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How a gold IRA can lower your taxes

With a gold IRA, you choose when your funds will be taxed. /Getty Images

Gold can be a valuable addition to any investor's portfolio. It can protect your money from inflation, shield you from losses from other assets and provide stable returns when the economy is shaky.

There are many ways to invest in gold, but if you want to shore up your retirement savings, your best bet is a gold IRA. In addition to the benefits that come with gold investing, gold IRAs reward you for contributing to your retirement with attractive tax perks you won't get from other gold investments.

Learn more about gold IRAs with a free information kit.

How a gold IRA can lower your taxes

There are several ways gold IRAs can help lower the amount of taxes you'll pay on your investment dollars.

Tax-deferred or tax-free growth

Depending on the type of gold IRA you choose, your money will be taxed either when you contribute it or when you withdraw it. Choosing the right type for you can help you lower your overall tax burden and keep more of your money.

Traditional gold IRAs are funded with pre-tax dollars, which means you do not pay taxes on your contributions. Instead, funds are taxed when you withdraw them at your then-current income level. So, if you believe your income with be lower in retirement, you could pay less in taxes by opting for a traditional gold IRA.

Roth gold IRAs are funded with after-tax dollars, which means your contributions are taxed when you make them. Withdrawals are not taxed. So, if you believe your income is higher now than it will be when you retire, a Roth gold IRA could reduce your taxes.

If you're self-employed or a small-business owner, you can open a SEP gold IRA, which works the same as a traditional IRA but has higher contribution limits.

Tax deductions

Contributions to traditional gold IRAs may be tax-deductible in the year you make them. This reduces your taxable income for that year and, as a result, the amount you'll owe on your tax bill. To find out more, see the IRS's guide on IRA deduction limits.

Tax-free rollovers

If you have a regular traditional IRA, Roth IRA or 401(k), you can convert it to a gold IRA with a gold IRA rollover. Funds you roll over are not subject to taxes if you have your existing retirement account provider transfer them directly to your new gold IRA.

However, if you choose to do an indirect rollover, where you receive the funds from your old account and deposit them into the new one, you must make this deposit within 60 days of receiving them. If you don't, they will be taxed as distributions.

Lower taxes for your heirs

While not a direct benefit to you, it's worth noting that a gold IRA could help your heirs save on taxes, too.

If you leave a Roth gold IRA to beneficiaries, they most likely won't pay any taxes on their distributions. If you leave them a traditional gold IRA, their distributions will be taxable at their income tax rate. However, if your estate is subject to estate tax, they'll get a deduction for the estate taxes that were already paid out of the estate.

For full details on how IRA beneficiary distributions are taxed, see the IRS's guide on inherited IRAs.

The bottom line

Investing in a gold IRA can be a smart move for investors looking to protect their retirement savings from market volatility, inflation and economic uncertainty. And with several potential tax benefits, it can help you keep more of your hard-earned money so you can rely on it in retirement. 

To find out how a gold IRA can fit into your investment and retirement strategy, request a free investors kit online today. And don't hesitate to speak with a financial advisor for guidance customized to your individual needs and goals.

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