There are some points in everyone’s life at which they need to take into consideration plans for their retirement. Especially, regarding those having worked for different companies and owning many retirement accounts, they are advised to consider IRA rollovers and make up their mind. Furthermore, great consideration should be carried out regarding your current assets and whether or not rolling such assets over into gold would bring you benefits.
How IRA Rollovers Work
IRA rollovers are distributions that are exempt from taxes, established from several retirement account types, and used as investments into an IRA. Many different types of retirement accounts can be rolled over into an IRA, including a qualified plan from an employer, e.g. a 401k, or another IRA. Nonetheless, because of the difference in the tax status, rolling over a Roth IRA into a traditional IRA is impossible.
Your rollover can be started when you have downloaded a request form provided by the online account, or you can get your account custodian to give you one and then pick up an account to obtain your rollover distribution. The term for the completion of the process is within 60 days, in order to avoid the taxation imposed on the distribution. There are two ways in which the distribution can be implemented: either by gaining the check payment to you, or as a direct rollover in which the payment of the check is made directly to the new account custodian.
If you can choose, a direct rollover is always the best choice to make.The reason behind this is that in the case that the payment of the check is made to you, a 20% withholding tax will be imposed by the IRS in order to make sure that the rollover rules are fully complied with. This also means you need to seek solutions to compensate for the 20% tax in order to guarantee the completion of your IRA contribution. Eventually, you will receive the 20% back, yet you might have missed some investment gains in the meanwhile.
Why 401k Rollovers are Different?
You can make decisions to perform rollovers at any time you want if your rollovers are from one IRA to another. However, 401k rollovers have some small differences. Generally, if you have yet to reach 59 ½, you are not qualified to own a distribution from a 401k unless one of the exemptions, such as financial hardship, applies to you, or if you are getting out of your job. In case that you are jumping to another company, normally you still have the choice to leave your 401k as it is until your retirement. However, you are strongly advised not to, as your savings will be heavily deducted with all the expenses and fees accumulating over the long period. The best choice to make here is to roll your savings over. You can roll it over into an IRA, or roll it over into the 401k of your new employer.
You are advised to roll over into an IRA to gain better benefits unless the 401k plan in your new company is especially excellent. The reason for this is that the IRAs usually have lower fees because of less administration involvement. Particularly, there are some IRAs that have no fees. Furthermore, regarding a 401k, the investment options presented to you are only picked by the employer or the plan manager, and such options may not have the best price competitiveness or performance. In the case of an IRA, a larger variety of investment options are available to you. The procedures for IRA rollovers bear much resemblance to those for 401k rollovers. You get the order form from an online source, or you perform a request through your custodian, and then you pick up an account unless you have one already. The receiving account custodian will normally make contact with your existing account custodian to make arrangements for the transaction on behalf of you.
Why Roll Over Into Gold?
No matter what you reason is, the rollovers of IRA and 401k bring you a good chance to examine the allocation of your current assets, and to determine whether or not your funds will sustain their value and satisfy your needs when you are retired. Most of the traditional IRAs are mainly financed with assets such as stocks, bonds and mutual funds, or even cash. Nonetheless, paper assets have been having their values decreased over the past years due to constant instability in the market. In the meanwhile, the incessant decrease in the value of the US dollar has some impact on the cash IRAs.
Considering the above reasons, more and more investors are going towards rolling their funds into a gold IRA instead of into a traditional IRA. Using a traditional IRA to make investments into gold mutual funds, gold mining stocks or gold exchange traded funds is possible, but using it to invest in physical gold is not so. You are required to open an IRA that you yourself direct in order to hold physical gold in your account.
The benefits you gain from doing this have been more and more obvious as time goes by along with the fact that the terrible conditions of the economy originated from the financial crisis are not getting any better. Due to such situation, it shows some likelihood that the same uncertainties are also imposed on gold paper assets as on other paper assets. Gold exchange traded funds have great popularity since they follow the gold performance in the market. However, as you hold no actual gold in your hand, if the fund defaults, you end up holding nothing.
On the other hand, inflation hardly has any influence on gold. Gold are bought more in the fall of currencies, and gold value increases when stock values decrease. The global gold demand remains to be high in the extreme and to exceed its supply, as also pointed out by great difficulties in the production, and continues long to the predictable future. If you wish to guarantee that your retirement account keeps its value to the future, it is reasonable to hold physical gold in your account.
Rolling Over Into a Gold IRA
When you are performing rollovers on your existing IRA or your 401k into a gold IRA, you only have a limited range of custodians to choose, as the custodian is supposed to be a gold investment company that has a special qualification in the field in order to take care of your gold. Your gold will be stored in a depository with the approval of IRS, and you cannot hold possession of your gold till you are qualified for the distribution.
Once the custodian has been chosen and all necessary documents submitted, you then need to pick a dealer from whom to buy your coins or bullions. Your purchased items are up to your decisions, but they are subject to some restrictions imposed by the IRS. The required purity for the bullions is 24-karat, and for the coins are 99.5% minimum, which makes some popular coins such as the Krugerrand from South Africa ineligible. Once your gold purchase has been done, the gold will be transferred by the custodian to the storage facility, and then you can enjoy your time and your fund growth.
Rollovers of 401k and IRA into gold are really reasonable and logical. You can protect your account from the effects of inflation and market instability by holding physical gold in the account, while other types of investment cannot. When you are retired, you can enjoy all the fruitful rewards of all the years of hard work, and the one way to make sure you actually enjoy such rewards in your retirement is a gold IRA.