For the most part, every day employees tend to have a traditional retirement option from their job including a 401(k), 403(b), or other options. Most likely, with a typical traditional retirement account of this nature, they can invest in assets like stocks and bonds. They can also consider a gold IRA rollover.
Are you a beginner investor? Or do you already have retirement accounts in place through your place of employment? It’s a good idea to learn about a gold IRA rollover at this stage in your investing journey.
Anyone thinking about adding precious metals to their IRA account needs to initiate a gold IRA rollover. It may seem complicated on the surface, but it’s actually very easy to set into motion. I will tell you how to initiate the rollover process in complete detail below.
More often than not, you already have a retirement account that gives you the ability to buy mutual funds, bonds, and stocks. By initiating a gold IRA rollover, you can also add precious metals to your retirement account.
Before sharing these critical steps, please learn the difference between a gold IRA rollover and a gold IRA transfer first. And if this sounds somewhat baffling at the moment, don’t worry because it will all make sense shortly.
The Differences between Gold IRA Rollovers and Gold Transfers
Ultimately, the difference between a gold IRA rollover and a transfer is all about how you’ll fund your account. The IRS has clear distinctions between a transfer and rollover, which I’ll go over more below.
With a rollover, the investor will receive a distribution check from their 401(k) account manager. They earmark this check for your precious metals IRA. You must deposit this money into the account on your own. The account manager isn’t going to take care of it for you as you learn about in more detail below.
During a transfer, the custodian of your account will transfer the money to your new gold IRA custodian. This is easier and more convenient for retirement investors. And the transfer method typically eliminates potential early tax payments and penalties.
Want to get started buying gold right away? Learn more about the best gold IRA companies in the industry to help you initiate a gold IRA rollover.
Gold IRA Rollover Rules
During a gold IRA rollover, your 401(k) account custodian will present you with funds from your account. These funds are designated to be deposited in your precious metals IRA during the rollover process. According to the IRS, you have 60 days to deposit these funds into your new account without facing repercussions.
What are the repercussions? Failure to deposit the funds within 60 days means it’s considered a distribution. If you receive this distribution before reaching 59 ½ years old, you must pay a 10% early withdrawal penalty. You’re also required to pay your taxes if you receive these funds before reaching retirement age.
The whole point of depositing money into a retirement account is to grow your wealth and keep it when you get old. If you withdraw early, the IRS doesn’t take too kindly on this. In fact, they will penalize you for breaking their rules.
You can complete the rollover process one time per year. This means that you can rollover precious metals and money, depending on your goals and desires. If funds are withdrawn for a traditional or Roth IRA rollover, taxes aren’t going to be an issue. Just make sure to follow the 60-day deposit rule.
Gold IRA Transfer Rules
By initiating the transfer process, you are telling your account custodian to move funds into your new precious metals IRA. The custodian will handle this task entirely without your intervention whatsoever. This means the custodian will send your distribution directly to your new gold IRA custodian.
The best thing about initiating a gold IRA transfer is avoiding potential penalties and fees. This isn’t going to happen because the 60-day deposit responsibility doesn’t fall on your shoulders. Your current custodian and new custodian handles the transfer directly. So, you get to wave your hands clean of any potential missteps and subsequent penalties.
Unfortunately, it is impossible for every investor to initiate a transfer from one custodian to the other. But it’s definitely the best way to handle this task, so I recommend making transfers whenever possible.
Gold IRA Rollover For Beginners: Step-by-Step Process Overview
- Picking the Best Gold IRA Account
- Aligning with a Top IRA Custodian
- Beginning the Rollover Process
- Purchasing Precious Metals
- Shipping the Precious Metals
Trust me when I say that the process isn’t too difficult to get started. And if you’d like to connect with a great gold IRA company, click here to read a detailed review of my favorites.
Picking the Best Gold IRA Account
The best way to start things off is to decide which type of gold IRA account is best to meet your needs. Your options include the following choices:
- A traditional gold IRA funded with pretax dollars
- A Roth gold IRA funded with post-tax dollars
The average rollover takes place using pretax dollars into a traditional gold IRA account, better known as a self-directed IRA. But it might not be the ideal choice, so consider which option best meets your needs.
Next, if you’re ready to get started read my detailed review of the top gold companies in this space. You’ll learn about wonderful organizations that are ready to help you with the gold IRA rollover process as a beginner.
Aligning with the Top IRA Custodian
Connecting with a great account custodian may seem like a difficult mission to some new investors. They feel this way because there are so many various custodians to pick from that it becomes overwhelming.
How can you take in your search parameters?
For starters, the bulk of the account custodians out there typically work with traditional IRA accounts only. So, this eliminates a plethora of them.
Next, focus on custodians that handle self-directed IRA accounts. This is the type of account you need to invest in gold, silver, platinum and palladium. The top custodians are typically connected with the best precious metals company in the business. They also have connections to top storage facilities and other important service providers.
Then again, do you have a great relationship with a self-directed IRA custodian already? A good precious metals company would definitely be willing to work with them.
Beginning the Rollover Process
Next, we will fund your precious metals IRA account. Starting this process means opening an account with your new custodian. You can fund your account after finishing all the paperwork and other steps.
Simply contact the administrator of your 401(k) account. Let him or her know about the impending rollover and follow their guidelines.
Next, you’ll receive paperwork to initiate the distribution process. Fill out the paperwork and the custodian will send you your funds via check or wire transfer.
Remember, you must deposit these proceeds within 60 days. If you fail to do so, you’ll pay distribution taxes and early withdrawal penalties.
Purchasing Precious Metals
After you successfully fund your account, you can begin purchasing precious metals including gold, silver, palladium, and platinum.
Picking investments is relatively simple but there are certain guidelines you must follow. The IRS requires that certain specific types of precious metals investments to meet certain purity levels. The purity level requirements include:
- Gold purity is 99.5%
- Silver purity is 99.9%
- Platinum purity is 99.95%
- Palladium purity is 99.95%
Use these specific guidelines to purchase investments that are eligible for your precious metals IRA. If you do not follow these instructions correctly, you’ll unintentionally break the rules by buying ineligible investments.
To get started the right way, please read my detailed review of the top gold IRA companies. This will help you choose the correct business to get started on your investing journey.
Shipping the Precious Metals
After you’ve purchased your precious metals investments for the account, it’s time to have them shipped to your storage facility.
Prior to this happening, your gold broker will let your custodian know about the impending purchases. They’ll send your custodian the invoice. Once you pay the invoice to the custodian, they will ship your metals from this point forward.
Always follow up with your gold dealer to make sure they shipped your investments properly to the facility. Check in with the storage company too to make sure your metals made it to your vault.
Typically, it takes roughly 7 days or fewer for the shipment to reach your dedicated vault or storage facility.
As a beginner gold IRA rollover investor, you were likely incredibly intimidated by this process. If I did my job correctly, I dispelled any fears that you may have had and answered all of your questions. You undoubtedly feel more confident about the entire procedure right now.
Before jumping in, I’d like to invite you to read my detailed review of the best gold IRA companies in business right now. This powerful information will help you simplify the rollover process tremendously. Learn about these great companies and choose the best one to meet your investing needs.