How to Initiate a Gold IRA Rollover

Gold IRAs can be a safe and reliable way to save for retirement and diversify your portfolio if you use a reputable provider. There are two primary ways to fund these self-directed investment accounts: a direct or indirect rollover.

With a direct rollover, your existing administrator transfers the funds to your new account. In contrast, with an indirect rollover, you’ll receive a check and need to deposit the funds. We’ll explore the gold IRA rollover process, including how and why to do it and what to know before you start.

Gold IRA rollover guide

You can roll over your existing retirement account or IRA into a new gold IRA in four steps. Here is what that process looks like:

1. Open a gold IRA

To open a gold IRA, you’ll need a self-directed IRA account and a designated custodian to manage it. These custodians report to the IRS, so they must be approved by the agency to operate.

You will also need a metals dealer to sell you IRS-approved gold and a secure storage facility. 

Your best bet is to start with an experienced gold IRA company to walk you through setting up your account, funding it, and choosing the appropriate vendors and investments.

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How does a gold IRA work?

Once your gold IRA is ready, you can begin rolling over part or all of your funds from another IRA or retirement account, including 401(k)s, 403(b)s, thrift savings plans, and more.

2. Contact your retirement plan administrator and complete the paperwork

To initiate the rollover, contact your existing retirement plan or IRA administrator and tell it you want to roll over funds into your new IRA account. The administrator will have the required forms and paperwork for you to complete.

The two major types of rollovers are direct and indirect.

• Direct rollover: Direct is when your money is transferred electronically or a check is made out in the new administrator’s name for your benefit (preferred method).
• Indirect rollover: Indirect is when a check is made out to you, and the IRS requires withholdings of 20% in taxes for retirement plans and 10% for IRAs (not preferred).

Remember that you must redeposit the funds into a new IRA or retirement plan within 60 days to avoid penalties. The entire account balance, including whatever was withheld for taxes, must be redeposited within 60 days.

3. Purchase your gold

Once the funds are deposited in your new IRA, choose the IRS-approved precious metals you’d like to invest in and direct your custodian to purchase them. 

It’s important to know that the IRS has very specific rules about what types of gold and other precious metals can be included in an IRA.

The custodian of your gold IRA can help guide you through the process. It’s crucial to ensure only IRS-approved precious metals are purchased and added to your IRA, as required by law. 

4. Have the gold shipped to an approved storage facility

Your custodian will have a recommendation on how to handle this. Not only does the IRS have specific rules about the types of gold and precious metals you can include in an IRA, but how these must be stored. These investments must be held by a bank or a non-bank trustee that’s approved by the IRS.

Monitor your account once the gold has been purchased and shipped to an approved storage facility. Check in regularly to see how your investments are doing. Depending on how your IRA is performing, you may want to consider a future annual rollover into the account if you want to buy more gold. 

If you no longer want to invest in gold, you could also consider an annual rollover into a more traditional IRA. Like any investment, if you’re unsure of what’s best, working with an expert to get the best possible advice can be helpful. 

Expert take

Chloe Moore

CFP®

There are risks of rolling over funds from a 401(k) to an IRA (not specific to gold). 401(k)s are protected from creditors in bankruptcy, while IRA protection may vary by state. If you retire early, you also have the potential to access funds from your 4011(k) as early as age 55. In most cases, you can’t begin IRA distributions without a penalty before the age of 59.5. 

What is a gold IRA rollover? 

A gold IRA rollover is the process of moving money from an existing IRA or retirement account into a new or existing IRA backed by physical gold. A rollover into a gold IRA allows individuals to diversify their retirement savings by adding IRS-approved precious metals to their portfolios. 

Unlike traditional IRAs, which primarily hold paper assets like stocks and bonds, a gold IRA holds IRS-approved gold and precious metals. Initiating a gold IRA rollover involves moving funds from your current retirement account, such as a 401(k) or another IRA, into a gold IRA.

This type of rollover can done without incurring taxes or penalties, provided the rollover follows IRS guidelines. Once the rollover is complete, the funds in the IRA can be used to buy gold or other precious metals that meet IRS standards.

Will I pay gold IRA rollover fees?

You can expect to pay fees for a gold IRA rollover. Not only will you likely pay a one-time fee to setup your new gold IRA, but also recurring fees for the custodian to administer your account, to store the gold, and for each transaction, amongst others. 

Not only can these fees vary by custodian, but they could reduce your IRA’s earning potential. That said, shopping around and comparing fees before selecting a gold IRA is crucial. Taking time to learn about the fee structure can help you better understand the future returns on your investment. 

What are the tax implications of a gold IRA rollover?

You won’t face tax penalties with a direct custodian-to-custodian rollover of funds, but you could with an indirect rollover. To avoid these penalties, you must deposit your funds within 60 days of receiving them from your 401(k) provider.

Upon withdrawal, the tax implications depend on what type of self-directed IRA account you’ve chosen.

• If you have a traditional IRA, you’ll pay taxes on any funds you withdraw in retirement.
• If you have a Roth IRA, you’ll pay those taxes before investing them in your account, making your withdrawal tax-free.

It’s possible for gold returns to be higher in traditional IRAs than in Roth IRAs. However, like any investment, higher returns are not guaranteed. Depending on the market, the returns could be lower. 

Pros and cons of a gold IRA rollover

While a gold IRA can be a helpful way to diversify your retirement portfolio, it’s essential to consider the advantages and disadvantages before proceeding with a rollover. Some of the pros and cons of a gold IRA rollover are as follows:

Pros

• Diversification

  A gold IRA rollover can be a way to diversify your retirement portfolio with precious metals. It’s a possible method to reduce risk and increase the long-term growth potential, as long as your portfolio is well-diversified with various investments.

• Tangible asset

  Gold is a physical asset you can hold, unlike traditional investments in stocks and bonds. This can provide a sense of security for investors who prefer tangible investments.

• Historical value

  Gold and other precious metals have a history of maintaining value over time, making them popular investments. These investments are sometimes used to preserve wealth and hedge against economic changes. 

Cons

• Fraud risk

  The gold IRA market has seen instances of fraud and scams. The federal government has issued warnings about potential fraud in gold IRAs. It’s crucial to choose a reputable provider to avoid being scammed.

• High fees

  Gold IRAs may come with higher fees than traditional IRAs. These can include setup fees, storage fees, and custodial fees, which can eat into your investment returns.

• Market risk

  While gold is considered relatively stable, its price can still fluctuate. This volatility can impact the value of your investment, particularly in the short term.

• Limited growth potential

  Gold does not offer income like dividends or interest potential similar to what you could earn on stocks or bonds. So, its growth potential might be limited compared to other types of investments.

Where can I roll over my IRA into gold?

Rolling over your money into a gold IRA requires working with specialized companies offering these services. These companies help set up your self-directed IRA, manage the paperwork, and ensure compliance with IRS regulations. Plus, they ensure your physical gold is stored in IRS-approved facilities.

You cannot perform a gold IRA rollover independently because it involves navigating complex IRS rules, purchasing IRS-approved metals, and ensuring secure storage. Choosing a reputable company ensures that your investments are managed correctly and securely.

Gold IRA accounts typically come with annual fees, so shop around before choosing where to open yours. Need suggestions? Our guide to the best gold IRA companies can help.

How to determine the best gold IRA rollover company for you

Choosing the right company for your gold IRA rollover is crucial to ensure your investment is secure and compliant with IRS regulations. Search for companies with a solid reputation, transparent fee structures, and excellent customer service. 

These companies should provide comprehensive assistance with setting up your self-directed IRA, managing the necessary paperwork, and ensuring your physical gold is stored only in IRS-approved facilities.

It’s important to compare fees, as they can vary significantly between providers and impact your investment returns. Reading online reviews and asking those you trust for recommendations can also help you find a trustworthy company.