Do you have a retirement or investment account? Do you want to protect your money against inflation and the extremely questionable economy? Have you ever pondered the thought of gold? Well, the solution you are looking for might be with a Gold IRA Rollover.
What in the world is a Gold IRA Rollover? Well, it’s the official term when referring to the process of opening a new self-directed IRA that will be used solely to invest in gold.
Rollover Vs. Transfer
You may be thinking, “why don’t I just invest in gold with cash?” or “couldn’t I just cash out my retirement and then invest in gold?”. Now you may think that those are smarter, more straightforward options. Well, there are two better ways of doing this: a rollover or a transfer. However, performing a Rollover is guaranteed to be a more tax-friendly way to do this. Now, wait, aren’t a rollover and a transfer the same thing? You may think that, and you’re not alone. But, the Internal Revenue Service has two completely different definitions of those two words.
A rollover may seem like a cashout; however, when the funds get paid to you, they are delivered with the specific intent for you to be depositing them into another account. At the same time, a transfer is where the original custodian of the IRA will transfer the funds to a different custodian of a separate IRA. In a transfer, you won’t touch, see, or smell the cold hard cash.
In a rollover, you have precisely 60 days from initiating the rollover to deposit the money into the gold IRA or to a custodian of the gold IRA. If you fail to do this within 60 days, it has become a cashout, and you may face the penalty for an early cashout, and believe me, the IRS loves to collect what they think is rightfully theirs. If you choose to do the transfer, don’t worry about the 60 days it is inapplicable. You should work with gold IRA rollover companies to get all of this done properly.
Gold IRA Rollover and a 401K
So, you’re thinking in your head, “this sounds awesome, let me pull from my 401K and do this!” well, hold on a second. There are some specific rules when it comes to a 401K and a Gold IRA Rollover. If your 401K is from a previous employer, then go ahead and skip reading this. If you have a 401K with your specific employer and you want to attempt a Gold IRA Rollover, go ahead and contact your payroll department, as they may prohibit doing so unless you plan on quitting.
I am not a financial advisor, and this cannot be considered financial advice. With that in mind, we will cover some commonly used strategies in different situations. If you are only looking to diversify your investment portfolio, the typical method is to invest 5-10 percent of your total funds in precious metals. If you happen to be losing your trust in the United States Dollar, you’re looking more towards 10-20 percent of total funds. Now, if you’ve completely lost faith in the entire system, look to invest upwards of 20-30 percent of your complete portfolio.
Stock Vs. Physical Metal
This isn’t just buying stock in gold companies, and you can also physically purchase gold. Now, can you invest in any old gold? NO! The IRS prohibits explicitly investing in anything minted at less than a purity level of 99.9 percent. Some examples of what you can invest in are the American gold & silver eagle, Canadian Gold Maple Leaf, Austrian Philharmonic, American gold, and silver buffalo, amongst any other similar coins. As far as gold bars go, the Credit Suisse gold bar would be acceptable under the IRS standards. I know I’ve made a big fuss about gold here, but a Gold IRA Rollover isn’t just about gold. You can invest in gold, silver, platinum, or palladium. It’s very versatile and provides you with many great options.
As with all financial decisions, it would be a safe bet to consult with a financial advisor before doing this, as they will have significant input and will be able to help you along the process.
Storage of Physical Precious Metals
Upon purchasing, you will need somewhere to store your metal, and unfortunately, no underneath your pillow won’t cut it. It would be best if you had a third-party custodian, NOT A BANK. Not to worry though, there are Gold IRA Rollover depositories located all over the United States. Some with extremely reputable names. Have you ever heard of the security company Brinks? They are one of the many!
Some of these companies have incredibly crazy insurance policies to ensure that your investment is protected no matter what.
There are two different methods of storage within these depositories, segregated and commingled. Segregated means that your precious metal will have your name marked on it. It will be cataloged and stored in your custodian’s specific area of the vault. Commingled means that your metal will be held in your custodian’s particular area of the vault. However, it will be mixed with other client’s precious metals. Because most people don’t like their precious metals marked before selling, they opt for the cheaper commingled option.