How do I perform a gold IRA rollover? Are there any strict rules and regulations that I should stick to when doing the rollover? What are some of the things that I should not overlook or should not bother about as much? If you’ve been asking yourself these questions, then this article is what you need to get started. Read on till the end to collect information that will inform you, and help you decide whether you have what it takes to perform a gold IRA rollover.
Is it easy to do a gold IRA rollover?
If you currently have a 401k, then it is highly likely that you are a suitable candidate for a gold IRA rollover – to mean that you can convert that account into a Gold IRA. Doing so would present you with the opportunity to invest in precious metals for the sake of financial stability during your retirement years.
A gold IRA functions in the same way regular/traditional IRAs do, with the only difference being that owners of gold IRAs are allowed to hold precious metals such as gold, silver, platinum, and palladium as opposed to paper assets such as bonds and stocks.
You might think to yourself, “who has time for this? This looks complicated!” You’d be surprised to know that the process is rather straightforward, and all you need is to follow a defined procedure to ensure that you do not get penalized by the IRS.
The first thing that you should keep in mind is that if you’re still employed by a company that sponsors your current 401k, it is highly likely that you won’t be granted permission to transfer your funds into an IRA in which you can hold precious metals. Fortunately, there are exceptions to this, but you will have to check with the sponsor of your plan.
In most cases, however, a new 401k plan with your current employer may necessitate you to cash it out. Note that cashing out will attract tax liabilities as well as penalties, that you need to carefully consider before moving forward.
The 401k to gold IRA rollover process
If for one reason or another you have decided that you’ll need to add some precious metals into your retirement investment portfolio, then below are some steps that you can follow:
Choose a self-directed IRA custodian
While most IRA custodians do not allow the purchase of anything other than traditional investments, self-directed IRA custodians give you the liberty to pick from a wide range of investments assets, provided they fulfill all of the rules set by the Internal Revenue Service (IRS). To purchase other commodities (such as precious metals) you need to open your IRA account with a custodian that grants you permission to purchase and hold precious metals through your account.
N.B: under the rules set by the IRS, you cannot take personal possession of the precious metals held in your IRA. They have to be stored in a secure depository, through an arrangement with your custodian.
Roll over the eligible funds
Upon selecting your custodian and having sent all the necessary paperwork to them, you can proceed to roll over the eligible funds from your 401k. To start this process, you need to contact the administrator of your 401k, to let them know that you will be rolling over your funds to your self-directed IRA. The administrator will typically send you paperwork to fill so that they can forward the money to your newly opened IRA.
If you opt for an indirect IRA rollover, in which the administrator of your 401k sends the money to you, you will need to uphold a very important rule, which requires you to transfer the money into your self-directed IRA within 60 days after receiving the money.
The IRS will consider the 401k to gold IRA rollover a tax-free rollover, provided you redirect the money into your newly created SDIRA within the 60-day window. Failure to do so will result in penalties.
Buy the gold (or other IRS-Approved precious metals) with your gold IRA
When the funds have been deposited into the self-directed IRA, you can purchase the gold, silver, or any other precious metal that you may want to purchase. If you’re solely purchasing gold, for instance, it should be at least 99.5% pure and should be in the form of bars, or IRS-approved coins (non-collectible) such as American Eagle gold coins.
You should contact a precious metal dealer of your choice to notify them that you will be purchasing bullion for your self-directed IRA, then have your custodian pay the dealer with the funds held in your IRA.
Make arrangements on how the gold will be shipped to an approved depository
Upon deciding on a given purchase and locking in a price with the precious metal dealer, your dealer will invoice your IRA custodian for payment. Once the funds have been cleared, the dealer has to ship the gold to the custodian’s depository.
It is crucial to verify with both your dealer and custodian that the items have arrived. Request for a receipt so that you can keep your personal records.
Track your holdings
After having successfully completed the gold IRA rollover and making your first purchase, you can now look forward to checking the statements from your holdings and investments through your custodian. It is necessary to track your investment since this will help you to prepare for how you will navigate the market, in readiness for your retirement years.
Whereas the process seems easy, it may end up becoming a complete nightmare if you do not work with the right service provider at each stage of the gold IRA rollover process. You need to do enough research about the companies whose services you’ll rely on, to avoid ending up with fake precious metals, or your money getting stolen. Check the link below for my recommended gold IRA service providers.
That will be all for this article that sought to answer the question “How do I perform a gold IRA rollover”. I hope that you enjoyed it and that you got the responses to the questions that you had in mind. If you still have some unanswered questions, do not hesitate to drop them in the comments section so that I can respond to them ASAP.
I wish you well,
Eric, Investor and Team Member at Gold Retired!