What Is a Gold IRA Rollover? | Gold IRAs |
By John Rothans, Chief Procurement Officer of U.S. Money Reserve
More than one third of households (37%) owned an IRA in 2020, according to the Investment Company Institute. Are you part of this group? If so, you’re on the right track.
But are you considering what more you could do to help increase the strength of your retirement portfolio? A gold IRA rollover might be one of those tactics. Learn a little about the history of gold IRA rollovers, what they are, and how they’re typically done in this gold IRA rollover guide.
What Is a Rollover?
A rollover involves moving some retirement funds from an existing retirement plan-which could be a regular IRA, Roth IRA, or 401(k)-to a new IRA. Those funds must be deposited into your new IRA within 60 days. Under this scenario, you won’t owe taxes. But if you remove the funds from your current retirement account and fail to deposit them in the new account within a 60-day window, you must report the money to the IRS as taxable income. Per the IRS, only one rollover is allowed in any 12-month period, regardless of the number of IRAs you own.
What Is a Gold IRA Rollover?
One option for rolling over retirement funds is putting some into a gold IRA, also known as a precious metals IRA. When you transfer funds to this type of account, it’s known as a gold IRA rollover or a “rollover IRA into gold.” The process involves switching all or part of a retirement portfolio to physical gold as a way to help shield your assets from economic and inflationary pressures.
The Taxpayer Relief Act of 1997 allows for the creation of gold IRAs.
A gold IRA is a self-directed retirement account that lets you keep physical gold and other precious metals ( silver, platinum, and palladium) in the forms of coins and bars. This kind of IRA can be a traditional IRA or a Roth IRA.
History of Gold IRAs
The Employee Retirement Security Act, a federal law passed in 1974, enabled the creation of IRAs. The following year, Americans were able to open IRAs, including traditional and self-directed IRAs.
It took another 22 years, until the Taxpayer Relief Act of 1997, for the IRS to remove restrictions on the diversification of IRA assets and allow these accounts to include select precious metal bars and coins.
Types of Precious Metals You Can Put in a Gold IRA
While a self-directed precious metals IRA is often referred to as a “gold IRA,” the assets in the account aren’t limited to just gold. Aside from the yellow metal, a gold IRA can contain silver, platinum, and palladium.
However, not just any form of gold, silver, platinum, or palladium is allowed. Only those precious metals products that meet IRS guidelines and are not considered collectibles can be included in a gold IRA. Certain bullion and proof coins, bullion bars, and bullion rounds are eligible.
Among the specific types of precious metals products eligible for inclusion in a gold IRA are:
Retirement Accounts Eligible for Gold IRA Rollover
A gold IRA, set up as a self-directed traditional or Roth IRA, can accept rollovers from these kinds of retirement accounts:
- Traditional IRA
- SIMPLE IRA
- SEP IRA
- 401(k) plan
- 457(b) plan for state and local government employees and employees of some nonprofit organizations
- 403(b) plan (tax-sheltered annuity plan)
- Profit-sharing plan
- Defined benefit plan (better known as a pension plan)
You cannot carry out a rollover from a Roth IRA to a traditional IRA.
How to Carry Out a Gold IRA Rollover
To set up a gold IRA, you must first open a self-directed IRA through a trustee or custodian -such as a bank, credit union, or trust company-that’s licensed and regulated by the IRS. U.S. Money Reserve can help with this process.
Once the gold IRA is open, you can start the rollover. You have two rollover options: indirect or direct.
Through an indirect rollover, you take the money out of your retirement account and put it into a gold IRA.
With a direct rollover, the funds are transferred automatically from the retirement account to the IRA. You never touch the funds. Once the old retirement account is closed, the manager of that account will send a check directly to the new IRA’s trustee or custodian.
Funds deposited into the IRA go toward purchasing physical gold or other precious metals through a trusted company like U.S. Money Reserve. The trustee or custodian holds those metals for the account holder.
One of the benefits of a gold IRA is that you directly control the assets you put into it, whereas you have less options when it comes to assets within a 401(k) and other traditional retirement accounts. A gold IRA also offers a clear and simple way to diversify your portfolio for the better.
Tips for Picking a Custodian and Depository
When choosing a custodian or depository handling precious metals held in a gold IRA, you must do your homework. Here are six tips for picking a custodian or depository.
- Ask trusted friends, relatives, and colleagues for recommendations.
- Check online reviews for custodians and depositories. Pay close attention to comments regarding customer service and depth of experience.
- Ensure that the depository is IRS approved!
- Request a “starter kit,” if available, from any custodian or depository you’re considering.
- Compare the fees charged by the custodians and depositories you’re looking at.
- Ask a trusted precious metals distributor (such as U.S. Money Reserve) for recommendations.
Gold IRA FAQs
Q: What types of precious metals can be held in a gold IRA?
A: The IRS allows certain types of gold, silver, platinum, and palladium to be kept in a gold IRA.
Q: Can you store IRA gold at home?
A: No. The IRS does not allow individuals to store gold, silver, platinum, or palladium from a gold IRA in a private residence or safe deposit box. Instead, these precious metals must be kept at an IRS-approved depository.
Q: What is a precious metals custodian?
A: A custodian oversees a gold IRA and purchases precious metals for the IRA on your behalf. Among those that can serve as custodians are banks, credit unions, trust companies, or other entities licensed and regulated by the IRS as “non-bank custodians.” Every gold IRA must have a custodian.
Q: What is a precious metals depository?
A: A depository is a highly secure facility that holds gold bars and coins and other precious metals for their owners. Most depositories are operated by private companies.
Rolling over part of your IRA to physical gold could help alleviate some uncertainty you might feel about more traditional paper-based assets, like stocks. Get started with help from a U.S. Money Reserve IRA Account Executive and request our free Precious Metals IRA Information Kit today.
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Originally published at https://www.usmoneyreserve.com on February 15, 2022.