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Gold IRA retirement planning. Are you saving for retirement? If so, you’re not alone – according to the Employee Benefit Research Institute, more than 20% of workers surveyed indicated that they were working towards their golden years. As the baby boomer generation begins to retire and more people begin to think about their future, however, it’s important to understand exactly what a gold IRA retirement plan is and how it differs from other kinds of retirement plans, such as traditional IRAs or 401ks.
What is an Individual Retirement Account (IRA)?
An Individual Retirement Account (IRA) is a personal savings account, funded with money from your paycheck, that you use in retirement. There are two main types of IRAs – traditional and Roth. Both can be established at any financial institution that offers IRAs, such as banks and brokerage firms. With a traditional IRA, you can deduct all or part of your contributions from your federal income tax. The money grows on a tax-deferred basis while it is invested in stocks, bonds or mutual funds until you withdraw it after retirement age; withdrawals are taxed as ordinary income.
Gold IRAs are a type of Individual Retirement Account that is invested in physical gold and/or silver. The gold or silver acts as a hedge against inflation and currency devaluation, offering protection against some of retirement’s greatest risks. Another plus? Some states offer tax incentives for investing in gold through an IRA account, even if you don’t live in a state that doesn’t have sales tax. If you own a 401(k) or similar employer-sponsored retirement plan, you can also purchase precious metals through your account. Check with your provider for details. There are drawbacks to investing in metals via an individual retirement account, however.
Gold IRA Retirement Planning
What are the advantages of using a Gold IRA for retirement?
Gold IRAs offer a wider range of investment options, including gold, silver and other precious metals. Gold IRAs allow you to invest as little as $1,000 per year and make contributions any time during the year, which may not be true with a traditional IRA. If you’ve always felt that investing in precious metals is too complicated or just not right for you, there’s no better time than now. The rules are relaxed when it comes to Gold IRAs; they aren’t nearly as restrictive as those that govern traditional IRAs. This can give investors like you more freedom over how and where your retirement money is invested—including precious metals.
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So it’s time to think about opening a Gold IRA. Gold IRAs are different from traditional IRAs in several ways, starting with how you make contributions. With a traditional IRA, contributions can only be made up until April 15 of each year, regardless of your age. On top of that, there’s a limited number of investment options for people under 50 years old who want their money in gold and silver. For instance, if you open an account with Goldco and want to invest as little as $1,000 per year into gold or silver, that option isn’t available at all if you’re under 50 years old. Traditional IRAs have yearly contribution limits based on your income and filing status; they also have rules regarding what types of investments you can make within them.
Are there any disadvantages of using Gold as part of my portfolio?
There are some clear advantages of using Gold as part of your retirement portfolio, especially if you have other assets that aren’t likely to increase in value (real estate, stocks and bonds). The biggest advantage is that precious metals have historically risen in value when other investments have fallen. As an example, in 2008-2009, gold rose from $850/ounce to nearly $1900/ounce while stock markets fell sharply. Gold is also a very liquid investment – if you decide it’s time for some or all of your retirement assets to be liquidated for whatever reason, there are usually no restrictions on how you can use or sell your gold.
What types of Gold should I buy?: Gold bullion comes in a variety of different forms, with coin and bar being some of the most common. The biggest difference between these two is how they’re valued – gold coins are priced based on their market value (what someone will pay for them), while gold bars are priced by weight. There are also fractional bars that come in weights less than one ounce and larger bars that can weigh several hundred ounces. In addition, gold jewelry is also considered a form of bullion.
Can I invest in other precious metals besides gold with my Gold IRA?
Gold IRA Retirement Planning
There are no legal limitations on what you can invest in with your Gold IRA, but there are restrictions on who can sell and buy gold coins. In order to set up a Gold IRA account, you must be working with a legitimate brokerage that is regulated by federal law. Once that’s established, then it’s possible for you to purchase any kind of precious metal investment product as long as it meets certain requirements for security and liquidity. This includes other precious metals besides gold.
What can I do with my Gold IRA once it’s invested? There are several things you can do with your gold investment once it’s in a Gold IRA. For example, if you have any kind of debt, it may be possible for you to convert your gold into cash. This is especially true for IRS-sanctioned retirement accounts, where a 10% penalty will apply on any funds converted back into gold. If you want to move your investment somewhere else, then you also have that option as long as you are working with a legitimate brokerage company. As far as transactions go, there are no restrictions on making purchases and sales based on an IRS-approved plan.
Do I have to pay income tax on contributions made into my account?
In a traditional individual retirement account (IRA), you can deduct up to $5,500 for single filers or $11,000 for married couples filing jointly in 2013. The contribution limits are tied to your age. As of 2012, if you’re under 50 years old, your maximum contribution is $5,500. If you’re over 50 but not yet 59 1⁄2 years old, your contributions rise to $6,500.
For most taxpayers, no. As long as you meet income requirements, your contributions are tax-deductible in most cases and grow tax-deferred. Your earnings will also be exempt from taxation until withdrawal—that is, during retirement. You’ll only have to pay income taxes on withdrawals if you’re under 59 1⁄2 years old and don’t use a distribution option such as rollover or conversion that allows you to delay paying taxes until a later date.
Are my gold investments FDIC insured?
Gold IRA Retirement Planning
Just like your regular IRAs, there are rules and regulations you must follow when withdrawing funds from a gold IRA account. These include being able to prove that you’re disabled or receiving payments due to a worker’s compensation claim. In some cases, you may be required to convert your gold into cash as part of a loan arrangement and then pay it back within five years at an interest rate of 5 percent. If you still want your retirement savings secured by gold instead of government bonds, talk with an adviser about making arrangements before starting an account. This is how you start Gold IRA Retirement Planning in order to protect your future and investments.
Which types of precious metals can be included in my Gold IRA?
Gold IRAs are typically available in one of two types of precious metals, including gold and silver. Platinum, palladium and other similar metals can also be included. Depending on your financial institution or brokerage account provider, you might not have a choice as to which precious metal you can include within your plan. It’s wise to shop around, especially if your first option isn’t appealing. The value of an investment in a Gold IRA will fluctuate over time so that it may be worth more or less than what was originally paid for it at any given point in time. This is true with most investments and is only an issue when large fluctuations occur between purchase date and final pay-out date.
Not only are these metals valuable, but they can also serve as a hedge against inflation. For example, if gold is valued at $1000 an ounce today and suddenly jumps up to $5000 an ounce tomorrow, your holdings will be far more valuable than when you first started investing. This isn’t something you can count on happening, of course—gold has proven its stability throughout history—but it’s a good thing to have in place just in case your other investments fall short of expectations. It’s also important that your holdings are insured properly so that they aren’t lost or stolen by someone else if they should happen to lose value while in storage.
What happens if I need to make a withdrawal from my account before age 591⁄2?
One of many rules governing IRAs states that any money withdrawn prior to age 591⁄2 is subject to a 10% penalty in addition to regular income taxes. This only applies if you have not yet reached age 59 1/2, and are not still working full-time. If you need cash from your account before then, there is an option. You can roll over all or part of your IRA into another retirement plan such as a 401(k) or an employer pension plan (if available). So long as you do so within 60 days after your first withdrawal, it will count as one rollover and you won’t be charged a fee.
And there are two options. First, you can always withdraw your money in order to purchase a home or fund education expenses. Second, you can make multiple withdrawals over time, as long as they add up to less than your required minimum distribution amount each year. However, any withdrawals made before age 59 1/2 will incur a 10% penalty in addition to normal income taxes.