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Table of Contents
A gold IRA rollover is when you move an existing retirement account to an Individual Retirement Account (IRA) that holds the physical metals in the custody of a 3rd party depository for the exclusive benefit of its owner. Gold IRAs are Self Directed accounts and function like Traditional IRAs with the exception that they can hold alternative assets, including physical precious metals.
IRAs were first introduced in 1974 when Congress passed the Employee Retirement Income Security Act. But it wasn’t until the Taxpayer Relief Act of 1997 was passed that individuals were allowed to hold certain precious metals, such as gold, silver, platinum and palladium in their retirement accounts.
You can transfer any existing Traditional IRA, Roth IRA, SEP IRA, Simple IRA or Self Directed IRA to a gold IRA.
If you have an inactive 401(k), meaning you no longer work with the company that created it, you can execute a gold IRA rollover. If you are over 59.5 years old and have a current 401(k) through an existing employer, you may be eligible for an “in-service” distribution, allowing you to do a partial gold IRA rollover.
A 403(b) plan is a retirement account offered to employees of public schools and tax exempt organizations. You can complete a gold IRA rollover with a 403(b) plan after you have terminated employment. And in some cases, you can do a partial gold IRA rollover after you’ve turned 59.5 via an “in-service” distribution.
A 457(b) plan is a retirement account offered to state and local government employees, such as police officers, firefighters and other civil servants. A gold IRA rollover is only permitted with 457(b) plans once employment is terminated or in some cases at 70.5 years of age if still working.
Thrift Savings Plans are government-sponsored retirement accounts for Federal employees, such as civil servants and military. You can perform a gold IRA rollover with a TSP plan once employment is terminated. And in some cases, you’re able to do a partial gold IRA rollover via an “in-service” distribution if you’ve reached 59.5 years of age.
In order to move your existing retirement account to a gold IRA, you must first establish a Self Directed IRA with a custodian that allows you to hold physical precious metals. Your chosen precious metals supplier will likely be authorized with several custodians for you to choose from. Most precious metals dealers will help you to complete your gold IRA rollover paperwork to ensure a smooth transfer.
If you’re moving funds from your current IRA to a new Self Directed gold IRA, you’ll simply complete a transfer request form with your new application. As mentioned above, most precious metals suppliers will help you to complete this document. Your transfer request form contains your existing IRA’s basic information, such as the current custodian, your name, account number, and the amount you want to transfer.
Moving funds between IRAs are considered a direct transfer because the IRA owner never takes possession of their funds.
A direct transfer typically takes between 10 and 14 days. You can expedite the process if your existing custodian accepts faxed transfer request documents and if they’ll send your funds via wire rather than check.
If you’re moving funds from a 401(k), 403(b), 457(b) or TSP account to a new Self Directed precious metals IRA, it’s called a rollover. A rollover is permitted when you change jobs or have retired. In some cases, if you’re still employed with the company that created your 401(k), you can do a partial gold IRA rollover if you’re over 59.5 years of age.
There are two distinct types of gold IRA rollovers, direct and indirect.
Indirect rollovers tend to be more complicated. With an indirect rollover, your existing 401(k) provider sends you a check for the proceeds that you deposit into your personal bank account. You then have 60 days to re-deposit those funds into your new IRA. Failure to do so will result in penalties and tax implications.
A direct gold IRA rollover is much more straightforward. With a direct rollover, your 401(k) provider will issue a check payable to your new custodian. They will then mail the check to you, and you will forward it to your custodian, or they will send it directly to them.
Most 401(k) providers can initiate your gold IRA rollover verbally over the phone. Government-sponsored retirement accounts require you to complete their own internal rollover documents. The complete rollover process can take between 2 and 6 weeks.
Note: The IRS only permits 1 rollover (per account) during a 12 month period. However, you are allowed unlimited custodian to custodian transfers.
No. If you are transferring an existing IRA to a new gold IRA, it is not a taxable event because you are moving funds between qualified, tax deferred accounts. The same rules apply if you do a gold IRA rollover from a 401(k), 403(b), 457(b) or TSP.
Although certain types of physical gold, silver, platinum and palladium are legally permissible in an IRA, not all custodians offer this service. Below is a list of “9 Popular Self Directed Gold IRA Rollover Custodians” that offer physical precious metals accounts.
Midland Trust Company
Ph: (239) 333-1032
Better Business Bureau Profile
Just like with traditional retirement accounts, your precious metals IRA will require one or more beneficiaries. You can designate any person or entity, as well as what percentage they should inherit should you pass away.
If married, people will traditionally choose their spouse as their primary beneficiary. If you’re married and would like to designate someone other than your spouse, they must sign a waiver (on your application) consenting to your selection.
If your spouse is your primary beneficiary, oftentimes children, grandchildren or favorite charities are selected as contingent beneficiaries. A contingent beneficiary is “second in line” should both the account owner and primary beneficiary pass away at the same time.
If your spouse chooses to waive their right to the account because you’d like to leave it to your children, for example, you can choose as many primary (and contingent) beneficiaries as you’d like with specific percentages allotted to each.
For each beneficiary you choose, your custodian will require their full name, Social Security number and date of birth. You have the right to change beneficiaries at any time by submitting a one-paged document to your custodian.
On your gold IRA rollover application, you will have the option to designate a Representative or an Interested Party on your account should you choose to.
If you designate a Representative for your gold IRA, it’s the equivalent of giving that person (or company) a Power of Attorney. Simply put, they can transact on your account at their sole discretion. You should never give Power of Attorney to a precious metals supplier. In fact, most reputable dealers will not accept such a responsibility. If a company is suggesting you designate them as a Representative (Power of Attorney), it should be a red flag.
Designating an Interested Party for your gold IRA, however, can be helpful because it enables them to speak freely with the custodian about your account. Otherwise, you are required to be on the telephone during every interaction. More importantly, an Interested Party has no authority to transact on your account; you are in complete control of buys, sells and trades, as it should be.
Per the Taxpayer Relief Act of 1997, certain gold, silver, platinum and palladium coins and bars are permitted in retirement accounts. This includes 1 ounce, ½ ounce, ¼ ounce and 1/10 ounce coins minted by the U.S. Treasury Department as well as select bars, rounds and foreign coins of a certain purity.
Below is a list of the different gold, silver, platinum and palladium coins, bars and rounds that are IRS approved.
Canadian Gold Grizzly Bear Coins
Canadian Gold Arctic Fox Coins Canadian Gold Maple Leaf Coins Canadian Gold Snowy Owl Coins
Canadian Gold Snow Falcon Coins
Canadian Silver Grizzly Bear Coins
Canadian Silver Arctic Fox Coins Canadian Silver Maple Leaf Coins
Canadian Silver Polar Bear & Cub Coins
Canadian Silver Snowy Owl Coins
Australian Platinum Koala Coins
Canadian Platinum Maple Leaf Coins
Accredited Platinum Bars and Rounds
Accredited Palladium Bars and Rounds
To execute a buy, you simply select the gold and/or silver items you would like to acquire, and your chosen precious metals dealer will complete an Investment Direction form for you. They will then forward you the document for your signature.
Upon receiving your signed document, your precious metals dealer will work with your custodian to finalize the purchase. Your dealer will then send your precious metals to your selected depository for its safekeeping.
Selling your precious metals is just as easy and as fast a process. First, simply call your dealer to lock in your buyback price. They will then send you an Investment Direction form for your signature to authorize the transaction. Next, they will work with your custodian to have your metals transferred to their account and will wire the cash proceeds to your IRA.
Upon selecting your custodian, you will be required to choose your 3rd party (non-bank) precious metals depository. Below are the five most reputable and frequently used gold IRA rollover depositories in the U.S.
Ph: (302) 765-3889
Better Business Bureau Profile
The Delaware Depository is a licensed precious metals depository of the CME group and ICE Futures U.S. They employ multiple layers of physical and electronic security, along with proprietary systems and internal controls as one of the most secure operations of its kind.
The Delaware Depository maintains $1 billion in “all risk” insurance coverage through Lloyds of London. Risks include, “physical loss and/or physical damage, including mysterious disappearance and/or unexplained loss and shortage, employee dishonesty and theft. Loss or damage from fire, flood or other natural disaster is also covered.”
All precious metals stored with the Delaware Depository are fully allocated and held off-balance sheet, meaning that at all times clients are recognized as the sole owners and titleholders of said metal.
Ph: (877) 527-4657
Better Business Bureau Profile
Brinks has been a leader in hard asset logistics for over 150 years. With clients in over 100 countries and 1,200 operations facilities, Brinks has secured its market position as the world’s largest tangible asset logistics company.
Brinks has state of the art storage facilities and “all risk” insurance coverage.
Ph: (888) 322-6150
International Depository Services (IDS) is a CME Group and Intercontinental Exchange approved precious metals depository. They offer state of the art, secure storage facilities equipped with multi redundant security systems and Class III vaults.
IDS also offers geographic diversification with depositories strategically located in Delaware on the Eastern Seaboard, and in the heart of the U.S. in Texas.
IDS provides “all risk” Lloyds of London underwritten insurance protection.
Ph: (361) 594-3624
The Texas Precious Metals Depository is a privately owned, fully underground, state of the art depository.
The full value of all precious metals held in their custody is insured by Lloyds of London against external theft, employee theft, fire, flood and other natural disasters. All storage accounts are audited annually by ADKF, certified public accountants.
Texas Bullion Depository
Ph: (844) 416-GOLD
The Texas Bullion Depository is one of a kind in that it’s the first ever “state-administered precious metals bullion depository”. The establishment of the depository was made possible with the passing of Texas H.B. 483. Per their website, “The Texas Bullion Depository has been designed to ensure the depositor sleeps well at night knowing their valuable precious metal assets are properly accounted for and protected.” All precious metals held at the Texas Bullion Depository are insured by a Lloyds of London “all risk” insurance policy.
On your gold IRA rollover application, you will get to choose between commingled and segregated storage. But because silver is so bulky and you get so much of it for your money, segregated storage is not available for silver.
With a segregated storage account, your precious metals will be cataloged, marked with your name and IRA account number, and stored within your custodian’s section at the vault. Later, when you choose to either sell your metals or take an in-kind distribution (a distribution of the physical metals), you will receive the exact coins or bars that you initially purchased.
Commingled storage means that your precious metals will be held in a segregated portion of the vault for your custodian but will be commingled with other clients’ metals. Later, when you choose to either sell or take an in-kind distribution, you will receive “like” precious metals, meaning the same type of coin or bar, not the exact ones you originally purchased.
Being that your precious metals are subject to a rigorous examination process and must be in perfect Brilliant Uncirculated (BU) condition to be accepted at the depository, most clients opt for the more affordable commingled storage. For more gold and silver storage options read “The 4 Best Gold Storage Options for Ultimate Peace of Mind”.
When you execute a physical gold IRA rollover, the costs can be slightly higher than with a non-physical gold IRA because your precious metals are real, not digital. For example, if you buy shares of a gold fund or ETF, you don’t own any real gold, and your transaction is completely digital. No metal needs to be moved or insured, as they do with a physical metals IRA.
Investors that insist on 100% sole ownership of physical precious metals tend to not mind the slightly higher fees because of the peace of mind that comes from having a tangible asset.
Most precious metals dealers are market makers, meaning they make a buy price and sell price for every item in their inventory. If the dealer’s buy price was the same as their sell price, they would not make any money and would be out of business quickly. The difference between the buy and sell price is known as the spread.
For example, if a dealer sells a 1-ounce gold bullion coin for $2,140 and at that same moment buys it back for $2,000, their buy/sell spread is 7%. It’s important to remember that every bar and coin carries a different buy/sell spread and that the spread can change over time due to supply and demand conditions.
When it comes to buy/sell spreads, Southern California dealers are typically the most expensive. In fact, investors lose hundreds of millions of dollars annually in excess fees from this region’s gold IRA rollover companies. Chances are you’re either already in communication with one of these overpriced dealers or you’ve at least seen their ads due to their enormous marketing budgets.
These firms generally have appealing brands and conservative celebrity spokespersons, but they will likely charge 20% or more over discount dealers’ pricing.
Warning signs of overpriced gold IRA rollover firms:
If the gold IRA rollover company you’re working with exhibits two or more of the above warning signs, you may be paying 20% more than you need to.
Liquidation fees may even be charged when you close out your gold IRA. Some dealers may discount the buyback quote, and this could affect any potential profit. If the metal’s value did not grow significantly, then a liquidation fee could even affect your break even.
In addition to fees charged by precious metals firms mentioned above, there are custodial, storage and insurance fees. Below is a fee comparison chart of two of the most popular precious metals IRA rollover custodians and include storage and insurance costs.
|Account Set-Up||Annual Account Fees||Storage/Insurance (Commingled) Fees||Transaction Fees||Total First Year Fees||Annual Fees Thereafter|
Upon first glance, an “independent” website claiming to have researched the “Best Gold IRA Rollover Companies of 2021” may seem like a godsend. But upon closer inspection, you’d realize these sites are paid affiliates of the gold companies they are promoting.
These affiliates are typically paid an upfront fee and a commission of 3-6% of the gross value of your gold IRA rollover.
Below are examples of “Best Gold IRA Companies” review sites along with their disclosures that state how they “may be” paid by the dealers they’re recommending.
One of the referral sites above even lists a California dealer recently sued by the Los Angeles City Attorney for fraud against senior citizens as a “Best Gold IRA Rollover Company”. It’s better to learn beforehand that many of these so-called “Top Gold IRA Companies” are actually the highest priced dealers in the industry.
And lastly, the following quotes about affiliate sites were taken directly from an online complaint forum.
“Had I known from day one that ***** ****** paid online affiliates to create fake reviews, I would have never attempted to do business with them.”
“I found that ***** was paying for endorsements on more than 225 websites.”
If it sounds too good to be true, it probably is. When a dealer offers you “FREE” gold or silver, the cost comes directly out of your account balance. These promo dealers typically charge 20% more than you should be paying to make up for the cost of your “FREE” coins. If you fall for this trick, you could end up paying an extra $20,000 for every $100,000 invested.
Below are examples of free metal promotions that result in investors drastically overpaying for their gold IRA rollovers.
Every gold IRA custodian charges for their service, and we have listed links to their fee schedules in section 6 of these 19 essential facts. So why are so many dealers willing to cover these fees for the client? Some dealers use your desire to get something for nothing to entice you into choosing their overpriced products.
Make no mistake about it, you’re paying your account fees one way or the other. Just like with “Free Gold Scams” listed above, your dealer will likely overcharge you by 20% or more for your metals. Trading 20% of your account value to avoid a few hundred dollars in custodian fees is a terrible deal for you, but a real windfall for the unscrupulous dealer.
Choosing the right precious metals supplier will have a bigger impact on your success than anything else. Below are some helpful hints on how to select a proven gold IRA rollover company with a long track record of success.
Start with checking the Better Business Bureau profile of the company you’re researching. Most reputable dealers are accredited with the BBB. The rating is deceptive so checking the number of complaints is vital. Look for firms with zero complaints or with one or two at most.
In addition to formally lodged complaints, the BBB also features client reviews. Again, more than one or two negative reviews and you may want to consider another supplier. The BBB automatically removes positive and negative reviews as well as formal complaints after three years. Therefore, if your dealer has been around for more than 3 years, it’s likely that they’ve had a similar pattern of customer comments in the past.
There are countless horror stories of folks doing gold IRA rollovers with companies they heard about on a TV or radio advertisement and being fleeced because they didn’t look into their history and reputation. Don’t let that happen to you.
You want your gold IRA rollover dealer to be fairly priced and have an unblemished reputation. Therefore, you should acquire all-important public information before contacting a gold dealer. Here are two surefire methods for learning about a gold IRA dealer’s public reputation.
So always call us to get background information on the providers you’re considering. We only supply third party public information. These reputation reports could save you thousands of dollars and eliminate the stress that comes from dealing with a problematic gold IRA rollover firm.
After you’ve established that your chosen dealer has a clean record, you may want to confirm how long they have been in business. According to the Bureau of Labor and Statistics, 20% of small businesses fail in their first year, while 50% fail within 5 years. You may find it prudent to steer clear of companies that have not been in business with functioning websites for at least 10 years.
To confirm how long a gold IRA rollover company’s website has been online, check out the internet archive. Click on https://archive.org/web/, then type the company’s website URL into the search bar. You should see results like this, confirming that their website has been online for many years, in this case since 2003.
Whereas the following firm has only had an online presence since 2016.
The following gold chart shows the price trajectory from August 5th, 1997, when gold IRA rollovers were enacted, through March 1st, 2021. The average annual return over this period has been 18.05%.
No. The following paragraph is a quote from the IRS FAQs on IRA investments. It refers to breaking the IRS self-dealing rule by holding IRA precious metals outside of an IRS-approved non-bank trustee (depository).
“Gold and other bullion are “collectibles” under the IRA statutes, and the law discourages the holding of collectibles in IRAs. There is an exception for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved non-bank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion. IRA investments in other unconventional assets, such as closely held companies and real estate, run the risk of disqualifying the IRA because of the prohibited transaction rules against self-dealing.”
Keep in mind that you always have access to your precious metals, but if you take a distribution from a Traditional Self Directed IRA (not a Roth), it is a taxable event. Also, if you are under 59.5 years old, you will be imposed a 10% penalty for early withdrawal.
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