What Is a Precious Metals IRA Rollover?

What Is a Precious Metals IRA Rollover?

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Creating wealth is a long but rewarding journey. When it comes to investing, there are several key rules to follow. One of those rules is portfolio diversification.

Portfolio diversification is when you spread your investments across different assets. This is important because it reduces the likelihood that one negative investment will wipe out your entire portfolio.

Ultimately, portfolio diversification helps preserve your capital and increase your risk-adjusted returns by investing in a variety of assets and companies.

One way to diversify your portfolio is through a precious metals IRA. A precious metals IRA, also known as a gold IRA, is an individual, self-directed retirement account that enables you to invest in precious metals.

The IRS limits the types of precious metals you can hold in an IRA. The four types of metals allowed are gold, silver, platinum, and palladium.

Note that you cannot own physical gold in a regular IRA. This is why investors must open a precious metals IRA if they're interested in these types of alternative assets.

But, a precious metals IRA will have the same general rules as conventional IRAs when it comes to taxes. With that said, there are additional tax reporting and record-keeping requirements for gold IRAs since precious metals are more complicated to hold in nature.

Before we get started:

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Table of Contents

What is a Precious Metals IRA Rollover?

To open a precious metals IRA, you'll need to perform a precious metals IRA rollover. Read on to learn exactly what this means for investors. The process of rolling over all or part of your IRA savings into precious metals bullion is what's known as a precious metals IRA.

Rolling over IRA assets have become a popular choice for many investors due to the ability to seamlessly diversify wealth and safeguard assets. Let's dive a little deeper into what a precious metals IRA rollover is.

When it comes to safeguarding your assets, converting a portion of a preexisting retirement fund or investment account is often the best option. Many investors choose to roll over an account like a SEP IRA, 401(k), or Roth IRA into gold and silver bullion in the form of coins and bars.

These metals are held in a precious metals IRA. To do this, money must be taken out of the old IRA account and placed into the new account to fund your precious metals IRA.

The Benefits of Precious Metals IRA

There are many benefits of opening a precious metals IRA. For starters, investors will be able to enjoy the same tax benefits that they receive from their traditional IRAs. Additionally, rolling over your funds from an existing account won't trigger tax implications.

Moreover, a precious metals IRA is deemed one of the best ways to diversify your investment portfolio if your primary goal is to minimize your risk exposure. What's even more interesting is that physical precious metals have a positive history of maintaining value compared to paper assets.

They have been shown to never fall to zero in value, making them a great way to safeguard your wealth. Lastly, since precious metals IRAs are self-directed accounts, you'll enjoy greater control over your investments.

two gold bars

How Are Precious Metals Transfers and Precious Metals IRA Rollovers Different?

There are two options when it comes to investing in a precious metals IRA: a transfer or a rollover.

A precious metals transfer means you'll be moving money from one precious metals custodian to another. In this scenario, no money is given to the account holder. The money is instead moved directly between two accounts of the same type. A transfer is a streamlined process that is handled by the custodians involved.

A precious metals IRA rollover follows a similar process, but there are some key differences to take note of. The main difference is that an IRA rollover occurs between two different retirement accounts.

It's important to note that there are two types of IRA rollovers: direct rollover and indirect rollover.

  • Direct Rollover

A direct rollover occurs when you move funds from a qualified retirement plan that are sent directly from one provider to another. This means you won't see the funds until they reach your new account.

  • Indirect Rollover

An indirect rollover is also known as a 60-day rollover. This is one where you take possession of the funds before putting them back into an IRA within 60 days.

Keep in mind that if you fail to get the funds into another IRA account within 60 days, you'll be liable to pay taxes and an early withdrawal penalty. Even being one day late can lead to fees. For this reason, investors typically choose a direct rollover.

How to You Rollover your Assets into a Precious Metals IRA

If you would like to start the process of rolling over your assets into a precious metals IRA, there are a few steps that you'll need to follow. We're going to provide you with a step-by-step of how you can get started:

  • Step 1: Find a Reputable Precious Metals IRA Company

If you're ready to dive into the world of alternative assets, the first thing you'll need to do is find a reputable precious metals IRA company. The right precious metals company will provide adequate education on the precious metals industry as well as the options you have available to you.

You should also pay attention to the company's ratings and specifically pay attention to reviews that talk about the customer service experience, quality of metals, and services.

A professional precious metals IRA company should also guide you throughout the process to ensure you are armed with as much information and confidence as you need to make the best decision for your wealth.

  • Step 2: Choose a Custodian

Next, you'll need to find a custodian. Depending on what precious metals IRA company you choose, they may have information on a preferred custodian, but the choice for a custodian is typically left up to the investor.

Choosing the right custodian is crucial because they play a key role in your investment journey. A custodian is a company that manages your precious metals IRA account and provides documentation and other services to the IRS.

In addition to your custodian carrying out all transactions for the account, they also coordinate the buying and selling of the precious metals you select for investment. Moreover, your custodian ensures that every part of your account is by IRS regulations.

All of this documentation is sent to you and the IRS, and the custodian will maintain records of the number of metals you purchase for your IRA.

With that said, it's essential to do thorough research on potential custodians. Note that not all custodians can manage self-directed IRAs. This is something you will need to find out as you explore your options.

  • Step 3: Set Up the Account

The next thing you'll need to do is set up your new IRA account. Once you make an account, your precious metals IRA provider will be able to work with you. Your custodian will work with your precious metals IRA administrator to help you acquire and sell your selected precious metals.

The custodian and administrator essentially collaborate to broker the transaction and move your metals to a secure facility that is authorized to hold physical gold, silver, platinum, and palladium.

  • Step 4: Rolling Over the Funds

You'll be taking the savings from your current retirement and transferring them to your newly opened self-directed IRA account. As stated previously, this can be done in two ways: directly or indirectly.

For a quick refresher, directly sending your funds means you won't ever touch the money. Your previous IRA trustee will send it to your new custodian. In an indirect rollover, the money will be transferred to you and you will have 60 days to get the funds into your new IRA account.

  • Step 5: Purchase Precious Metals

You're now ready to purchase IRS-approved precious metals for your IRA. Your precious metals IRA provider can help you select the best metals to include in your new account. Once you've chosen your metals, they will be transported to the secure storage location of your choosing.

This is where working with a reputable precious metals IRA company comes in. Companies that are more established are likely to have connections with reliable custodians and storage facilities that will meet your needs.

Precious Metals IRA Rollover FAQs

Here are some frequently asked questions regarding precious metals IRA rollovers:

What Are the IRA Rollover Rules?

According to the IRS, individuals generally cannot make more than one rollover from the same IRA within 1 year. Additionally, individuals cannot make a rollover during this 1-year period from the IRA to which the distribution was rolled over.

However, the 1-year per limit does not apply to rollovers from traditional IRAs to Roth IRAs, trustee-to-trustee transfers to another IRA, IRA-to-plan rollovers, plan-to-IRA rollovers, and plan-to-plan rollovers.

The IRS also states that there are certain types of distributions individuals can roll over. According to its website, you can roll over all or part of any distribution from your IRA except a required minimum distribution or a distribution of excess contributions and related earnings.

What are the disadvantages of Rolling Over a 401(k) Into an IRA?

For some investors, rolling over their 401(k) can come with some disadvantages. One of the main concerns is the potential for higher fees and the loss of a potential earlier withdrawal without penalty.

What Fees Come with a Self-Directed IRA?

There are several fees that you will need to consider for your new self-directed IRA. Some common fees include:

  • Setup Fee: A one-time fee to get your account started.
  • Transaction Fee: This is a fee charged by the custodian for performing transactions on your behalf.
  • Asset-Based Fee: This is a quarterly or annual fee that is charged based on the total value of assets in your account. Note that not every company charges this type of fee, but it's something you can ask about.
  • Annual Account Fee: A fee charged by the custodian for maintaining the IRA on your behalf.
  • Asset Holding Fees: Precious metals are charged a storage fee by the depository that you will need to pay.

Fees will vary, depending on who you choose to work with. For this reason, you must always ask about fees to get a better understanding of what you can expect.

What Happens if I Don't Roll Over Within the 60-day Window?

The IRS has set up specific rules and guidelines that must be followed. If you don't complete the rollover within 60 days, your distribution will be treated as a regular withdrawal.

This means that you'll need to pay taxes on the entire amount. You could also be subject to an early withdrawal penalty of 10%. Even being one day late can lead to serious financial penalties.

If you're concerned about not making the 60-day window for any reason, it's best to perform a direct rollover for peace of mind.

A precious metals IRA rollover is a great way to begin diversifying your portfolio. If you don't want to roll over your entire IRA account, you can always do a portion of your assets.

With that said, who you choose to work with will make all the difference in your experience. Be sure to thoroughly research precious metals IRA companies, custodians, and storage facilities before getting started.

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.

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