that you will always have the peace of mind knowing that a part of your wealth is secure at all times
- It can be a great source of monetary benefits during times of trouble when the demand for secure investment options increases.
What Are The Rules Associated With Gold IRAs?
This is perhaps the biggest stumbling block for many who want to invest in gold and other precious metals. There are a lot of rules and regulations that govern Gold IRAs and doing everything by the book is very important to ensure that there are no unforeseen and unwanted experiences such as tax penalties. A lot of these rules and regulations are also meant to ensure that the precious metals you get are of a high-quality and thus can be viable at all times.
The minutiae of the regulations can be found here: https://www.law.cornell.edu/uscode/text/26/408).
However, here are some of the most essential regulations that you should be aware of.
- The gold you buy should be .9950 or 24 karats pure
- The gold bars should be fabricated by an ISO 9000 approved refiner such as NYMEX or COMEX.
- Any coin that you buy should come with a certificate of authenticity and should be in its original packaging.
- Any bullion that you intend to add to your Gold IRA should be in the first-hand condition and should not have been in circulation.
Here are some of the most popular coins that can be a part of a Gold IRA
- American Gold Eagle
- American Gold Buffalo
- Chinese Gold Panda
- Canadian Gold Maple Leaf
- Australian Kangaroo
- Australian Nugget
- Austrian Gold Philharmonic
While some of these coins can come in a variety of sizes, the IRS only allows one ounce, one half, one quarter, and one-tenth ounce coins to be a part of a Gold IRA.
Just to cover all bases, if you are looking to further expand your precious metals IRA then keep in mind of the purity requirements of the other precious metals which are as follows
- Silver – .999
- Palladium – .9995
- Platinum – .9995
What Sort Of An Account Do You Need For Gold IRAs?
To invest in gold, silver, platinum, or palladium, you need to set up a self-directed IRA. The name itself is quite self-explanatory. In this type of an account, it is your responsibility make all the investment decisions. In short, you have complete control over your account. This gives you the flexibility to shape your investment portfolio the way you want to. It is also quite easy to set up as all you need to do is approach a custodian, of which there are plenty, and they will do all the legwork on behalf of you.
What Is The Role Of A Self-directed Custodian?
The custodian will not only make your life a lot easier but they are also mandated by law. You will need a custodian to open a self-directed IRA. The self-directed custodian can come in a variety of guises. It could be a bank, brokerage firm, loan association, or a firm that deals exclusively with gold IRAs.
By now, you should have a definite answer to the questions “Should you invest in gold” and “why invest in gold”. I will assume that your answer is in the affirmative and the next part of the guide will help you answer the question “How to invest in gold” and whether you can use your existing custodian for this. We will also clear any doubts regarding Gold IRA Rollovers and the direct transfer of an existing IRA.
Do You Really Need A Custodian?
While the prospect of doing everything all by yourself can seem attractive to many, it is not a viable option. The straightforward answer is that you will have to take the help of a self-directed custodian for your gold IRA needs as this is the law. Choosing the custodian, however, is totally under your control, and choosing the right custodian can make the entire experience hassle-free. Some of the qualities to consider in a self-directed custodian include
- Proper licensing: This is the first thing that you need to look into. Any custodian you consider should be IRS-approved
- Proper experience: They should have plenty of experience in navigating the intricate world of Gold IRAs. Look into their history to get an idea about their experience.
- Good reputation: Looking at the reviews from other people who have used their services is a great way of gauging the type of experience that you could get.
- Their charges: All custodians will charge some fee. Make sure that it isn’t too high. Also, be very clear if any special or hidden charges are involved.
- Additional benefits: Some custodians will offer additional features and services. Keep an eye out for those as well.
How To Transfer Your Savings Into A Self-directed Account
This is where some confusion can arise as to which modes are available to you. You might be confused between Direct Transfers and Gold IRA rollovers.
Direct transfers: This is for those who already have an IRA and are simply looking to change custodians. This is a tax-free process and you are allowed to make an unlimited number of transfers.
Gold IRA Rollover: If on the other hand, you have retirement accounts such as a 401(k), 457(b), 403(b), or a TSF account and you want to transfer some or all of the funds in these accounts to a Gold IRA then the rollover is the method that you need to adopt. There are no tax penalties as long as you complete the entire process within 60 days. Also, keep in mind that you can do a rollover only once every 12 months. So, ensure that you are absolutely sure about going through with it.
What About The Tax Implications Of Gold Ira Investments?
This is another doubt that investors often have about precious metal IRAs. The good news is that you do not have to pay any taxes on the gains in the value of the gold and other precious metals that are a part of your IRA when they are sold. In general, Gold IRAs are quite attractive if you are looking to save some money on taxes.
Another big benefit of Gold IRAs is that once you withdraw your funds after selling the gold and silver after you have reached the retirement age, you are not liable to pay the normal collectible capital gain tax. As far as a traditional IRA is concerned, you will be liable to pay tax on the withdrawn amount equivalent to the normal income tax rates.
How To Store The Assets In Your Gold Ira?
By law, you cannot simply buy gold coins and bars and store them in your home. You will need the custodian to do this for you as well. All licensed custodians will offer storage options that are in the form of depositories. These depositories offer various security features such as 24-hour surveillance and they are of two types.
- Segregated storage: In this type of storage, you will get your own little corner of the depository just for your coins and bars. This option is generally available for coins and bars weighing more than 10 ounces. Once you withdraw your assets, you will get the same bars and coins that you invested in the first place.
- Non-segregated storage: The coins and bars of different customers are kept together. This is not that big of a deal as on withdrawal you will get bars of the same purity and weight and fabricated by the same refinery and coins of the same year and type. The only difference is that you won’t get the exact bars and coins that you had bought originally.
How To Withdraw Your Assets From Your Gold Ira?
There are two ways you can do this
Cash withdrawal following a liquidation: In this method, the custodian will take care of liquidating the assets. Once they have done that, you can withdraw the cash that has been generated and the investor is liable to pay a tax on this amount at a pre-defined rate.
Physical withdrawal of the previous metal: In this method, the custodian releases the actual gold bars and coins to the investor who then liquidates it for money. This method is not recommended as you are liable to be taxed twice, first when the withdrawal is made followed by a second tax when the precious metal is liquidated.
How To Purchase Gold And Other Precious Metals With Your Gold IRA?
This is also quite straightforward as all you have to do is add some funds to your Gold IRA. This can be done by the aforementioned rollover. Once funding is accomplished, you can then ask your custodian to buy gold and other precious metals on your behalf. The choice of the type of precious metal and dealer will be completely in control of the account holder.
The 4-Step Process of Investing in Gold IRAs
- Start a self-directed account: All you have to do is fill out a few forms with your custodian
- Add funds to your account: You can use a direct transfer, gold rollover, or make a contribution through your custodian for this.
- Select the type of storage depository: Choose between a segregated and non-segregated depository. Just ensure that it is IRS-approved
- Purchase the gold and other precious metals: Again, ensure that the dealer you choose is IRS-approved.
All the finer-details will be handled by your custodian and all you have to do is fill out a few forms and make all the important choices.
What Are The Costs Involved In Investing In Gold?
As you can imagine, navigating the maze of rules and regulations is hard-work and as such, your custodian will charge you different types of fees. While these fees can vary from custodian to custodian, here are some approximate values for the fees that people looking to invest in gold and other precious metals can incur.
- Opening the Gold IRA or Precious Metals IRA: $50
- Fees of Conducting a Gold Transaction: $40 per transaction
- Maintenance fees: $75 to $200 every year. This covers the charges for the various security measures and maintenance associated with the storage of your precious metals.
- Transfer fees: $25 per transfer. This is usually incurred when the custodian has to transfer funds to a dealer.
- Storage fees: 05% to 1% of the total value of your assets depending on the type of storage chosen.
Finally keep in mind that the dealer can charge an extra amount over the principal value of the gold, silver, platinum, and palladium and this can depend on a number of factors such as the current demand, shipping, insurance, labor charges, etc.
Investing in gold IRAs might be the smartest thing you can do with your wealth and by now, you should have a good understanding of everything that you need to know to take advantage of this incredible investment option.