In current times, everyone needs a retirement investment plan that doesn’t just save their retirement funds, but also gives them a hedge against economic crises.
Historically, gold has been known to serve adequately in this capacity. During economic crises like inflation and political crises like war, this precious metal is known to always retain its value.
Luckily, you can also add this wonderful asset to your IRA account and enjoy all the benefits attached to gold investment. If you want to get a gold IRA with Goldco, then you may be wondering how to fund the account when you get it.
Well, the good thing about funding a precious metal IRA is that it is as easy (even more so) as getting the account. There are so many alternative methods to do this from doing a wire transfer to using cash, and even rolling over from your existing 401k account.
You are in the right place if you would like to opt for the last option. In this read, we will be discussing how to do a 401k to precious metal IRA. But first, let us start by explaining what a Gold IRA is.
Gold IRA – What Is It Exactly?
A gold individual retirement account is a form of retirement account that allows an individual to invest in precious metals such as gold, silver, palladium, and platinum. Although this plan is commonly referred to as gold IRAs, gold is not the only precious metal that can be held with this plan. Hence, these accounts are also referred to as precious metal individual retirement accounts.
They are usually self-directed, which is why the diversity they offer is more than what traditional IRAs offer. You can watch this video https://www.youtube.com/watch?v=GoamnYifH3Q to learn more about self-directed IRAs.
One thing you must note is that while the account accepts any of the precious metals listed above, you can’t collect just anything made with these metals. There are certain IRS specifications and requirements that the precious metal must meet before it can be added to your IRA.
Open a Precious Metal IRA
The first thing you have to do to rollover your 401k funds to your gold IRA is to set up the gold IRA. If you already have the account, then you can skip to the next section. Now, we are going to discuss how you can open a precious metal individual retirement account in steps.
The process is quite straightforward and the first step would be to get a custodian. Keeping your precious metal by yourself is illegal; hence the custodian would be handling most of the transaction throughout. Therefore, you must be very careful with who you hire for this role. Ensure the custodian is reputable and do your findings diligently before you make your conclusion.
The custodian is typically a financial institution like a bank, trust company, credit union, or any other approved institution. They also have to be IRS-approved.
Once the custodian is gotten, you would have to get a dealer. Again, you would have to be diligent in your search as anyone can pose as a dealer. Anyone can read this article and learn to become a gold dealer. We advise that you ask your custodian for a list of reputable dealers, being in the field means they would know quite a few or even work with some.
Once all these are done, it will be time to fund the account. In this case, rollover funds from your 401k to the account.
401k to Precious Metal IRA Rollover
When your precious metal individual retirement account has been properly set up, you can now contact the firm handling the 401k account. Then you would inform them that you would like to initiate a rollover.
There are two options available to you and you would be asked which you want to opt for. You can either do an indirect or a direct rollover.
The indirect rollover involves you withdrawing the money from the 401k account then depositing them in your new gold IRA.
On the flip side, the funds go directly from your 401k account to the new one with direct rollover. Direct rollovers typically have less complex procedures and have lesser IRS penalties risk attached to them.
If you choose the indirect option, there are certain regulations you have to abide by. The major one is that the funds have to be deposited in your new IRA or to the custodian 60 days after it was sent to you.
If you fail to deposit the funds within this 60 days window, then the money becomes taxable. If you happen to be below 59 and half years, then you would have to pay a 10 percent withdrawal penalty.
Regardless of the option you choose to use, if the company has any special rollover requirements, then you have to ensure that you follow every one of them. Once every requirement has been met, the investment funds would either be sent to either your custodian or you.
The rollover cycle will be fully completed once you get to this stage.
Should You Make This Move?
When all is said and done, you may still be considering whether or not this move is the right one. As we said in the introduction of this read, gold has historically been considered a great investment choice. This is due to the intrinsic value it holds.
This precious metal serves as a hedge against inflation and when other investments and the stock markets are experiencing volatility, this precious metal stays strong. In the past when fiat currencies and other types of investments lost their values due to some geographical/political crises and even natural disasters, gold retained its value.
Yet, having this asset as your only form of investment may ultimately be a very wrong choice. So, instead of doing this, we advise that you simply use it in diversifying your portfolio while you have other assets as well. This will ensure you are properly protected from the volatility of any investment plan.
In this art, we have discussed what gold IRAs are and how to fund one a 401k rollover. We hope you find it useful and begin to implement the information shared herein.
This content was originally published here.