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What is a gold IRA rollover?

Gold IRAs combine the tax benefits of traditional retirement accounts with the perks of gold investing.  Getty Images

If you've been saving for retirement, chances are good you have a dedicated retirement savings account like a 401(k) or IRA. These accounts are easy ways to invest your money for the future while enjoying some attractive tax incentives. But there's one type of retirement account you may not be as familiar with: a gold IRA.

Gold IRAs work the same as traditional and Roth IRAs, but they also allow you to take advantage of the many benefits of gold investing, including diversification, protection from inflation and stable returns. If you're looking to shore up your retirement savings, it's worth considering rolling over your funds from an existing retirement account to a gold IRA. 

Learn more about investing in a gold IRA with this free information kit.

What is a gold IRA rollover?

A gold IRA rollover is the transfer of funds from a traditional IRA or 401(k) to a self-directed IRA that allows for investment in other precious metals. This means that instead of having your retirement savings tied up in traditional assets like stocks, bonds and mutual funds, you instead diversify your portfolio by including gold and other precious metals such as silver, platinum and palladium.

You can do a direct rollover, in which the institution holding your current retirement account transfers funds directly into your new gold IRA. Or, you can do an indirect rollover, in which you withdraw the funds from your current account and deposit them into the new one yourself.

Direct rollovers are faster and are 100% tax- and penalty-free. If you opt for an indirect rollover, you have 60 days from the time you receive the funds from your old account to the time you put them into your new account. If you don't complete the rollover within these 60 days, the IRS considers it a distribution or withdrawal. You'll be taxed on it, and you'll also face a 10% early withdrawal penalty if you're under 59 ½.

Benefits of a gold IRA rollover

One of the primary benefits of a gold IRA rollover is the security gold provides in periods of economic turmoil.

Gold has long been regarded as a safe haven during times of financial crisis, as it tends to hold its value (if not increase in value) when the economy is shaky. Unlike traditional investments, gold and other precious metals maintain a relatively stable value despite periods of inflation, geopolitical instability and market volatility.

In addition, gold is negatively correlated with assets like stocks, which means that its value tends to go up when these assets go down. This can reduce your risk exposure and help you maintain your retirement savings when traditional assets are underperforming.

Get started by requesting your free gold investors kit online today!

What to consider before choosing a gold IRA rollover

Before deciding on a gold IRA rollover, make sure you understand any costs involved. Gold IRAs come with fees you may not have with other retirement accounts, including storage and insurance fees, custodian fees and the premium you'll pay for physical gold. Make sure to take these into account, as they will affect your bottom line.

How to set up a gold IRA rollover

To start a gold IRA rollover, you first need to find a reputable gold IRA custodian to hold your gold assets and manage your account. Look for one with a solid track record, fair fees and plenty of positive customer feedback.

You will then work with the custodian to transfer funds from your existing retirement account into your new self-directed gold IRA. Once the account is set up, you can begin buying and selling gold through this account.

You can choose to invest in either gold bars and coins or exchange-traded funds (ETFs) that track the prices of gold. Your IRA custodian will handle all the necessary paperwork and ensure everything is done according to IRS regulations. They will also store your physical gold in a secure facility.

The bottom line

A gold IRA is a powerful tool that combines the tax benefits of traditional retirement accounts with the perks of investing in gold. And if you already have funds in a traditional account like a 401(k) or IRA, moving those funds over into a gold IRA is a fairly straightforward process.

Of course, before making any investment decision, it's important to carefully weigh the pros and cons and speak with a financial advisor to determine the route that best fits your individual needs and goals. With the right plan in place, a gold IRA rollover can be a valuable addition to your investment strategy.

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