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Gold IRA Rollover: Things Worth Knowing Before Taking the First Step
There’s a lot of misconception going round the stock market today. However, as an individual who holds a personal retirement account, you need to get some things right, and especially where investing your money for the future is concerned.
You see, with some investment opportunities that appear to be safe (like Fixed-income Investments), you can only realize microscopic returns at the end of it all, plus the risk of inflation remains at large, or worrisome. That’s the reason why investing part of your IRA money into Gold or other precious metals might sound appealing.
But here are a few things that you must take note of:
Physical Ownership of Gold or other Precious Metals
Until now, the Internal Revenue code has allowed IRAs to own certain types of Gold, Silver or even Platinum coins that meet a certain standard of fineness.
For instance, an IRA could own Canadian Gold Maple Leaf coins, American Gold Eagle coins, American Platinum Eagle coins, American Silver Eagle coins, or gold and silver bars which are at least 99% pure.
South African Krugerrand and other gold coins could be considered off the limit, and the same applies to bullion bars which are considered not sufficiently pure. When you purchase the coins or bullion, they must be kept by an IRA trustee, and not the owner. You cannot buy a Gold IRA and have the precious metal buried somewhere in your backyard.
The same tax rules will also apply to traditional IRAs, simplified employee pension accounts, or just simple IRAs, and there’s no problem with this so far.
However, the biggest challenge that comes with this ownership of Gold is finding a trustee that will be willing to create a self-directed IRA for you, and who will handle the transfer of funds and also the storage of the precious metals to where they are supposed to be kept in a convenient way.
American Estate & Trust, Sterling Trust Company, Entrust Group, LLC, GoldStar Trust Company are just some of the brokers not willing to play by leaving a handful of outfits into the game of investing IRAs in gold.
However, when you ultimately find a trustee, they will arrange for the physical storage of the gold coins or bullion — which comes after they’ve consulted with the Delaware Depository Service Company.
A set-up fee for the IRA will be charged, and it’s often a one-time fee. This is usually something between $25 and $50. However, for the trustee to be able to manage this gold, they will charge an annual fee.
The Golden Rules for Gold IRA Rollover
You can only invest in Gold IRAs using actual gold or bullion. You see, with this type of investment, you are purchasing the actual metal, as opposed to a piece of paper or fund that is taken to represent the item in question. And with any investment method, it rewards for taking time to shop around for the best and most trusted deal.
Even though gold has a going rate, this precious metal has a mark-up depending on whether you want the coins, bullion, proof and so forth. And every form of gold also presents its own set of requirements, just in case you’ll want to sell it. That’s the reason why it pays to educate yourself before getting into the business of investing a part of your portfolio into a gold IRA.
You should be aware of the type of fees associated with this type of retirement account compared to other forms of IRA or retirement accounts.
The following is a detailed breakdown of the fees you’re supposed to pay, in addition to set-up fees, insurance and management of the gold itself.
1. Mark-up or the seller’s fee
The amount you pay here will vary depending on the vendor or gold product you want to buy. Again, just like the set-up fee, this is a one-time payment.
2. Custodian Fees
Because the law demands that all IRAs be held by a custodian, there has to be some form or fees to get things running. Your custodian is a financial institution, and they are responsible for keeping the gold you’ve bought. To protect your asset and make sure it is safe, they will charge a small fee.
3. Storage Fees
A qualified storage facility will keep your gold IRA, and they will charge you a fee for this service. However, there’s an option of opening a checkbook IRA — a type of self-directed gold IRA that doesn’t need the management effort of a custodian. So you could purchase Gold Eagles with your retirement money and personally keep it, thereby side-stepping unnecessary fees.
However, checkbook IRA requires a very complex financial set-up. For this reason, the matter is currently under scrutiny (according to some financial experts). So if you consider getting one, be extremely cautious about it.
How to Setup a Gold IRA Rollover
A Gold IRA is just a regular IRA with gold as an investment tied to it. In other words, the rollover process should be the same as with any other retirement fund.
Most financial institutions that deal with gold IRA rollover can set up the account and transfer the assets without experiencing problems along the way.
You only need to fill out your details on paper or on the web. Upon receiving your details, the institution will set up an account for you in less than 48 hours. However, the two parties must received the signed request to make the transfer, thus funding the Gold IRA account for the new custodian.
In some cases, if funds are available in a new IRA account, your account representative will only review the existing precious metal investment options before letting you choose. But you must advice them on the exact type of precious metal you want to invest in.
If you’re contemplating to invest in a gold IRA, it’s vital that you consider your financial plans and goals, both in the short term and long term. After putting all things into consideration, you should decide the amount of your overall portfolio you want to rollover to gold investment. That’s how it’s done.