How to Put Gold in Your IRA

Saving for retirement is a lifelong strategy. It takes a mixture of investments to reach a goal that's comfortable for the investor. However, today's investment options can have some limitations. Investors may want more than just paper assets.

Take a close look at how investors can add gold to their IRAs or Individual Retirement Accounts. This strategy provides additional security to any retirement fund.

Understand Limitations With Investment Gold

Before investing in gold, it's helpful to know its limitations. Investors cannot simply buy random gold products, such as coins or bars. The products must be IRS-approved gold.

As investors research this term, they'll come across advertisements regarding approved and unapproved gold. Both products may be of high quality, but it's only the approved gold that can be used for investment purposes.

The IRS dictates the rules for gold IRAs. Keep in mind that these rules might change as tax laws continue to evolve. Currently, gold held in an IRA must be 99.5 percent pure.

Investors might add silver, palladium, or platinum to their IRA too. These precious metals have their own purity levels that slightly differ from gold. Palladium and platinum must be 99.95 percent pure, whereas silver requires 99.9 percent purity.

IRS-approved precious metals are clearly marked with their purity levels. Investors don't usually see the precious metals in person. They're bought with the help of an account custodian who secures the gold in a separate facility. Gold that's purchased with IRS-approved policies can be used as a tax incentive.

Every gold purchase should come with a certificate of authenticity. As a result, the investor has proof of the gold's quality. No precious metals purchase involves gold that's been circulated either.

It must be freshly minted and saved to be eligible for a gold IRA. For example, these coins are typically packaged and numbered so that they retain their value.

Gold IRA experts can discuss precious metals choices with the investor. For example, investors can choose among certain coins as investments, such as the American Eagle and Canadian Maple Leaf coins. These products ship from their corresponding mint to the gold IRA's depository.

Investors also have the option of purchasing gold bars for the IRA. The same purity levels apply to these purchases too. Most investors gravitate toward buying gold coins for their retirement accounts, however.

They're small in size, which makes each transaction manageable for most investors. Investing in precious metal bars takes a considerable amount of money.

Coins are also attractive because the investor may want to take possession of the gold during retirement. Investors can physically hold the gold in their hands once distributions go into effect. The gold doesn't have to be cashed out. It can be distributed in its original form.

Know About Physically Possessing Gold

Gold IRAs operate in the same manner as traditional IRAs. Investors won't be able to physically hold any gold until it's distributed during retirement.

This same rule applies to paper assets as well. The main idea of a gold IRA is to hold the precious metals for a long time. When it's time to retire, the gold offers a profit when cashed out.

Investors are welcome to withdraw the gold in retirement without converting it into cash. Some people enjoy the gold at home while securing it in a personal safe. Because of a gold IRA's flexibility, many investors appreciate this alternative to paper assets.

Many tax laws apply to every gold IRA, however. To take possession of the gold, investors should be at least 59-1/2 years of age. They avoid a 10-percent early withdrawal fee as a result. The penalty can add up if an investor takes out a large sum of money well before retirement.

If investors choose a Roth gold IRA, any withdrawals are free from being taxed. A traditional gold IRA, however, will be taxed accordingly after each withdrawal.

Afterward, investors can use the gold or funds in any way they see fit. It might be spent, secured at home, or passed on to loved ones. Gold coins and bars are versatile resources in any economy.

Benefit From Gold Held in an IRA

Every investor wants a comfortable retirement with plenty of money to cover life's expected and unexpected events. Holding a 401(k) or traditional IRA are both good investments toward the future. However, there are even more benefits to adding a gold IRA to a growing portfolio.

Investors who have several decades until retirement can benefit from investing in gold. This asset has historically grown in value over time. It doesn't fluctuate like paper assets, such as stocks or bonds. Gold is a physical item that has real value. A dollar bill, in contrast, has only face value.

When investors withdraw the gold after many years, it's usually cashed out at the current rate. In many cases, there's a considerable profit involved.

Alternatively, investors might choose to withdraw the gold and keep it at their homes. It will still hold its value until it can be converted into cash.

Some investors go as far as holding onto the gold until it can be passed down to loved ones. It's a smart way to start a nest egg for a grandchild or other relative, for instance. Paper assets just don't have the same solid value as precious metals.

Another benefit of gold is its protection against inflation. Precious metals and their value aren't tied to any currency. If inflation rises and the dollar's value decreases, gold will retain its value. It often rises in value during tough economic times.

As investors see retirement portfolios shrinking with paper assets, precious metals can protect some of the wealth with their value.

Financial professionals are always touting the importance of portfolio diversification. Investing in many different things reduces the risk of losing funds during an economic downturn.

Precious metals are simply another financial resource in the industry. For example, investors might convert five to 10 percent of their funds into precious metals. Diversification can lead to wealth even with downturns in the stock market.

Lastly, investors benefit from tax-free growth on a gold IRA. As long as the physical gold remains in an IRS-approved facility, the investor pays no taxes on it. Depending on the type of gold IRA, taxes only come into play during withdrawals in retirement.

Fund a Gold IRA Account

When investors open a gold IRA, they have several options for funding it. There must be cash added to the account to facilitate any precious metals purchases.

A common strategy is using a 401(k) rollover. Investors who have an established 401(k) will usually have enough funds to support a gold IRA account. A rollover is essentially a transfer of funds from the 401(k) to another retirement account.

Investors request a rollover of some or all the funds in the 401(k). For a 401(k) with a current employer, it's preferable to move only a portion of the funds.

Investors should check with their employer's plan to see if a rollover is possible. Some companies may or may not allow it within the plan.

In contrast, a 401(k) with a former employer has more options. Investors can move all of the funds into a gold IRA or fund several different IRAs with multiple transactions.

Because investors aren't employed by these companies anymore, clearing out the 401(k) is usually the best option. Rolling it over protects the investors from any tax implications.

The rollover will fund the gold IRA within a few weeks. The investor and account custodian can then decide on precious metals purchases. Any transactions will be performed at gold's current rate.

The custodian should go over any quotes before completing the transaction. The precious metals can then be shipped and secured at a depository of the investor's choice.

Another funding option is a transfer from another IRA. For example, investors might have traditional or Roth IRAs already established. It's possible to transfer funds from these IRAs into the gold IRA.

Investors simply request a transfer amount from the established IRA. Unlike a 401(k), traditional and Roth IRAs aren't administered by an employer. Investors are free to move funds based on IRS rules only.

Funding a gold IRA is also possible by simply adding cash to the account. Wiring money from an investor's bank, for instance, is a typical scenario when starting a gold IRA. The only drawback to a bank wire is the taxation concern.

Presumably, money in a bank account has already been taxed. Use these funds to purchase precious metals, and the funds will be taxed again when they're withdrawn in the future.

The best way to fund a gold IRA is through a 401(k) rollover. These funds come from pre-tax dollars. As a result, investors only pay once for taxes when the gold IRA is used for distributions in retirement.

There are limits to how much money investors can put into an IRA each year too. Currently, up to $6,500 can be annually contributed to an IRA. If the investor is older than age 50, they have a slightly higher amount of $7,500.

These limits apply to all IRAs owned by an investor. If investors have more than one IRA, they must divide out this amount across all accounts. Experienced custodians can help the investor with the proper purchases to remain IRS compliant.

An interesting loophole exists with 401(k) rollovers, however. The contribution limits don't apply to rollovers. As a result, investors can roll over any amount they desire. Adding money to the gold IRA otherwise will activate the contribution limitations.

Funding the account starts the investment process. Afterward, the custodian and investor decide on gold coins or bars for purchase. Investors must activate an account with a depository too. Paying for storage fees upfront streamlines the shipping and receiving process.

Purchased gold ships from an appropriate mint and out to the depository. Investors can follow the shipment with an available tracking number.

Once received, the depository secures the gold in a reserved space. It remains there until it's withdrawn. Investors receive statements regarding the gold's maintenance and storage fees in the meantime.

Find an IRA Provider

When investors are ready to put gold in their IRA, they need to find a provider. Gold IRA accounts are unique. They're often held by specialized companies and managed by individuals who understand precious metals as an investment tool. In fact, many banks and other financial entities don't offer them at all.

Start by researching companies on the Internet. Searching for "gold IRA" will give investors a long list of choices. Read about each company's services.

They tend to differ from custodian to custodian. Investors want a gold IRA provider who can manage the account and secure the products at an affiliated depository.

Dive deeper into this research by also reading over independent reviews. Take a look at what customers are saying about the custodians. Companies that have been in business for a long time, such as a decade, should have more reviews than newer companies.

Investors might come across both positive and negative reviews for these experienced custodians. This scenario is entirely normal. Read over every perspective to see if there are any concerning patterns.

There will always be some negative reviews. In fact, some companies respond to reviews as a way to assist customers. These documented conversations are great ways to see how the custodian resolves any issues.

As investors narrow down their custodian search, they should also look at fee structures. Gold IRAs involve purchases of physical precious metals and their storage. In contrast, paper assets require only administrative efforts.

It's not unusual for a custodian to have several different fees. Overall, gold IRAs have more fees than traditional IRAs. Investors should be aware of this fact before choosing any provider.

Common fees include account setup, maintenance, and wire costs. Investors might pay these fees as a single transaction when opening a gold IRA account, for instance. Subsequently, the fees are typically charged as individual line items each month or quarter.

Every custodian will have varying fees, so it's important to ask about them upfront. Ideally, they'll be written out for the investor. They may be subject to change, but any cost differences should always be quoted.

Gold held in an IRA gives the investor some protection against financial loss over time. Precious metals, paper assets, and other holdings support a comfortable retirement or a suitable inheritance for loved ones. In the end, these savings provide peace of mind to the investor as time carries on.

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