Everyone’s talking about Gold IRAs. Why? Because there’s so much chaos in the world today, and people turn to gold in uncertain times. If you are wondering how to invest in gold with retirement funds, this Gold IRA rollovers guide gives you all the details you need to start today.
There’s a lot of negative news right now, making investors seek safe places to protect their money. With 77% of Americans not feeling great about the economy, this is when people turn to gold. This article covers the basics of a Gold or Precious Metal IRA, including benefits, rollover steps, tax considerations, pros and cons, and how to choose a reputable company.
By the end, you’ll have a good overview of the process and steps to add gold to your retirement savings.
What is a Gold IRA account?
You can open an Individual Retirement Account (IRA) at any time, or you might transfer funds from a 401(k) at a previous employer into an IRA instead of leaving them in the employer-sponsored plan.
You might invest in traditional paper assets like stocks, bonds, and ETFs inside the IRA, or you can buy alternative assets, such as:
Physical gold or other precious metals
Real estate
Cryptocurrency
Commodities
Private loans
Forex (Foreign Exchange)
A Gold IRA account specifically holds physical gold and other precious metals within this retirement account, allowing you to benefit from tax advantages.
Why do people switch to Gold IRAs?
Since we’ve been helping investors set up a new Gold IRA for over 40 years, we understand why people switch. The most common reasons we see are:
Asset protection
Investors are seeing the impact of market volatility, economic uncertainty, and global conflicts, and they’re looking for ways to protect their assets. Gold and other physical precious metals offer comfort because they preserve wealth. These assets behave differently from traditional investments and perform better when the world is in chaos.
Recent market developments have underscored this point. As of October 2024, gold hit $2700/oz. Back in August, in the Reddit r/gold forum, user Mammoth-Fun-2180 noted, “Gold is up $500 since january, thats 25% in less than a year, thats quite insane for gold.” This rapid appreciation highlights gold’s potential to protect your wealth against uncertainty.
Diversification
Some investors get into Gold IRAs because they want to diversify a portion of their assets. It’s similar to how a financial advisor might recommend splitting between stocks and bonds, except with Gold IRAs, you own physical investments.
This strategy’s potential is evident in individual experiences. In the same r/gold forum, user lostsurfer24t shared, “one of my best investments in the last 5 yers, i bought a gold eagle from nationwide for $1660 spot.” This example shows how even small gold investments can yield strong returns over time.
Inflation hedge
In economic cycles, there are times when inflation rates spiral out of control, as we saw in 2022 after the global pandemic. As inflation rises and the dollar’s value drops, investors turn to gold investments that can outpace inflation or at least protect their portfolios.
Types of retirement accounts for Gold IRA rollovers
You can do a Gold IRA with any of the following accounts, provided you meet certain requirements:
Employer-sponsored retirement accounts
If you have one of these accounts and no longer work for that employer, you can roll those funds into a Gold IRA. These plans have administrators who define which assets you can invest in, usually paper assets like stocks, bonds, and mutual funds. Common plans include:
401(k): Private employers provide these traditional retirement accounts for employees as a benefit.
403(b): These retirement savings accounts apply to public school employees.
457(b): Available for state and local government employees.
SEP IRA: Small business owners place retirement funds in these accounts and may also contribute to accounts for their employees.
Thrift Savings Plan (TSP): Federal employees and armed services employees leverage this retirement account type.
Self-Directed/Individual Retirement Accounts:
Outside of employer plans, you might have IRA plans that give you more flexibility about which assets you invest in. The types include:
Traditional IRA: This retirement account lets you choose from a broader range of investments, although it’s still limited to traditional paper assets. For example, you can invest in an index fund that wasn’t available through your employer-sponsored plan. You contribute with pre-tax dollars and can potentially deduct those contributions from your taxable income.
Roth IRA: You can choose different paper assets for this account type. The main difference between a Roth IRA and a Traditional IRA is that you make contributions with after-tax dollars. Since you’ve contributed after-tax dollars, withdrawals at retirement age are tax-free.
Self-Directed IRA (SDIRA): Now, this type of account gives you the ultimate flexibility. You can invest in alternative assets that qualify according to the IRS rules. To comply with tax regulations, you’ll choose a custodian to own the reporting and buying of assets in the account, but everything they do is at your direction.
How to do a Gold IRA transfer
If you’ve decided to convert your IRA to gold, follow these steps to make the transfer:
Step 1: Choose a Gold IRA custodian
Find a custodian specializing in Gold IRAs. If you don’t already have a company in mind, the Swiss America team can help with this process, and we usually recommend Gold Star Trust.
Step 2: Open a Gold IRA account
Work with your chosen custodian to open a new Gold IRA account. This account will hold your gold investments, and the custodian will follow your directions on what to buy.
Step 3: Start the transfer
Contact the administrator of your existing retirement account to start the transfer.
Employer plan rollovers: If you have a 401(k), 403(b), or similar employer-sponsored plan, request a rollover. The funds will move from your employer plan to the new Gold IRA.
Traditional IRA rollovers: If you have a Traditional IRA, request a rollover into your Gold IRA. The custodian will handle the transfer of assets.
You can roll over either type into a self-directed Gold IRA through these two methods:
Direct rollover: Your current plan administrator transfers the funds directly from your existing account to the new Gold IRA. This path avoids tax penalties and is the most straightforward option.
Indirect rollover: If you ask the administrator to send the funds to you instead of directly to your chosen custodian, you have 60 days to deposit them into your Gold IRA. If you miss the deadline, the IRS can tax the amount, and you might have financial penalties.
Step 4: Fund your Gold IRA
Once the transfer happens, you will have retirement funds in your Gold IRA. You can then buy gold or other approved precious metals through your custodian.
Buying assets for precious metal IRAs:
The Swiss America team provides expert guidance on what the IRS regulations allow for Gold IRA investing. In general, the rules include:
Qualifying precious metals
Swiss America’s IRS-approved precious metals include gold, silver, and platinum. You can buy coins in bars as long as they meet these purity standards:
Gold: 99.5% pure
Silver: 99.9% pure
Platinum: 99.95% pure
Gold storage
You can’t store your precious metals at home because doing so violates IRS regulations for tax-advantaged retirement accounts. They count home storage as a distribution, meaning the IRS treats it as if you’ve taken the assets out of your IRA, which can lead to taxes and penalties.
Your Gold IRA custodian stores your precious metals in an IRS-approved depository.
Step 5: Monitor your Precious Metals IRA
You can check your investment status anytime through Swiss America’s online portal, and your Gold IRA custodian will provide regular value reports. One of the great benefits of gold and silver investments is that you don’t need to monitor them constantly or worry about stock market fluctuations. They are a straightforward and stable asset to own.
Gold IRA costs and fees
Just like traditional IRAs, your Gold Self-Directed IRA account has various fees, including:
Fees from your precious metals company
Gold IRA companies charge fees to set up your account and make your purchases. Here’s what you can expect:
Transaction fees: These are the costs for buying or selling gold within your IRA. It can include support, shipping, and any additional costs related to the transaction.
Premium: This refers to the difference between the buying and selling prices of gold, also known as the spread.
Swiss America’s average setup fee is $250, but the final amount may vary depending on the size of your fund transfer.
Fees from the Gold IRA custodian
Custodian fees can include the following:
Setup fees: The custodian may charge a one-time fee to open and set up your Gold IRA.
Management fees: These annual fees cover account administration, record keeping, and reporting.
Storage fees: These costs provide secure storage for your gold in an IRS-approved depository.
Miscellaneous fees: Your custodian might have other fees like wire transfers, account termination, or additional reporting.
Tax advantages and considerations
Your Gold IRA rollover benefits from all the same tax advantages and rules that you see from a traditional IRA or Roth IRA, including:
Traditional IRAs
Tax-deferred growth: The earnings from your investments within a Gold IRA grow tax-deferred, and you won’t pay taxes on gains until you withdraw at the IRS-defined retirement age of 59 1/2.
Pre-tax contributions: If your rollover comes from a traditional IRA or 401(k), your contributions are from pre-tax dollars. You benefit from not paying taxes when you contribute and you won’t pay taxes on it until you withdraw funds during retirement.
Tax deductions: Depending on your income and participation in other retirement plans, your contributions to a Gold IRA might be tax-deductible and reduce your taxable income for the year.
Required Minimum Distributions (RMDs): Just like a traditional IRA, once you reach the age of 73 (or 72, depending on your birth year), you’ll have to start taking required minimum distributions from your Gold IRA. The IRS taxes these distributions as ordinary income.
No early withdrawal penalties: When you roll over your retirement funds into a Gold IRA, there are no early withdrawal penalties as long as you complete the rollover within 60 days.
Roth IRAs
Your Gold IRA rollover into a Roth IRA gives you these tax benefits:
Tax-free growth: The earnings on your investments within a Roth IRA grow tax-free.
After-tax contributions: You contribute after-tax dollars to a Roth IRA. Since you’ve already paid taxes on the money you contribute, retirement withdrawals are usually tax-free, but it’s best to verify this with your financial advisor.
No Required Minimum Distributions (RMDs): Roth IRAs do not require minimum distributions, and you can leave your precious metals in the account for as long as you like.
Tax-free withdrawals: You can make tax-free qualified withdrawals if you’re 59½ or older and have had the Roth IRA for at least five years.
No early withdrawal penalties: You can withdraw your contributions from a Roth IRA at any time without penalties or taxes, regardless of your age. Note that this is for contributions only – not earnings.
Retirement account contribution amounts
For either SDIRA account type, the IRS-allowed contribution amounts include:
2024 IRA contribution limits
For both traditional and Roth IRAs, the limits are:
Under age 50: $7,000.
Age 50 and over: $8,000.
Income limits for Roth IRAs
You may not be able to contribute to a Roth IRA depending on your modified adjusted gross income (MAGI). If your income exceeds certain thresholds, you may be ineligible to contribute directly to a Roth IRA.
SEP IRA contribution limits
For SEP IRAs, you can contribute up to 25% of your compensation or $69,000 for 2024, whichever is less.
Pros and cons of a Gold IRA
Before you make any changes to your investment portfolio, you should be aware of the pros and cons. Here are some areas to consider:
Pros
Tax advantages: A Gold IRA offers the same tax benefits as traditional IRAs.
Diversification: You can diversify your retirement portfolio with physical assets, which can complement traditional paper investments.
Investment choices: With a Self-Directed Gold IRA, you have more control over your investment choices, including which precious metals to buy.
Long-term security: Physical gold in a Gold IRA is a stable, long-term asset that can provide security in retirement.
Cons
Fees: Gold IRAs include costs like setup, custodian, and storage fees.
No yield: Gold or other precious metals don’t pay dividends or interest, so you won’t earn passive income from this investment.
Liquidity: Converting gold to cash can be slower than selling paper assets. The good news for Swiss American customers is that we buy back your gold, so the process can be faster than on the open market.
Choosing a Gold IRA company
How do you choose a reputable Gold IRA company? Experts usually recommend working with companies that have:
Experience: Gold IRA companies that have been around for decades have demonstrated their ability to handle economic ups and downs. It’s a positive sign when a firm has lasted through the years, like Swiss America, which has been in business for over 40 years.
Customer reviews: Positive reviews usually mean a company provides great products and support so look for positive reviews from real customers.
Industry affiliations: You want to work with a dealer that’s a member of groups like the American Numismatic Association (ANA), Industry Council for Tangible Assets (ICTA), and Better Business Bureau (BBB). All of these groups require commitment to quality and customer statisfaction.
Education and resources: Your Gold IRA company should go the extra mile to help you understand how to invest and what are the right ratios of precious metals to meet your goals. Good companies offer free guides, webinars and one-on-one consultations to walk you through the process.
Physical Gold IRA rollover final thoughts
By now, you should have the key details on what a Gold IRA is all about and how it might fit into your retirement strategy. We’ve walked you through the nuts and bolts, from rollover steps to tax considerations.
Precious metals have been a store of value for thousands of years, and that’s not changing anytime soon. If you’re looking to diversify or just sleep better at night knowing you’ve got some tangible assets in your portfolio, a Gold IRA could be your next smart move.
Ready to learn more? Contact the Swiss America team today. The market waits for no one, and neither should your retirement planning. It’s your future. Why not take control of it now?
Gold IRA rollovers guide: FAQs
How do I cash out my Gold IRA?
To cash out your Gold IRA, you can either sell the gold through your custodian and receive the proceeds or take an in-kind distribution, where the physical gold gets shipped to you. Be sure to consult with your custodian about any potential taxes or penalties involved.
What is the difference between a Gold IRA and a traditional IRA?
A Gold IRA allows you to invest in physical gold and other precious metals, while a traditional IRA involves paper assets like stocks, bonds, and mutual funds. Both offer tax advantages, but a Gold IRA requires a specialized custodian and approved storage for the physical metals.
What are the rules for withdrawing from a Gold IRA?
Withdrawals from a Gold IRA follow the same rules as traditional IRAs, including penalties for withdrawing before age 59½ and required minimum distributions starting at age 73. You can choose to receive your distribution in cash or in-kind, meaning the custodian can ship the physical gold to you.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
