There are several good reasons for the increasing popularity of gold IRAs. IRAs and 401 (k), s are great options for a tax-deferred retirement plan because you don’t pay taxes on growing your investments. However, there are a few key differences between these types of plans. A gold IRA, also known as a precious metals IRA, is a self-managed retirement account that allows someone to hold a wider variety of assets as part of their retirement portfolio, including physical gold, silver, platinum, and palladium.
Gold is generally regarded as a safe investment and inflation hedge, as the price of the metal rises when the U. If your 401 (k) doesn’t offer direct access to gold investments, you may still have some flexibility to invest in gold through mutual funds or exchange traded funds (ETFs). Once you’ve met the requirements, the company will send a check with your money to either you or your Gold IRA custodian. A rollover is the process of converting some pension funds from an existing retirement plan, which can be a regular IRA, Roth IRA, or 401 (k), to a new IRA.
According to the IRS, only one rollover is allowed in a 12-month period, regardless of the number of IRAs you own. Transferring part of your 401 (k) or an existing IRA to a gold IRA can help reduce some of the uncertainty you feel about more traditional paper-based assets, such as stocks. While that’s understandable, it’s generally not a good idea to make gold your only investment. It makes sense as part of a diversified portfolio. If so, you may be able to transfer some of the funds from your current 401 (k) employer into a self-governing IRA this way.
If your employer doesn’t offer a 401 (k) or other sponsored plan, you should probably just start saving in a Roth IRA or a traditional IRA so you can choose your investment options. Using the fund descriptions that accompany your 401 (k) plans, investors can find one or more potential investment funds that offer significant exposure to gold by holding shares of companies involved in the gold mining industry. With a direct rollover, the funds are automatically transferred from the retirement account to the self-governing IRA. Since it’s illegal for you to keep the gold yourself, you need a custodian that stores the gold you buy through your IRA.
Gold sellers often market gold IRAs by contrasting them with the volatility and risk of the stock market. A gold IRA was made possible by the Taxpayer Relief Act of 1997 and is a type of long-term retirement account in which a custodian bank stores precious metals for the account holder.