How to Exchange your IRA for Gold

After losing a sizable portion of their savings in the recent market downturn, many investors have been looking for alternatives to equities that will still provide the opportunity for growth, yet without all of the risk and volatility. The good news is that they can find this in gold and precious metals.

Investing in Gold Through Your IRA Account

An even better strategy than purchasing gold alone is investing in gold and other precious metals through your IRA account. This is because in addition to the benefits of growth, diversity, principal protection, and the hedge against inflation that investing in gold and precious metals can offer, putting these vehicles inside of an IRA account can provide additional tax advantages.

For example, if invested in a traditional gold IRA account, an investor’s funds can grow on a tax deferred basis and are only taxed upon withdrawal. If invested in a gold Roth IRA account, funds can both grow and be withdrawn tax free by the investor.


How to Exchange Your IRA for Gold

When ready to move your IRA to gold, there are some steps that must initially be taken. First, it is important to locate a gold IRA custodian. A reputable gold IRA custodian can help to ensure that you are investing in the IRS-allowable metals for gold IRA accounts.

This is important because according to Internal Revenue Service guidelines, there are only certain types of gold and precious metals that are allowed to be invested inside of an IRA account. In addition, a good gold IRA custodian can also provide all of the necessary paperwork and account records that are required.


Funding a Precious Metals IRA Account

Once a gold IRA account has been opened, there are three ways to fund the account. These include:

  • Cash – Each year, investors are allowed to make a cash deposit to their IRA account, up to a maximum dollar amount. In 2014, this amount is $5,500 for investors who are aged 49 and younger, and $6,500 for investors who are aged 50 and over.
  • IRA Transfer – If an investor already has an IRA account established – regardless of whether it is a gold IRA account or not – funds may be transferred into the new gold IRA account. There is no maximum dollar amount limit on IRA transfers from one account to another.
  • 401k Rollover – If an individual has funds that were left in a former employer’s retirement plan such as a 401k or a 403b, then those funds can be “rolled over” from your 401k into the gold IRA account. Similar to with an IRA transfer, there is no dollar amount limit on the amount of funds that may be rolled over into the new IRA account in a rollover transaction.


Finding the Best Gold IRA Companies

The best IRA companies will provide guidance to investors on how to open a gold IRA account, as well as assistance with how to fund the account, and on which types of metals may be best in meeting the investor’s overall short and long-term investment goals.