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Should You Get a Gold IRA?

Oct 28

You're not sure if you should invest in a gold IRA. Gold has been an investment staple for centuries, and it's still one of the most popular investments today. But is investing in gold right for you?

We can help! Our team of experts will walk you through all the steps to get started with your own gold IRA. And we'll make sure that everything is done correctly so that your investment stays safe and secure at all times.

Plus, our advice is completely free! So keep reading to see if investing in a Gold IRA is right for you!

The Shifting Price of Gold

What do you get by investing in a gold investment retirement account? Gold! But gold is worth a lot more than it used to be. In fact, in the year 1900, if you had $1 in gold, you'd be looking at around $19 today! That's huge growth.

But investing in gold is even smarter than it was back then. Why? Because we're seeing inflation rise and interest rates on savings accounts drop. Now, more than ever, gold is beginning to look like a safe investment. And the best part is that if you include it in your retirement savings plan, you can get tax breaks!

Gold IRAs: A Growing Trend

Gold IRAs appeal to investors sense of security. While stocks are vulnerable to inflation, gold does better during inflationary periods. And with the instability in the stock market over the past few months, more and more people are looking to diversify their investments with gold IRA's.

Of course, this isn't a new trend. Employees have been able to invest in Gold IRA's since 2001, and it's gained in popularity ever since. But this doesn't make gold the best option for everyone.

For example, if you are looking for fast growth that will have you seeing returns within months or even years, then gold isn't the right choice for you at all. Gold is an investment that will typically yield results over a longer period of time.

Those who believe that inflation and interest rates will continue to rise can benefit from a Gold IRA, as it typically does well during inflationary periods. But those looking for an investment with high returns may be disappointed by gold's long term growth potentials.

Golden Rules

Gold IRAs can be either traditional or Roth options which offers different advantages. For example, with a traditional IRA your contributions are tax deductible and earnings can grow tax-deferred until it is withdrawn. However, with the Roth IRA there is no up front tax deduction but funds do grow tax free.

Some investors choose to get both types of gold IRAs so they have the best of both worlds. But while the Roth is typically more popular, you should select the IRA type that best meets your cash flow needs.

Another thing to consider is that some investment firms will only offer gold coins for their Gold IRA investments while others may also include paper certificates or bars. Again, this decision will depend on what's best for your particular situation.

Finally, you should consider the fees associated with your Gold IRA. Most firms charge administration and storage fees for gold transactions, so make sure to factor those costs into the total expense of switching over to a gold retirement plan.

With a little more research, you can find a firm that meets your needs and makes investing profitable. But before you start looking, make sure you know how much gold you want to add to your retirement account and what type of IRA will work best for your needs.

Then you can get started finding the perfect firm!

Finding a Broker or Custodian

To put IRA funds into gold, you need a broker or custodian to hold the actual metal. Your options will depend on what state you live in. For example, California has stricter regulations regarding gold IRA's and does not allow coins as an option.

To find a suitable firm for your Gold IRA, check out their website for information about investors' rights and fee schedules. Make sure they are licensed and offer services that you need.

Then, compare price versus service to find out which firm will yield the best results for your needs.

Help is Available!

Before starting any investment plan like Gold IRAs, you should always work with a financial planner. They can help you determine how much gold to buy, what type of IRA you should choose and how to manage the funds.

A financial planner can also help you with any tax issues that may arise during your investment process, as well as track overall performance. This is a huge benefit when it comes to future planning and determining if your current Gold IRA plan needs any adjustments or not.

With the erratic market conditions that we've been experiencing in recent years, everyone needs to have a financial plan. You can start yours with a Gold IRA today!

Special Costs

Owning gold in a gold IRA does come with some special expenses and responsibilities. For example, you will need to set up a custodian to hold your gold and provide proof of that storage on an annual basis.

In addition, if the metal is held in a safety deposit box or vault, then you will have to pay for those fees as well. You should also expect to pay any fees charged by the custodian or your IRA manager.

But most are small in comparison to the overall cost of buying gold, so they shouldn't impact your investment position very much.

Paper vs Physical Gold Some investors choose to use paper certificates when rolling over their 401k's into a Gold IRA while others opt for physical bars and coins instead. The choice is completely up to the individual investor, but there are some significant differences in fees and oversight between paper certificates and physical gold.

For example, you will need to pay for storage of the physical gold in most cases, while most retirement plans only charge an annual fee for paper assets. There is also typically a difference in storage costs.

Physical Gold Storage If you choose to have your IRA company store your physical gold, you will have to pay for the cost of security and insurance. If you are buying gold bars, expect storage charges to be higher than if you bought U.S. 90% or 40% junk Gold Eagle coins.

With that in mind, it is important that you do not warehouse the gold yourself, but with a trusted company instead. That way you can avoid making your IRA liable for any claims or lawsuits that could arise if the precious metal is damaged or lost.

Paper Gold Storage If you choose to go with paper certificates for your IRA, then chances are you will only be charged an annual storage fee unless there are other fees or services that are demanded by your retirement vehicle.

For example, some IRA plans require investors to make yearly statements using paper certificates instead of electronic data transfers. That can add fees for service providers if you only have a small amount of gold in your account.

Additionally, you will need to verify that the physical gold is still where it should be which can mean a visit from the IRA custodian or an outside auditor.

In short, owning gold in a Gold IRA is not as simple as buying some shares of stock or mutual funds. But there are benefits to taking part in this type of diversification and security as well.

Required Minimum Distribution Problems

Once you reach age 72, you will be mandated to take required minimum distributions (RMDs) from a traditional gold IRA (though not from a Roth one). This is a fixed amount that you will have to take out each year and it is based on your overall account balance.

If your IRA contains only paper assets such as gold bars, coins, and certificates then you will be required to sell enough of those items every year in order to fulfill the RMD. This can lead to problems if market conditions are bad and gold prices are down.

For example, say your IRA account contains $200,000 worth of gold and the annual RMD is about $9,000. If market conditions make it impossible or too costly to sell that much metal in a single year, you will either have to take out more than the requirement (and pay extra fees) or deal with the tax consequences of not taking out enough.

To avoid this, it is important that you review your RMDs annually to see if any changes need to be made. Some IRA providers act as custodians which means they will help you manage the process for a fee.

Otherwise, you will have to make all the decisions yourself. If you are using physical gold in your IRA, then it might be a good idea to consult with a tax expert who is well-versed in managing RMDs and taxes for retirement plans before making any decisions that could affect your return.

Checkbook IRAs

There is one possible way to avoid having a custodian and the costs associated with one.: That is to set up an LLC inside your IRA. This can be done with Goldco Precious Metals or some other gold IRA company that offers this service.

Once the LLC is established you can then use it like a checkbook to buy and sell physical gold for your retirement plan at will without having to pay any fees beyond the purchase prices of the ingots you buy.

Of course there are some risks to this including possible penalties for early distributions or if you fail to file Internal Revenue Service Form 5472 when required by law. This could result in either civil or criminal penalties, so it's best to check with a tax professional before making any decisions.

Rolled Gold

If you already have an IRA or 401(k) established, then you will have to decide whether or not you want to transfer the existing money into a Gold IRA. You can also choose to keep it where it is and buy additional gold with new contributions.

This option might be suitable for investors who already own some physical gold but want more of it in order to diversify their holdings. If you decide to go this route, then you will still pay all the ETF fees and other charges associated with owning gold.

However, you will also incur fees for transferring IRA accounts to Goldco or another gold IRA provider. Just keep in mind that these costs vary depending on your existing plan's custodian and what method of transfer (if any) is used.

Gold's Special Risks

All investments come with risks and rewards, gold included. In addition to the general risks associated with owning commodities, gold also has some very unique pitfalls that investors should be aware of before making a purchase.

The most obvious risk with investing in physical gold for an IRA is the possibility of theft or damage to your holdings while they are being stored or transferred. However, there are many other possible financial risks so it's important to review your entire investment strategy with your tax professional before making any moves with physical gold.

Some of these risks include: Counterparty risk : Who you buy physical gold from can determine whether or not there is a way to recover it if the sale goes bad. Be sure to only do business with reputable companies that will ensure all contracts are enforced and any disputes are settled fairly.

Manipulation : Gold contracts are sometimes used as futures instruments on the COMEX. If new laws or regulations allow for manipulation of these markets then it could threaten your retirement plan.

Market Risk: There is always the possibility of losing money on gold investments, so you need to consider whether or not this asset class is suitable for building a diversified investment portfolio.

Tax Risk: There are a number of details you have to pay attention to in order to fully utilize the tax breaks that come with investing in gold for your IRA or 401(k). If you accidentally omit a step then this could result in penalties and other complications.

Gold is one of best assets for diversifying a retirement portfolio. It is also one of the most complex, which means you need to find an experienced financial advisor to help set up your IRA gold account and keep it growing in value over time.

The Bottom Line

Gold is still a popular investment, but few people realize that it can be used as part of their retirement plans. Having physical gold in an IRA can provide peace of mind since it is backed by over 30 years of history. However, the regulations are complex and the process for setting up one will depend on your current holdings.

There are pros and cons to owning gold in an IRA, but it is always best to do your own research into the costs and risks associated with it before making any decisions. Otherwise you might face unexpected fees or penalties down the road if you fail to correctly report your holdings, contributions, and distributions every year.