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Gold IRA Guide | All You Need To Know About Investing in Gold

These days, there are now a lot more opportunities for investments than ever before. It is no longer advisable to “keep your eggs in one basket” by focusing on one type of investment.

With the global economic uncertainty we are experiencing, wise investors are realizing that account diversification is the best decision to make. One option that has emerged as a popular choice is investing in gold bullion.

Physical gold has always been valued as one of the most important resources we have in the world. Its demand has been high for many centuries and it is unlikely to slow down any time soon.

If you want to secure your financial future by investing in gold and other precious metals, you have come to the right place. Read on and find out what you need to do to become a master of your destiny through the power of precious metals investments.

What Is a Precious Metals IRA?

Gold IRA Guide

A precious metals IRA is a type of self-directed IRA that is based on the value of the metals owned by the account holder. It is similar in many ways to a Roth IRA or Traditional IRA when it comes to the level of control you have on your individual retirement account and the various rules, regulations, and benefits that come with it.

Gold IRAs such as these also allow you to invest in various assets related to gold and other precious metals. These can be stocks and bonds from companies that offer EFTs for precious metals or are directly involved in mining for physical gold.

Benefits of Gold IRAs

You might be wondering why, if you already have traditional IRAs, you would need to further diversify into gold IRAs. There are a lot of benefits of opening a gold IRA as soon as possible, and these include:

Huge Potential for Profit

While no investment in the world can ever hope to guarantee 100% returns to the investor, investing in gold is probably as close as you will get to have a sure thing on your hands.

The potential for making a handsome profit from your gold IRA is backed up by centuries of positive growth in the precious metals sector. While researching for this gold IRA guide, we learned how, historically, gold has grown in value despite any economic uncertainty or turmoil in the world.

As long as you are patient enough to wait for your gold IRA account to grow, you are virtually guaranteed that by the time you retire and cash out, your traditional gold IRA will be worth a lot more than it is today.

Hedge Against Inflation

While other investments, such as mutual funds, EFTS, stocks, and bonds are vulnerable to inflation and stock market volatility, gold and silver are virtually immune to all that happens in the world.

In fact, at times when inflation is running rampant, as is feared might be the case soon, it is gold and other precious metals, such as silver, platinum, and palladium that do well in the markets. This means while everyone else is busy worrying about the economy, you will have a big chunk of your individual retirement account protected by your gold IRAs.

Highly Liquid

Other investments can rival opening a gold IRA in terms of returns, such as the real estate market, but these are not as easy to liquidate as precious metals. If, for example, you are suddenly faced with an emergency and you require access to funds, selling a few metals from your gold IRAs is much easier than selling a house.

Diversify Your Portfolio

A gold IRA will allow you to spread the risk associated with owning traditional IRAs across a variety of accounts. That way, no matter which way the economy turns, some of your self-directed IRA accounts will benefit. If you have a low-risk tolerance, this gold IRA guide is for you!

Control Your Gold IRA Account

Managing your savings is not always easy under the watchful eye of the IRS. However, with a self-directed IRA, you have a lot more control than you do over your 401(k). This will allow you to pick and choose how you want to manage your savings without having to worry about being fined hefty penalties.

Tax Benefits

Wise investment choices are always made to give the account holder as many tax advantages as possible because paying taxes can be one of your biggest expenses.

The good thing is that tax rules for gold IRAs are very similar to Traditional IRAs. Therefore if you are familiar with, for example, paying taxes for your Roth IRA, you will not face any problems when it comes to your gold IRA.

One example is the annual contribution limit, which is USD$6,000 or USD$7,000 if you are aged 50 and above. Just like a Roth IRA, you will only need to pay taxes when you make your withdrawal after reaching retirement age. If you choose to withdraw before that time, though, you will face the possibility of paying fines.

Benefits of Gold Investment

Risks of Gold IRA Investments

While the benefits of investing in gold, silver, and other precious metals are quite clear, you have to consider the risks as well. Your gold IRA is a very secure investment portfolio, but you need to consider the following:

Funding Restrictions

There are a lot of restrictions placed by the IRS on your gold IRA that you need to be aware of. The first one is that you are not allowed to keep your physical gold and silver coins at home or anywhere else except an IRS-approved depository.

The second is that only IRS-approved precious metals can be part of your gold IRA. That means whatever you intend on buying should meet IRS standards regarding mintage and purity.

Lastly, if you already own precious metals, these cannot be a part of your gold IRA. The only precious metals deemed suitable for your gold IRA are those purchased with part of your retirement funds specifically to invest in gold.

Higher Costs

Over and above the regular fees and payments that one would expect to pay for retirement savings accounts when it comes to a gold IRA, you will have to pay your gold IRA custodian fees to cover various services that they will render to you.

Some of the fees you should expect to pay also include storage fees for the safe-keeping of your precious metals and annual fees for the management of your gold IRA.

Gold Investments Tips

When handled the right way, opening a gold IRA account can be the best retirement decision you could ever make. However, the potential for making huge losses by making the wrong decisions is also there.

To prevent that from happening, these gold IRA guidelines will give you some tips that you can implement to make sure the setup and management of your gold IRA account are done the right way.

Choose the Right Gold IRA Company

The first, and perhaps most important, decision you will have to make is choosing the best gold IRA company to handle your retirement funds. Your IRA custodian will have three main duties, which are:

  • Setting up your account using whichever method of funding you choose

  • Managing your account and giving you relevant advice

  • Finding a storage facility for your precious metals

There are many gold IRA companies out there so you need to make sure you do your research and pick the one that is most suited to the needs and size of your gold IRA.

The custodian needs to have a lot of experience dealing with gold IRA transfer issues, knowledge of IRS restrictions, and tips on how to make the best of the tax advantages at your disposal.

When choosing the right gold IRA custodian, customer reviews are some of the best tools in your arsenal. Make use of platforms such as Better Business Bureau and Business Consumer Alliance to find out the truth about your custodian before you make any commitments.

Fund Your Gold IRA Account

The next crucial step is funding your gold IRA account. Your custodian should be on hand to give you sound financial advice regarding the best way to fund your account based on your circumstances.

There are three main ways to fund your account which we shall look at in the next section of this gold IRA guide:

Rollover from traditional IRA or 401(k)

One of the most popular ways of funding a gold IRA is to initiate a rollover process of funds from your existing retirement account to your new one. You can roll over funds from a 401(k) or a Traditional IRA.  This can also be called a “gold 401k rollover” and we created this gold 401k tutorial.

However, while the process is easy to do and contains a lot of benefits in terms of cost, it is strictly controlled by the IRS. The following rules, in particular, are the ones you need to pay the most attention to as the penalties can be steep:

  • You are only allowed one rollover per year, meaning if you have already done a rollover within the last 12 months you will have to find another way to fund your account

  • Whatever funds you rollover from your existing IRA or 401(k), are not allowed to sit in your account for more than 60 days. As soon as you breach that 60-day rule, you will be fined up to 10% of the value of your retirement account

Transferring funds Directly

A direct gold IRA transfer has the benefit of being tax-free! It can also the done completely online in the comfort of your home, which makes it one of the most convenient options on this list.

However, the process does require you to have a bit of computer knowledge if you are going to be able to handle it on your own.

Even if everything is done right, the process will still take a few days to be confirmed, during which time you will have to keep a close eye on the movement of funds from your 401(k), traditional, or Roth IRA accounts.

Cash Contribution

Last but not least is traditional cash or check payment deposited directly into the account of your custodian. You can even do a simple bank transfer if you choose.

However, this method requires that you talk to your banker first about how long the process may take and the associated transfer fees, which may be quite a lot with some banks.

Choose Your Precious Metals

As soon as the IRA gold transfer has been confirmed by your custodian, you will now have to choose the precious metals you want to invest in. Of the many options you can choose from for your precious metals IRAs, gold is perhaps the most attractive and safest choice, especially for beginners.

When making your choice, pay special attention to the purity of the metals and confirm the place the coins or bars were minted, as this is something the IRS will look into.

Select IRS-Approved Depository

Last, but not least, you have to select an IRS-approved depository that is licensed to hold gold that is part of retirement accounts. Your custodian will probably recommend one of the depositories they usually work with.

These storage facilities are located all over the country, for example, the Delaware Depository in Wilmington. Pay special attention to the storage fees and verify whether you will need to transport your metals.

Another important consideration is insurance. You need to make sure that your chosen depository is insured against theft or destruction of your precious metals before you allow it to oversee the storage.

Final Word

If you have spent years investing in the stock market, mutual funds, and other paper assets, it is high time you diversify into alternative investments such as gold and silver. With the right custodian by your side, you can open a new gold IRA in very little time.

There are a lot of benefits to having actual gold secured in a safety deposit box at some secure depository. With such a good backup, the potential financial crisis will never have to worry you again. Do the right thing and invest in gold today!