Many investors are turning to silver, gold, and other precious metals in a bid to diversify their portfolios. Gone are the days when stocks and bonds were the in thing. We know better now because we have seen that even in the middle of an economic crisis, precious metals are highly sought-after and traded.
To make this strategic investment, many people use their retirement accounts. This allows them to leverage the tax benefits. All you need to do is choose a reputable company to assist you in investing.
Lear Capital Gold IRA vs 401(K)
401(k) is a retirement savings plan that allows employees to invest a fraction of their salaries before tax deduction. You will only pay tax on your savings when you withdraw from the account. This plan, therefore, allows employees to have funds at their disposal when they retire.
The drawback of 401(k) is that your employer has to sponsor it. Otherwise, you can’t invest, though other options that allow tax-deferment exist. An example is theLear CapitalGold IRA (individual retirement account). It allows you to contribute to your retirement savings without any assistance from your employer, and you won’t have to pay tax until you withdraw.
Gold IRA: Getting Started
Setting up this type of retirement account is straightforward. First, you need to get a custodian. It is illegal to keep gold in your house or store it whichever way you choose.
The custodian will help you purchase the bullion through the IRA. To get a custodian, contact a reliable bank, trust company, or credit union, and do your own research to be sure the custodian has an excellent track record in handling precious metals IRAs.
Next, you need to find a bullion dealer or broker that will sell investment-grade gold bars or coins to you. Sometimes, custodians already have brokers that they work with. This should also form a part of your research as it would reduce the burden of searching for both a broker and a custodian.
After choosing the people to work with and you are satisfied with their offer, you can go ahead and initiate the account set up, then purchase your preferred precious metals. When you attain the age of retirement, you can either collect the physical metals or convert them to cash. Still confused about which custodian to choose? Click here to get useful tips.
Rolling Over 401(K) to Gold IRA
If you previously held a 401(k) but want to set up a gold IRA, reach out to the account manager to rollover your funds. You can either choose an indirect or a direct rollover. The indirect one involves withdrawing your funds and depositing them in the new account. The direct one involves moving funds directly, which is simpler and less risky because of the IRS penalties of early withdrawals.
If you choose the indirect method, you must complete the fund transfer to the custodian within sixty days. After then, the funds would become taxable. Also, if you are younger than 60 years, even if you’re 59 and a half years old, you will pay 10% of your withdrawal as a penalty.
Whichever option you choose, ensure you understand and accept the requirements of the 401(k) company. When you have fulfilled the requirements, your 401(k) company will give you a check for your requested funds or send it to the IRA custodian. This is the climax of the 401(k) to gold IRA rollover.
Final Thoughts: Should You Roll Over to a Gold IRA?
If you want to diversify your savings or want a plan that does not contain volatile assets like stocks, bonds, and mutual funds, then you should consider rolling over to a gold IRA. Generally, gold investments are appealing because its spot price increases when there is a downward movement in the stock market. So, when your paper assets are not performing as planned, your precious metal investment will probably do better.
Many people use gold as a hedge against inflation and other economic insecurities. As a result, investors ensure they include it and other precious metals in their portfolio of paper assets. You will hardly find an investor with a portfolio filled with only one class of assets. You may want to check out https://finance.yahoo.com/ to find other means of investing in gold apart from holding the physical metal.
Oftentimes, metal dealers advertise precious metal retirement accounts by describing the volatility and risky nature of the stock market. Without a doubt, gold will never lose its value. However, you must know that no investment goes without a risk. Gold prices are also subject to rising and falling.
Also, investing in the physical metal makes it prone to theft, but the custodian should be able to provide insurance against such cases. So, whether you want to rollover or not, bear in mind that investing in different classes of assets is a more secure retirement strategy.