According to the IRS, you can’t accept a distribution from your Gold IRA until you’re 59 ½ years old. At this point, you must pay any income taxes that arise when making withdrawals, and you can liquidate the metals in your account for cash or take physical possession of them without penalty. A gold IRA rollover is when you transfer your 401 (k) money to a gold IRA. This will be a self-managed IRA account where you can invest in physical gold and other precious metals.
Before you initiate the transfer, it’s important to calculate how much of your existing retirement savings you’d like to invest in your new Gold IRA. Traditional retirement plans are structured so that you can build a diverse portfolio that includes stocks, bonds, and mutual funds that appreciate over time and can generate income through dividends and bond returns. You should work with a reputable company that has experience with Gold IRA rollovers and can provide competitive pricing and excellent customer service. A key selling point that gold IRA companies like to tout in their marketing is that if you own a gold IRA, you own the physical precious metals.
Making a mistake, even if it happens accidentally, can be very costly. So it’s worth knowing what the IRS will and won’t let the IRS do with your Gold IRA. With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. They also perform the necessary administrative functions to ensure that your Gold IRA complies with all IRS regulations. Your custodian bank must work with the Gold-IRA Company to help you buy and sell the physical gold and other precious metals you want to invest in.
If you want to hold gold outside of a retirement account (which means you can keep it at home), here’s more information on how to buy gold outside of an IRA. There is no tax penalty if you transfer your 401 (k) funds directly to your Gold IRA custodian without withdrawing them. When you convert part of a pre-existing pension fund or investment account (such as a SEP IRA, 401 (k), or Roth IRA) into gold bars in the form of gold coins and bars in an IRA, this is known as a gold IRA rollover. A gold IRA rollover could be a good step if you want to reduce the risk of market volatility in your retirement portfolio.
A common way to fund a new Gold IRA account is to use funds that are already in another retirement account, such as another IRA, 401 (k), 403 (b), 457 (b), or Thrift Savings Plan, in accordance with IRS rules. The alternative to the tax deferral that a traditional or self-directed IRA offers is a Roth IRA, which is financed with money you’ve already paid taxes on. Most gold IRA companies recommend or require that you work with a specific custodian and custodian, although some give you a choice of two or more. If you’re considering a gold IRA, you should always do so as part of your wider investment strategy, taking into account your time horizon until retirement, your expected income needs, and your risk tolerance.