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Ensuring a financially secure retirement is a goal many individuals strive for, requiring careful planning and disciplined saving.
For most, this journey involves leveraging employer-sponsored retirement plans such as 401(k)s or 403(b)s. Those without access to these plans, including the self-employed, often turn to Individual Retirement Accounts (IRAs).
These retirement plans provide a structured way to invest in a diverse range of assets, including stocks, bonds, mutual funds, and ETFs, offering the potential for growth and stability in the long term.
Before we get started:
Inflation and rising interest rates has destroyed many people's savings. Many investors feel defeated and helpless, but you can fight back.
Gold and other precious metals have been used to protect against inflation for thousands of years. And when you hold physical in a tax-protected savings account, it gets even better.
Opening a gold IRA can sound complicated, but it's really not.
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Gold IRA Investment Guide
However, individuals can also invest in alternative assets for their retirement. These alternative investments include precious metals, real estate, and other tangible assets. These assets can help to diversify a retirement portfolio, reduce risk, and preserve wealth during uncertain economic times.
They can also be a hedge against inflation. Individuals cannot make these alternative investments in traditional retirement accounts. Instead, they will need to open a self-directed IRA or gold IRA.
The information in this guide should help anyone who wants to start investing for their retirement and would like to open a gold IRA for retirement planning.
Reasons to Open a Gold IRA
There are many reasons why a gold IRA can be a great addition to an investor's retirement portfolio. First, a gold IRA is a popular way for investors to diversify their portfolios. Stocks, bonds, mutual funds, and ETFs mirror the movement of the stock market. An investor's portfolio can be at high risk of losing significant value if there is a bear market where the overall stock market is down for an extended period.
A bear market for someone in retirement could put them in a financially stressful situation. However, precious metals like gold can hold their value during uncertain economic times so the investor can maintain their standard of living during a bear market.
Second, gold and other precious metals can help protect the retirement portfolio from inflation. The value of gold usually rises when the value of the dollar decreases. During inflationary times, someone in retirement can maintain their purchasing power with gold and other precious metals.
A final reason to open a gold IRA is that it allows an investor to own a physical asset. Unlike stocks, bonds, mutual funds, and ETFs, investors can physically obtain precious metals for their gold IRA and store them in an IRS-approved storage unit. They can visit the storage unit, view their precious metal assets during the storage unit's business hours, and withdraw at any time.
What to Consider Before Opening a Gold IRA
Investors need to know how a gold IRA works to ensure it is right for them before they open an account. There are many factors for investors to consider, including account type, contribution amount, storage, and fees. Let's look at each of these factors:
There are several types of gold IRAs. However, most people open a traditional or a Roth gold IRA. The difference between these two gold IRAs is how it taxes the account holder. An investor makes pre-tax contributions to a traditional IRA, which will reduce their taxable income. However, they will pay taxes on the amount they withdraw in retirement.
If an investor has a gold Roth IRA, they make after-tax contributions to the account. After-tax contributions will not reduce their taxable income. Yet, they do not pay taxes when they withdraw the funds at retirement. The investor should work with a financial advisor or tax planner to decide which is best for their situation.
There is a limit to how much an investor can contribute to a traditional or Roth gold IRA. The current 2023 contribution limit to each IRA is $6,500 for anyone under 50. Anyone over 50 can contribute up to $7,500. There is no age limit to contributing to a traditional or Roth gold IRA.
Also, there are no income limits to opening a traditional gold IRA. However, there is an income limit to opening a gold Roth IRA. Therefore, the investor should talk to their financial planner or tax advisor to see which gold IRA they can open based on their income.
IRS rules require gold IRA owners to store their precious metals in an approved storage facility or depository. Some rules can result in fines and penalties if investors keep their precious metals at home or in a storage facility that the IRS does not approve. However, when an investor withdraws their precious metals at retirement, they can store them wherever appropriate without fines or penalties.
Investors should be aware of gold IRA fees because this can impact their return on investment. Gold IRA fees include a one-time setup fee, an annual storage fee, and possibly a management fee. As a result, gold IRA companies and depositories can have different prices for several hundred dollars. Also, some gold IRA companies and depositories can have a flat or adjustable fee based on the value of the precious metals in the account.
Steps to Opening a Gold IRA
There are several steps an investor must go through once they decide that having a gold IRA is good for reaching their retirement goals. The most important first step is to find a reputable gold IRA company that the investor can work with to help them with their retirement savings. Other actions include funding the account, selecting the precious metals, and finding a depository to store the metals:
Finding a Reputable Gold IRA Company
An investor must find a gold IRA company to help them open an account, roll over funds from another retirement account, purchase precious metals, and ship them to an IRS-approved depository. They will also be a custodian for the investor by handling the paperwork and ensuring the account meets all IRS compliance requirements.
It is easy to fill out an application to open a gold IRA. All the investor needs is their driver's license. Investors should look for a company with the lowest fees and excellent customer service.
Funding the Account
Funding a gold IRA involves purchasing precious metals from the gold IRA company. Many people roll over funds from an existing retirement account into a gold IRA. These funds can be from 401(k) or 403(b). The gold IRA company can help an investor with this process to avoid any taxes, penalties, or fees.
Second, an investor can transfer funds from an existing traditional or Roth IRA into a gold IRA. Transferring is also an easy process. The investor can fill out a form with the account administrator that directs them to transfer the funds to the gold IRA. Transfers are also tax and penalty-free.
The third option for the investor to fund their account is to write a check, use cash, or wire funds to the gold IRA. There may be a charge to wire funds. The investor can choose the funding option that works best for them.
Selecting the Precious Metals
The fun starts when the investor gets to choose the precious metals to put into their gold IRA once the funds are in the account. Precious metal options for a gold IRA include gold, silver, platinum, and palladium.
The IRS has specific rules about the type and purity of precious metals that investors can place in their gold IRA. A representative from the gold IRA company can help them choose the precious metals that are IRS-approved for their account.
Withdrawing Funds from a Gold IRA
A gold IRA holder can withdraw from the account without a penalty at age 59.5. If the account holder withdraws before 59.5, they will have a 10% penalty and pay taxes. Mandatory distributions occur at age 70.5. However, the traditional gold IRA or gold Roth IRA holder can continue contributing to the retirement account.
Top Three Gold IRA Companies
There are many gold IRA companies, which can make it challenging for individual investors to choose the one that best fits their needs. In addition, gold IRA companies offer different services, precious metal products, and fees, so investors must research various companies to find one that works best for their investing goals.
Here are three highly recommended gold IRA companies to help investors start their research. Then, investors should compare these gold IRA companies to ensure they can find the one who can diversify their portfolio, protect their assets against inflation, and enhance their long-term wealth for a comfortable retirement.
Goldco is one of the top-rated precious metal companies in the industry. They are based in the Los Angeles area and have many years of experience helping individuals with their long-term investment needs in precious metals. Since 2011, Goldco has placed over $1 billion in gold and silver transactions. As a result, they can take advantage of the growing market for precious metals in the current economic environment.
Goldco offers gold and silver IRAs for its customers. They sell IRS-approved gold and silver bars and coins that meet the .995 minimum purity fitness requirement. The company sources high-quality gold and silver bars and coins from mints worldwide. Goldco offers their gold and silver IRA customers the Goldco BuyBack Guarantee. Their products include:
Customers cannot set up an account online. Instead, they need to request a free kit. Then, a Goldco representative will walk them through setting up a gold or silver IRA, funding their IRA, and purchasing precious metals. Goldco has a strong reputation for its customer service, making it easy for customers to begin investing in precious metals for their retirement.
Augusta Precious Metals is another highly-rated company based in Casper, Wyoming. Customers will find plenty of information about investing in precious metals on the company's website. In addition to market news and a video library, customers will find the following:
Augusta Precious Metals provides customers with gold and silver IRAs, gold and silver cash purchases, and lifetime account support. They have a straightforward process for clients to open an IRA, including opening an account, funding the account, and buying gold and silver. Customers must contact a company representative to start this process. The products Augusta Precious Metals offer its customers include:
Augusta Precious Metals also provides custodian and depository information. In addition, the company works with Equity Trust as its number one custodian and precious metal IRA provider. This company has over 30 years of experience in this industry, operates in all 50 states, and has over $25 billion in assets under management.
The company also uses Delaware Depository for its precious metal storage. It is a non-governmental depository that provides up to $1 billion in insurance and complies with IRS regulations for IRA asset storage.
American Hartford Gold is another Los Angeles-based precious metal company that provides customized investment solutions for its customers. In addition, the company helps to educate its customers about the benefits of precious metal investing through its Data Center. The Data Center provides information on precious metal market trends and price comparisons. It also enables customers to contact an account representative.
American Hartford Gold offers its customers a gold IRA for their retirement savings. The setting up of a gold IRA is the same as Goldco and Augusta Precious Metals. First, customers must contact a company specialist to help them complete the paperwork. Next, the customer can fund the gold IRA once they establish the account. Finally, they can purchase gold and silver products for their retirement savings.
Customers can buy gold and silver bars and coins for their gold IRA. American Hartford Gold lists the gold and silver products on its website. In addition, it labels the products that meet IRS standards for a gold IRA. American Hartford Gold also uses Equity Trust Company as its custodian. Customers can also choose from three depositories: Brinks, Delaware Depository, and International Depository Services Group. These deposits are in various locations throughout the U.S., including Texas, New York, California, Utah, and Delaware.
Final Thoughts
A gold IRA is a way many investors can diversify a portfolio, protect retirement savings from economic uncertainty, and boost an investor's purchasing power in retirement. First, the investor must compare their options, whether precious metal companies, custodians, depositories, or precious metal products. They should also talk to a financial advisor or tax professional about their retirement goals. Comparing all the options is the best way to ensure the investor can have a secure and financially comfortable retirement.
Remember to read our list of the Best Gold Investment Companies to work with, before investing your hard-earned savings!
>> CLICK HERE to read our list of the Top Gold IRA Companies. <<
Charles Turner
Hi, I'm Charles Turner, founder of Turner Investments. I created Turner Investments to provide education and guidance to individuals interested in personal finance.
My goal is to make Turner Investments a valuable resource for anyone looking to learn more about personal finance and make smarter investment decisions.