A Guide of Process Gold IRA Rollover

If you are considering about converting your retirement savings into gold bullion, then you may already have heard about self directed individual retirement accounts. In this article we will try to look at the process of a gold IRA rollover to help you understand the process better so that you can convert your retirement savings into gold and protect them from economic uncertainty.

The first step before you roll over your savings into a gold IRA is to set up a self directed IRA account. Once you have done that you need to now consider two options. You can either roll over your funds into your gold IRA account or you can transfer them. While the terms may sound interchangeable but there is a technical difference between both terms which investors should understand beforehand.

Should I Pick A Rollover Or A Transfer?
Do not get confused between the two terms as they are not the same. Some people assume them to be same but really they are not. IRS has clearly defined the two terms and both are technically different when it comes to their treatment.

When you transfer your funds, you transfer your savings from the traditional IRA or 401(K) directly to your new self directed gold IRA. The money is transferred through banking channels, the transfer takes the normal time it takes for funds to be transferred and you are done with the transfer process.

The rollover process is a little different. To roll over your funds, you will first take your funds out of your traditional IRA or 401(K) account and then deposit them into the gold IRA account. You will have 60 days to transfer your funds into your gold IRA account before they become chargeable for early withdrawal penalty if you are less than 59 ½ years old.

Once you have rolled over your funds you will have to find a custodian to keep your gold, we will cover this next but investors need to be careful about the custodian they choose because IRS only allows the funds to be rolled over “once” a year and if you decide to change your custodian at any point through the year then this will count as a second rollover during the year and thus your savings will be charged with penalty and fines. You will only be able to change your custodian a complete year after you make your first roll over. This is why it is important to carry out proper due diligence before choosing your custodian.

Be sure to check with your employer and fund manager who manage your 401(K) plan because sometime some employers place restrictions on transfers or rollovers. Some do now allow gold investment rollover or transfer unless the employee quits the current job. It can always be worked around but prudence demands one to check first if there are any such restrictions.

Find A Custodian For Your Gold IRA
So now that you have understood the difference between a rollover and a transfer, comes the next step. You need to choose a custodian for your gold IRA. Yes, a custodian will be required for the safekeeping of your gold. Under the IRS rules, investors cannot keep the gold in person; it has to be kept in a trust under the custodianship of a trustee. Banks, credit unions and brokerage houses provide custodian services for your gold, so be sure to carry out due diligence before selecting the custodian of your choice.

Some custodians have a central repository where they deposit all the gold and this may be far from your place of residence, in this case it will be very difficult for you to visit and see your gold or precious metals whereas some custodians have repositories in multiple cities and thus it may be easier for them to arrange your visit.

There is a way around this but it is not recommended. You can keep your gold with yourself. This can be done by exploiting the loopholes within the IRS laws. You will have to set up a limited liability company and make the trust or custodial company its parent company, this way you will be able to store your gold in person. This, however is not recommended because the IRS knows about this loophole and if at anytime they decide to move against it, then you may have to face penalties and fines for knowingly going against the law.

Therefore it is only sensible to carry out proper due diligence before choosing your gold IRA company and your gold custodian, as haste or carelessness at this crucial stage may end up costing you a lot in penalties.

A Few Tips To Avoid Being Scammed
Now there is an important thing to remember once you decide about buying gold. As mentioned above you should carry out proper due diligence before investing your money because there are many gold brokers in the market some of them are good and honest while some of them are scam and thus not a good choice if you are going to invest your retirement savings. It is important to choose an honest and reputable broker who will sell you what is best for you.

There will be brokers who will try to sell numismatic coins to you, these are rare and valuable coins but illiquid in nature, as they are a collector’s item. They will tell you that these coins sell for a high value but never tell you that they are illiquid because they get a high commission on these. Many experts believe that you should never buy these coins if you are investing your retirement savings, instead you should invest in pure bullion such as gold bars, biscuits and coinage as they are the most liquid forms of gold.

Apart from this there are also some other considerations that all come under proper due diligence. Scope out your gold IRA company and the custodian, look for reviews on the internet. Check their processing and delivery times. If they take a lot of time to deliver your gold, it means they are trying to profit from speculating over the price and thus not a good choice. Also a general rule is to stay clearly away from anything that sounds too good to be true.