IRAs and employer-sponsored plans aren’t “intended” to have gold and other precious metals, one could say. These are considered alternative assets. So, how did some of the oldest investments around come to be viewed as alternative, you might ask? Well, in this Gold IRA rollover guide we are going to explain all and equip you with the knowledge to make your own mind up if this is the investment opportunity for you.
The conventional approach to retirement investment, but also the general one, consists of stocks and bonds. Until recently, many money managers didn’t even consider precious metals. They weren’t on their radar. They utilized a so-called 60/40 approach, where 60% of assets are meant to generate risk-oriented bigger returns from stocks and 40% risk-free ones from bonds.
Over the past few years, much has changed in this regard. It’s not uncommon for Americans to buy physical gold and other precious metals as part of a long-term retirement plan, something that was almost unheard of years ago.
In general, though, whatever IRA or existing retirement plan you have, likely doesn’t support precious metals investment, or you probably wouldn’t be reading this Gold IRA rollover guide. Alternatively, you might have a gold IRA with a company that you aren’t satisfied with, a subject we’ll touch upon later. For now, let’s focus on what you’ll be rolling over.
Common types of accounts and plans to roll over
If you’re interested in either a gold IRA rollover or gold IRA transfer, the differences on which we’ll also touch upon briefly, you probably have one or more of the following:
- A 401(k), self-directed but more often employer-sponsored
- Other retirement plans, like 403(b), 457(b) or TSP
- One or more Traditional, Roth or SEP IRAs
As a general rule, it’s easier to perform the rollovers of inactive accounts and plans than those of active ones. This holds true more with 401(k)s (and the like) than it does with IRAs.
It doesn’t mean, however, that the rollover or transfer won’t be possible or that the custodian won’t be willing to facilitate one. It only means that there is more paperwork and technical know-how involved, in most cases. And, of course, there are instances where active accounts can’t be rolled over at all.
Now that we mentioned the custodian, since there is a chance you don’t know what these are, we’ll go over who facilitates this process and how.
Gold IRA rollover process: who’s involved?
The gold IRA industry can be said to be one of partnerships. You’ve probably seen a lot of gold IRAs companies advertising their services. However, one of the most important things to understand is that each of these companies has its services split into three pieces:
- Custody, which is managed by a third-party
- Storage, which is managed by yet another third-party
- Everything else which doesn’t fall under that and is managed by them. Things like customer support, precious metals brokerage, education and much more
Certainly, each of these three facets of gold IRA investments warrants its own section, so we’ll afford them just that.
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Gold IRA custody
A gold IRA custodian deals primarily in paperwork. They’re usually a large, specialized custodial firm that works with many companies to ensure everything goes smoothly. Avoiding oversights and ensuring complete IRS compliance every step of the way is one of the main purposes of an IRA custodian.
You might be tempted to ask: why not just perform administrative duties on your account? And the question is best answered even more simply: do you really want to? Custodial fees are fairly negligible, all things considered: there is an annual fee to the tune of $80-$200. This annual custodial fee is usually a flat annual fee and will vary depending on which gold IRA custodian you choose to work with.
It’s important to note, some gold IRA companies waive this fee partially or fully once you’ve opened a gold IRA with them. Some will cover custodial fees for up to 10 years if your account qualifies. When vetting a gold IRA rollover specialist, make sure to ask about current promotions or other incentives.
By working with an IRS-approved self-directed IRA custodian, you’re ensured that no stone will be left unturned, so to speak, when both opening and managing a new gold IRA. Imagine countless pages of paperwork and legal intricacies to know and you’ll soon get the idea of why custody is always “sent out” to a third-party.
You might have heard of self-custody, but no reputable gold IRA company offers this or even allows it. Most actively dissuade you from even considering it, and with good reason: unless you happen to be a custodian by trade, attempting to self-custody your IRA could result in some mix of a hefty penalty and account dissolution.
The custodians, that reputable gold IRA companies work with, are some of the biggest names in finance, even if they aren’t the most famous. Therefore, you won’t have to worry about IRS compliance, your account being poorly handled, or your private details being in the wrong hands.
If you work with a top-rated gold IRA company, there’s a good chance they’ll refer you to one of these gold IRA custodians:
- The Entrust Group
- Equity Trust
- Goldstar Trust Company
- Madison Trust Company
- Midland Trust Company
- Millennium Trust Company
This of course is not a comprehensive list. If you don’t know where to start, know that most gold IRA companies have done the legwork for you and can recommend a highly reputable low-cost gold IRA custodian for your gold IRA rollover.
If you already have a preferred custodian, your gold IRA company should have no issue working with your chosen custodial partner.
Gold IRA investment should be seen as part of your diversified retirement plan and separate from your home gold and silver coin collection. Just as it’s not just a matter of purchasing gold and saying it’s part of your IRA, so too is it not a matter of simply storing it in your home safe.
For the most part, misconceptions about self-custody and self-storage of precious metals in an IRA go hand-in-hand, as do the penalties. The storage facility that will hold your gold bullion and other physical precious metals, like the custodian, needs to be specialized and IRS-approved.
Unless you happen to run such a facility, your precious metals will instead be stored in a third-party vault. More so than the management of a retirement account, this tends to trouble certain gold investors.
After all, don’t we all like the feeling of having our tangible assets nearby? Isn’t physical gold investment synonymous with a sort of autonomy? Yes, but not within an IRA. Since a retirement account is essentially a government-administered investment vehicle, there is no use trying to cut out the middleman here.
If you have a desire to store bullion in a home vault, outside vault or another exotic location, you’re free to do so with the physical precious metals you purchase outside an IRA. We’d recommend you get an insurance policy if you do, though, since the metals held in third-party depositories are fully insured.
There is a fair bit of diversity when it comes to choices of storage facilities. Again, when it comes to top gold IRA providers, all of the storage recommendations are going to be top-notch. High-end security, try-if-you-dare vaults and all-encompassing insurance.
But while some gold IRA companies only partner with one company with a storage facility in one or two states, others have far greater options. While not as flexible as it comes to custodian choices, generally speaking, storage options can still be aplenty.
There are companies that seek to have storage in many different states as their customers prefer having their metals closer to them. And some, like Augusta Precious Metals, can even arrange for you to have a trip to the facility and have a look.
Storage fees, like custodial fees, are fairly negligible. For some storage facilities, you can expect a flat fee applied on an annual basis. For others, the depository may charge a small percentage of the total value of assets being held.
These fees are similarly oftentimes partially or fully waived. An important point to note is that facilities offer segregated and non-segregated storage. The fee difference is minimal, but for the majority of gold investors, the choice makes all the difference in the world. The former option means that your bullion is given its own space, so to speak, and isn’t mixed with “same-type products” when applicable.
Your gold IRA account representative can go over the pros and cons that come with different vault storage options and help you make a smart decision for your investments. When it comes to IRS-approved storage, here are a few of the usual suspects the big gold dealers typically work with and recommend:
- Brinks Global Services
- Delaware Depository
- International Depository Services
- Texas Precious Metals Depository
Gold IRA companies
By now, it might look like third parties are doing everything. What’s the purpose of a gold IRA company, then? The longer you take part in precious metals retirement investment, the more you’ll understand the importance of choosing a top-notch company.
For starters, you don’t want a gold company that looks like it’s going to go under. If it does, it doesn’t mean the assets in your retirement account will, too. But there’s definitely plenty of comfort in dealing with the company you know will be around for decades.
Not all companies have been in the business for decades, but it doesn’t disqualify them from being reputable. You’ll have to gauge many different things when choosing your IRA company:
- How long have they been in business and how important is it to me?
- What is the vibe I’m getting from the company?
- Do others agree with me? What do reviews online say? Are there complaints, and if so, have they been resolved?
- What is their product offering like? Do they offer only gold and silver, or platinum and palladium too?
- What is their go-to IRA custodian and storage provider?
- How high are the markups on their sales?
- What kind of education do they provide?
- How good is their customer service?
And much more. Primarily, the gold IRA company acts as a seller of physical precious metals. They have a bullion inventory from which you can choose precious metals and place them inside the IRA in an IRS-approved manner. But, as the questionnaire above showed you, there’s a lot more to precious metals IRA companies than that.
You’ll want to work with a company that is friendly and accessible on a daily basis, and willing to answer any questions you might have. While the custodian does administrative duties, the brunt of customer service falls on the gold IRA company.
The gold IRA company will:
- Assist with the paperwork to set up and open your new self-directed “gold” IRA
- Assist in the rollover or transfer of assets from your old 401(k) or IRA into your new account
- Assist (if needed) in selecting which bullion bars and coins you want to purchase via your new gold IRA
- Help set up your gold IRA vault storage
- Ensure your metals are shipped (fully insured) to your IRS-approved gold IRA storage facility
This, like the 60/40 rule, is where the conventional approach starts to fail. The best gold IRA companies aren’t as well known as the big banks or financial firms. Compared to a company like Vanguard, the most reputable gold IRA companies almost seem like a corner store.
Yet their service and products are leagues better if you’re a gold investor. Just to use Vanguard as an example, the only gold investment they offer isn’t self-directed and allows for only a few “paper” gold ETFs. And customer service isn’t really there for small-cap investors.
So, smaller companies as opposed to large investment firms are the true specialists and should be your preferred choice without exception. As opposed to a large fund or a similarly-recognizable name, all these companies do is precious metals retirement investment, and they do it well.
Here’s a short list of businesses that specialize primarily in facilitating physical gold IRAs:
These are all highly rated gold IRA rollover companies that can set up your new account and help move retirement savings into gold, silver, platinum, and palladium bullion bars and coins. Research a few top gold IRA providers and request more information directly from their websites to learn more.
Gold IRA rollover vs gold IRA transfer
Before we dive into the more exciting parts of this gold IRA rollover guide, let’s cover one more bit that is important. Rollovers and transfers are used interchangeably very often when it comes to retirement investment, but they are not the same.
In a gold IRA rollover, assets are moved from your old retirement account and sent directly to you, the account owner. You then have 60 days to deposit these funds with your new self-directed IRA custodian for the purchase of physical precious metals. Failure to deposit funds with your new self-directed IRA within this 60 day period can result in penalties and fees.
A direct transfer is more streamlined than a rollover as the funds move directly from your old retirement account into your new gold IRA. Since assets are not distributed to you directly, you don’t have to worry about possible penalties or triggering a taxable event.
While rollovers might be all you hear about, the truth is that both the custodian and the gold IRA companies would prefer to do a transfer whenever possible. It’s quicker and less complicated.
The custodian, along with the gold IRA company, assess each customer on an individual basis and decide what accounts and plans can be transferred and which ones need to be rolled over instead. Most of the paperwork will still fall on the custodian’s hands, so the details of either process shouldn’t concern you too much.
Although many companies offer “regular” methods of opening and funding a traditional or Roth gold IRA, the reality is that rollovers tend to comprise the bulk of their business more often than not. Regardless of how you choose to fund your account, a gold IRA representative from a trusted gold IRA firm can hold your hand through the entire process.
Precious metals investment: a primer
We started early on by saying how precious metals investment has been getting more and more popular, and it’s true. Where to begin when describing the state of the precious metals market, or the financial markets in general?
We’d say it’s a good idea to remind everyone that the so-called spot price, or what you see as the price of any of the four precious metals, is almost entirely disconnected from physical demand. Physical demand, even amid economic downturns, has risen tremendously over the last few years. If the spot price was determined by it alone, it would likely be magnitudes of times higher.
The price of gold and other precious metals moves slowly, however. It’s dominated by contracts of paper gold, which are in turn dominated by sentiment of speculators and large-cap investors. So when you see gold inching higher, it means that the U.S. dollar has weakened on a broad scale, but also that gold investment is becoming more popular. When it hits all-time highs, you know that everyone in every market has gone into panic mode.
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Why has precious metals investment gotten so popular?
We’d say that there have been two instances that kind of placed precious metals investment on the radar. Of course, it was never off the radar. Gold was, after all, once a primary currency. And not too long ago, the dollar’s value was synonymous with it.
But, since 1971, lots of monetary experimentation has been done. Nixon fully untethered gold from the U.S. dollar to fund the Vietnam War, and all bets were off. Clearly not so much, as gold exploded in value while the dollar essentially hyperinflated.
Between 2008 and 2011, multiple shake-ups told the markets that something isn’t working with the system of free-floating currency and perpetually-increasing debt. A bailout worked, more or less, to keep the system afloat. But gold hit an all-time high in 2011, after which it slumped considerably. It was three years into a financial crisis that seemed resolved, but careful onlookers knew better.
After 2019, the crisis gripping the world involved a lot more than the malfunctioning of financial systems, though this is no less prominent. Over the past few years, gold has hit consecutive all-time highs.
Increasingly, it feels like we’re living in an “anything goes” world. And in such an environment, people want an asset that they can trust. There is really no rival to gold in this regard. There are many assets and currencies that look good and seem promising, but none that have steadily appreciated in value with close to no effort on their owners’ part over the course of centuries.
Why is the 60/40 portfolio model no longer the norm?
A portfolio investment orientation where 40% of your assets are in bonds makes sense if governments and their currencies look good. That is not the case. It’s not that well-known that the bond market collapse began before 2019. But by now, almost everyone knows that the bond market is tanking.
Bonds are supposed to act as a slow-returning safe-haven. These days, they look riskier than stocks. You might have heard this or that about Treasuries not performing well. The dismal truth is that the Treasury is pretty much the only bond with any kind of performance left.
All around the world, bonds of what were once considered “top” nations are now offering either zero or negative yield. That’s right: owners of German bonds have, over the past years, had to pay the government interest for the privilege of owning its debt. It’s supposed to be the opposite, and it tells you just how in-the-mud economies really are.
These days, we are hearing about inflation comparable to the 1970s. But in the 1970s, the benchmark interest rate was 13%, which is the return you’d get as the government’s creditor. These days, they can barely keep it above 1%, and doing so is causing a recession.
How much of my retirement portfolio should be in gold?
You’ll often hear that a 5%-10% allocation to gold is ideal. This advice, however, seems better-suited for speculative investors and the like. When distributing your retirement funds, considering the aforementioned, some may advise a portfolio allocation of 20% or more to gold.
An online search will pull up “experts” recommending anywhere from 5-30% to precious metals. It really comes down to your personal situation and your long-term outlook. Consult with a trusted advisor and know that:
- investing in any asset (including gold and silver) holds risks
- investing too heavily in any one asset class defeats the purpose of diversification
Money managers might be shaking their heads at gold bulls, but the potential upside to owning physical gold is pretty straightforward. You want your retirement investments to be long-term oriented, and it doesn’t get much more long-term oriented than precious metals. The supposed returns you’ll get from stocks in your retirement funds can just as easily turn into massive losses during a time of a stock market crash, which is happening right now.
In reality, precious metals are far more volatile than one might expect. There is so much difference between each of the four precious metals that there’s enough room for speculation and big gains without ever leaving the convenience and general safety of the sector. And, since we’re there, let’s go over your options for each.
Which precious metals can go in an IRA?
Just so we’re clear on this one, precious metals IRA companies invest your retirement funds in physical precious metals, not derivatives, stocks or any other form of paper gold. You’re buying actual bullion, one way or the other, which is a massive plus.
The IRS has laid out fairly simple requirements for bullion in either a Traditional or Roth IRA. Gold bullion needs to have a 0.995 purity, silver bullion a 0.999 one, and platinum and palladium a 0.9995 one.
So long as the precious metals product fits the purity requirement, it can go into an IRA. This accounts for coins, bars, rounds and probably more.
The only specific exception are American Eagles, coins issued by the U.S. Mint which are technically our national currency and therefore shouldn’t be subjected to nitty-gritty purity checks.
The American Eagles are available as bullion coins and as proofs. Proofs are typically minted for collectors, and it’s important to note the American Eagles are the only proof coins allowed for inclusion in an IRA.
We’ll give a brief overview of what each metal offers without going too much into the products, as there are simply too many.
The safest of the four precious metals, gold is bought to provide safety against inflation, calamities, disaster and everything in-between. Its price doesn’t move a lot, and when it does, it’s generally upwards, which is how investors like it.
It has the most investment options, closely followed by silver. Plenty of sovereign gold coins, private and sovereign gold bars, and gold rounds can make it in your IRA.
The first foray into speculation by the precious metals investor. Silver has a large industrial component, meaning it’s more prone to price swings and external factors that don’t really affect gold.
It’s much cheaper and tends to follow gold up and down. Investment options are similarly varied, but not quite as incremental as in the case of gold due to silver’s much lower price.
Once more expensive than gold, platinum now serves as an example of why a venture into precious metals can be risky, as it’s roughly half the yellow metal’s price.
Investment options are far more limited and consist of a few sovereign platinum coins and bars with limited denominations, for the most part.
The opposite side of platinum’s “cautionary tale”, palladium has been soaring above gold’s price for a while due to multiple reasons. One is that the supply picture is the worst of all metals, but it has also benefited from favorable regulations.
Even more limited than platinum, palladium tends to come in a few sovereign coin varieties of 1oz and a single 1oz bar denomination. Some gold IRA companies don’t really deal in platinum or palladium, so make sure to ask about a company’s product offerings if you’re interested in buying these two metals..
Some popular gold IRA rollover investments include:
- American Eagle coins (gold, silver, platinum, or palladium)
- Australian Koalas (gold, silver, or platinum)
- Australian Gold Kangaroos
- Austrian Gold Philharmonics
- Canadian Maple Leaf coins (gold, silver, platinum, or palladium)
- Chinese Pandas (gold or silver)
- Mexican Libertad silver coins
- Isle of Man platinum coins
- Valcambi Gold Combibars
- Royal Canadian Mint gold or silver bullion bars
- Credit Suisse gold or silver bars
- Johnson Matthey gold or silver bars
Again, this is not an all-inclusive list. A reputable gold dealer should have no problem sourcing any gold IRA eligible products you’re interested in buying for your investment. If you’re not sure which products to buy, you can discuss options with your gold IRA rollover account rep.
Gold IRA rollover guide FAQs
How does a gold IRA rollover work?
One or more existing retirement plans or IRAs are liquidated and the funds are used to open a gold IRA with a specialized company. Different companies have different investment minimums: $25,000 tends to be the norm, but there are many examples of differences in both directions.
How do I rollover my IRA to gold?
You don’t, but rather your custodian does. Your existing custodian and provider of retirement plans and IRAs will handle this side with your assistance. For the most part, all you need to do is reach out to the gold IRA company of your choosing and they’ll do most of the heavy lifting for you.
Can you hold physical gold in an IRA?
Yes, so long as it’s approved by your custodian and held in a likewise IRS-approved depository. It also needs to adhere to the purity requirements outlined above.
What is a gold 401K rollover?
The custodian liquidates the funds from an active or inactive 401(k) to gold IRA and they are made available as funds in your new retirement account. You’ll use these to purchase precious metals in the account, with more funding options available if necessary.
Gold IRA investment – less complicated than it seems
Between the treatment of precious metals as alternative assets and few employers offering true diversification in a retirement plan, investing in gold within an IRA can seem daunting. In reality, it’s the opposite.
The companies in this sector exist to cater to your needs. You can bombard them with questions and they’ll be happy to answer. You can demand a hands-off approach and all you’ll need to do is sign-off on some sound investment decisions.
On the other hand, it’s called a self-directed account for a reason. The when, what and how much is decided entirely by you, which is more than can be said for most other retirement investment vehicles and some traditional ira’s.
With physical gold investments generally having little downside, you can expect this lack of risk and ample benefits to translate to your retirement account. The only thing you’ll need is a good idea of how much you’d like to allocate to your gold IRA and the right company to do it through (scroll back up this post for some of the biggest names in this field).
That concludes our Gold IRA rollover guide, we hope you found it insightful and helpful. If you have any further questions around precious metals investment please let us know.
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