Today’s post is mainly for those who have been searching for “how to convert my IRA to a Gold IRA”. With the recent changes in the state of the global economy, it has become more essential than ever for investors to consider the addition of assets such as gold to their investment portfolios. In today’s article, I will take you through the ways in which you can add this valuable asset to your individual retirement account legally, and without having to get hit with unnecessary taxes and penalties by the IRS.
Gold IRAs are a good option for those who are out to take advantage of the stability that gold and other IRA-approved precious metals have to offer. As it has been observed through the analysis of historical trends, adding such precious metals often enables investors to diversify their retirement investment portfolio as they save for their retirement years. A gold IRA is a special type of IRA and is designed to hold a wide variety of non-traditional assets, including precious metals, real estate, etc.
If you want to open a gold IRA and you do not have extra cash at the moment, then one of the main options that you have at your disposal is funding the new account with funds sourced from other retirement plans, e.g. your 401(k), traditional IRA, or Roth IRA.
Ways in which you can convert your IRA to a Gold IRA
You have two main options when it comes to the utilization of the funds in your retirement plan to fund your newly opened gold IRA, including:
With this option, your current custodian will give you the funds you request to withdraw, after which you will have 60 days to deposit the funds into the newly-created gold IRA. Failure to meet the deposit deadline will attract a 10% penalty on the funds withdrawn- this applies if you are under 59 ½ years old.
Here, your current IRA custodian sends the money to the custodian of your newly-created Gold IRA. This means that no cash is sent to you or taken out of the account. This is an option that many investors prefer, owing to how it significantly reduces the hassles of having to avoid breaking any gold IRA rules and regulations at this stage.
How do I open a gold IRA?
Before you can even think of making the conversion of the funds in your 401(k) or any other retirement plan, you must open a gold IRA. A gold IRA is a self-directed IRA that allows you to add gold as one of your main assets. Below are the steps you can follow to get started today:
- Search for a suitable gold IRA firm ( See our top recommendations here).
- Fill out the paperwork to open your account.
- Fund your account ( more on that below).
- Select the gold products you want to add to your account.
- Authorize your gold IRA custodian to buy the precious metal products on your behalf.
- Follow up on whether the purchased items are safely transported to a depository.
How do you transfer the funds in your IRA to the newly-opened Gold IRA?
After opening your gold IRA, you should not have a hard time transferring the funds from your other retirement plan. In most cases, the process involves the following steps:
1. Contact the custodian of your current IRA account/any other retirement plan
Notify them about your intention to initiate a transfer.
2. Fill out the paperwork
You will have to provide all the information for the newly opened gold IRA, as well as how much you intend to transfer.
3. Wait for your custodian to transfer the funds to your Gold IRA
It is only after the funds are in that you can begin considering which precious metals you will add to your gold IRA.
4. Select your preferred IRA-approved precious metal products
Note that only certain coins and bars are eligible for use in a gold IRA.
5. Request the gold IRA custodian to purchase the precious metals on your behalf
They will use the funds that have already made their way into your gold IRA to purchase your preferred metals.
6.Shipping of your precious metals to a depository
Stay away from companies that claim that you can store the gold at home. Doing this will only put a target on your back and the IRS will strike with penalties.
If you make it all the way to the 6th step, then all that’s left of you as a gold investor is to start monitoring the performance of your assets by checking your account statements. Your gold IRA may present you with the tools to do this.
**Read more on”What is a self-directed IRA?”
Why should I transfer my IRA to a gold IRA?
Transferring your existing IRA funds into a new gold IRA is beneficial in a couple of ways, which include:
1. It presents you with an opportunity for the growth of your portfolio
The prices of gold have been steadily rising over the last decade. If this trend does not change then your gold IRA portfolio will be worth more over time too.
2. The creation of a more diverse portfolio
It is not a sound approach to put all your eggs in one basket when it comes to investing. Precious metals are a good option for those who are looking for ways to minimize the risk levels of their portfolios.
3.Hedging against inflation
A drop in the value of the US dollar is usually accompanied by a drop in your purchasing power. By owning physical gold, you can protect yourself from inflation, since its value has been found to outpace the dollar.
If you’re still not sure whether transferring your funds to a gold IRA makes financial sense to you, then it is a good time to talk to a financial planner about it. They will help you create a well-balanced retirement investment portfolio, as they weigh in on your unique financial goals and potential risks.
Frequently Asked Questions on “How to convert my IRA to a Gold IRA”
1.Where do I open my gold IRA account?
If you want to open a gold IRA account, you will need to choose the right gold IRA company. Not every company will have their customer’s interests at heart, which is why you need to research a company’s experience, services, and costs. Doing this will help you land on the best option for your gold investment needs.
2. Are there any fees that apply to the gold IRA transfer?
No. The IRS and the government do not charge you any fees for doing a gold IRA. Your IRA custodian may, however, charge a fee for facilitating the transfer, though this is dependent on their policies. If you are thinking about a gold IRA transfer, therefore, you need to contact your IRA custodian to get any details on the fees and charges you might incur.
3. Will I be taxed for initiating a gold IRA transfer?
If you follow all the rules during the rollover process, then you will be safe from all IRA penalties that come with this process. The failure to uphold the set rollover rules, such as not depositing the funds in your gold IRA more than 60 days after withdrawing them from your former IRA or retirement plan may attract a 10% withdrawal penalty if you are not 59 ½ years old.
If you opt for a direct transfer, in which the funds are sent from your IRA custodian to the custodian of the newly created account, then you stand no chance of additional fees or penalties.
4. How much of my IRA can I transfer to gold?
You can transfer some or all of the funds from your retirement plan to a gold IRA. With the rolled-over or transferred funds, the gold IRA custodian will purchase your preferred gold products ( or other precious metal products) on your behalf. The precious metals must meet the minimum purity standards set by the IRS, and cannot be held at a safe in your house, or a local safe-box – they will be sent to an IRS-approved depository, where they will be held until it is the right time for you to start taking withdrawals.
More interesting & informative reads :
That will be all for this post on “ how to convert my IRA to a gold IRA”. I hope that reading through it presented you with sufficient informational resources to get started with the transfer process. If you still have questions about how to go about the transfer ( or rollover), then you can drop me a question in the comments section, or you can check the reviews and articles linked in this post, for more details on the subject.
I wish you well,
Eric, Investor and Team Member at Gold Retired!