What Exactly Is A Gold IRA Investment Account
Finance | Retirement | Gold IRA | Article By: eBackers Staff Writers – 11th April, 2020
When thinking about retirement, you’ll notice that there are a lot of options out there. You can invest into stocks, bonds, retirement accounts, and even mutual funds. Now, while this may be the case, I want to speak to you about the opportunity that a Gold IRA provides you.
That’s why, today, I’ll be showing you everything you need to know about opening up a gold IRA. While it may seem like a simple account, you’ll soon find that they definitely work differently than traditional accounts.
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For your convenience, I’ll be breaking everything down into easy-to-read sections. This way, no matter your knowledge level, you’ll be able to bounce around if you need to. Here is a look at what I’ll be going over:
- Self-directed IRA
- Precious metals IRA
Now that you know what I’ll be going over, let’s jump right into the facts.
Before I can truly explain what a gold IRA is, I need to provide some background into how the account actually works. This is due to the fact that gold IRAs do not function the same way as a traditional IRA, which means that you need to know how the account is structured.
What is a self-directed IRA
A self-directed IRA is an account that allows you to have a more hands-on approach to money management. You can choose how much, where to go, and what to do with your funds. Now, while this may be the case, you’ll generally need to have a custodian help you through this process.
What is a custodian?
A custodian, in the world of finance, is someone who manages the account. They will handle most of the initial investment and design, and take care of the hands-on responsibilities that you would have to manage on your own. Think of a custodian as a primary aid for the account; you make the decisions, but they execute those decisions.
It might seem like I’m getting off-topic here, but trust me on this one, this is very important to know.
Precious metals IRA
Now that you know a little bit about self-directed IRAs, I can start to get into the real meat and potatoes here. A gold IRA is a precious metals IRA, and each type has the same rules. Precious metals IRAs work in a similar way to traditional IRAs in that you need to be at least 59 ½ to take withdrawals free of penalty, and you’ll be forced to take withdrawals at 70 ½.
Now, the accounts do have some key differences that you should be aware of. For example, as I mentioned earlier, gold IRAs and other precious metals IRAs need to be self-directed. This means that you’ll need the custodian that I was talking about a moment ago to help you manage the account.
Another thing to consider is the broker that you’ll be working with. Gold IRAs and other precious metals IRAs need to hold bullion coins in them, and they need to be held at an IRS approved location. This means that you’ll need to find a broker that you can trust in order to obtain the gold you want to keep in the account.
Precious metals IRAs are all self-directed IRAs that require multiple parties to help manage the account. Other than that, it’s very similar to how a traditional IRA works. I’ll have more on the buying process for you in a moment.
Buying gold in a gold IRA
When you want to use a gold IRA, you’ll need to use gold bullion coins as the value of the account. You have a few options when it comes to purchasing these coins, and either way will work just fine. You can either use money from another account to make the switch, or you can use your own funds to open the account on your own.
Now, before you do this, one thing you need to know is that you can’t directly manage the account on your own. This is due to the fact that there are specific regulations out there keeping you from keeping the gold IRA directly in your name. This is why you’ll need either a custodian or trust to handle the transactions on the account.
While a gold IRA may seem very complicated, it’s actually very simple. Just make sure that you find a broker and custodian that you trust to help you through all of the steps.
A gold IRA can be a great tool to aid you in your investments needs. While it may not be as liquid or aggressive as a traditional IRA, placing your bet on gold is always a good idea. With a value higher than the dollar, and one that grows when the dollar regresses, a gold IRA can be a safe bet for anyone.
Gold IRAs can be great for a hedge against inflation, retirement, and even passing down generational wealth. What you do with a gold IRA is up to you, but it’s definitely something worth considering.
Now that you know the facts, do you think a gold IRA is right for you?
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Frequently Asked Questions
Can my IRA hold anything other than gold?
Yes. Your new precious metals IRA is self-directed, and you have the authority to invest into any assets that you want. You don’t have to just allocate your funds to gold and other precious metals, you can also put them into stocks, cash accounts, mutual funds, and more. There are also other gold related investment products that you can invest your funds into.
Can my existing IRA be rolled over?
Yes, funds from an existing IRA can be rolled over to a precious metals IRA and you can do this as often as you want without having to pay penalties or taxes. You will simply need to set up the new IRA and then authorize the transfer of funds. Typically, the custodian of your new IRA will handle this and will work with your existing custodian to work out the transfer of the funds. IRA rollovers are subject to time limits and other restrictions and you may have to report it to the IRS. In order to avoid complications, be sure to get tax advice before you start the rollover process. Also, you can invest in gold with your 401(k).
What is the difference between a traditional a self-directed IRA?
A traditional IRA is controlled by a custodian or trustee. You must allow them to direct your funds into investments that they deem to be worthy. A self-directed IRA is where you get to choose where your funds are invested. You don’t have to follow the decisions of a custodian or trustee. The main benefit of the self-directed IRA is that you get to choose from stocks, bonds, precious metals, mutual funds, CDs, or other IRA-compliant investments.
How can I invest my IRAs into precious metals?
As long as your IRA is self-directed, you can simply direct some of your funds into precious metals. Most commonly, you can invest in palladium, platinum, silver, or gold. However, you must know that any precious metal, whether it be in coin or bullion form, must meet certain requirements of purity and refinement.
Can my existing IRAs be used to invest in precious metals?
Typically, yes. However, the final decision is left to your current custodian or trustee.
Is it OK to have more than one IRA?
Yes. There is no limit on how many IRAs you can have at once, but there are limitations on the total amount you can invest annually into IRAs. In December 2011, if you were under 50, you can contribute up to $5,000 per year in all IRAs. If you were over 50, you can invest up to $6,000 per year.
What is an IRA?
An IRA, or Individual Retirement Account, is a savings plan for your retirement that has been designed specifically to provide tax advantages to individual investors such as tax-free or at least tax-deferred growth of earnings. There are several different types or IRA accounts- all of which have different rules that govern the mimimum withdrawal age, annual limits on contributions, and others. Most commonly, IRAs are used to supplement an employer’s 401(k) account and typically will be the majority of your investment portfolio.