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After watching the volatility of the stock market and hearing about the benefits of diversifying your investment portfolio with precious metals, have you decided that it is time to open a Gold IRA? Many financial experts agree that this is a smart financial decision. However, you may still be a bit confused about the whole process of transferring an existing retirement account into a Gold IRA.
Specifically, you may have some questions about how the process of buying gold with IRA funds works. Today, we'll take a close look at what you'll need to do to purchase gold with your IRA funds. Keep reading to learn more and find answers to your questions.
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Gold IRA Transfers and Rollovers: Which is Best?
When you're ready to open a new Gold IRA, you can fund it using your existing retirement account. To move the funds from the current account into your new Gold IRA, you can choose to complete either a Gold IRA transfer or a Gold IRA rollover. You may have heard both terms being used synonymously, but they actually refer to a different process.
If you initiate a Gold IRA rollover with your IRA custodian, the funds from your current account will be sent to you. These funds must be reinvested into a new IRA account within 60 days. If something delays the process, and you end up holding the funds for more than the allowed 60 days, you'll be charged penalties. Additionally, the money will be taxed as regular income, losing one of the biggest benefits of setting up an IRA.
A Gold IRA transfer, however, eliminates the stress and concern of handling the funds from your IRA yourself. With a Gold IRA transfer, the funds are sent directly from one IRA custodian to another; they are never in your possession. This means that you don't have to worry about any penalties or taxes being charged.
For this reason, many individuals choose a Gold IRA transfer over a Gold IRA rollover.
Eligible Account Types
The vast majority of retirement accounts may qualify for a Gold IRA transfer. Eligible account types can include:
Transferring an employer-sponsored IRA can be a bit more complex. If you are trying to transfer the retirement account from your current employer, it may or may not be eligible for a transfer. Some company plans prohibit investing in precious metals. You may need to reach out to a representative from your company or read up on the investment policies.
However, if you're trying to transfer a 401(k) from a previous employer, the process should follow the steps outlined below.
How to Transfer a Retirement Account to a Gold IRA
While the necessary steps involved in transferring a retirement account to a new Gold IRA can vary slightly, the outline below should give you a general sense of the process.
❑ Select a Precious Metals Provider
If you're ready to transfer your existing retirement account to a Gold IRA, the first thing you need to do is choose a precious metals provider to work with. Begin by looking at the reputation of each company, how much experience they have, and what past customers have to say about their experiences.
Once you've narrowed down your search to a few key companies, take a look at the selection of precious metals offered by each precious metals provider. If there are any particular coins or bars that you're looking to add to your IRA, choose a provider that offers these options.
❑ Find a Gold IRA Custodian
The funds for an IRA must be controlled by an IRA custodian. So, the next step in the process is to choose an IRA custodian company to work with. Not all IRA custodians support Gold IRAs, so this step may take a bit of research. The precious metals provide you are working with may also have a preferred Gold IRA custodian or a list of companies that you can review.
When choosing a Gold IRA custodian, it is important to find the right one. The Gold IRA custodian/company will play a large role in making sure the funds for your account are handles properly. Additionally, you also want to choose a company that will work with you through all the necessary paperwork and information required to open your new Gold IRA.
For this reason, when looking for a Gold IRA custodian, it is important to look up the company's reputation. You can check review websites like Trustpilot, Google, the Better Business Bureau, and the Business Consumer Alliance to find out what past customers had to say about their experiences. Look for a highly-rated and trusted custodian that will be able to deliver the service and result you need.
If you are unhappy with your custodian and decide to change companies, you'll want to wait at least 1 year. IRS policies only allow for one IRA rollover without penalties every 365 days. If you happen to request an additional rollover and change custodians before a year has passed, be prepared to pay early distribution penalties. This is another reason why it is so important to do your research before choosing an IRA custodian. You want to feel confident that you'll be happy with the company you choose.
❑ Open the New Gold IRA Account
Once you have a precious metals provider and Gold IRA custodian lined up, the next step is to open your new account. You'll need to complete any required paperwork for this step to get your account set up. In most cases, your precious metals provider and IRA custodian will be able to help you through the process.
❑ Transfer Funds
Next, it will be time to initiate the transfer of funds from your existing retirement account to your new Gold IRA. You'll Gold IRA custodian will be responsible for much of this step, and will let you know the paperwork that will need to be completed.
❑ Add Precious Metals to Your Gold IRA
After the transfer has been initiated and the funds have arrived for your new IRA account, they can be used to purchase the precious metals that you'd like to hold. A team member from your precious metals provider will be able to help you select the specific coins and bars to add to your account or offer advice if you are unsure what you want to invest in.
In addition to investing in gold coins and bars, you can also add eligible silver, platinum, and palladium coins or bars to your account.
Eligibility Requirements for Precious Metals
The IRS has very strict rules in place regarding the types of precious metals that can be held in an IRA. These rules specify minimum purity levels for each type of precious metals, along with other key requirements. Here is what the IRS requirements say:
After reading these strict requirements, you may be wondering if there are any coins or bars that are even eligible to be held in an IRA. Thankfully, there are quite a few options that satisfy these requirements. You'll find a few of the different gold, silver, platinum, and palladium coins and bars that you can add to a Gold IRA below, but the precious metals provider you work with may have a few additional options to choose from.
If the prospect of opening a Gold IRA has you excited, don't let yourself worry about adding precious metals to your account. The precious metals provider and Gold IRA custodian you choose to work with can help you through the process and will be able to help you select the right gold, silver, platinum, or palladium coins and bars for your account.