What is a Gold IRA Rollover?

What is a Gold IRA Rollover? - Most Americans invest their Individual Retirement Fund (IRA) in what are known as mutual funds. It is estimated that a total of 46% of American’s IRA is comprised of diverse stocks, while the rest is usually allocated to banks and insurance companies. While 46% of an IRA may not seem like a large number, most IRA’s at the age of retirement amount to nearly $100,000, which means that about $46,000 is tied in stocks. These statistics were taken for years when the United States economy performed well. In recent years, the US economy has seen a tremendous amount of volatility and fluctuation. These changes have had a negative effect on the value of American’s IRA, reducing the total amount at the time of retirement. However, what most Americans do not know is that they can protect the value of their IRA, and that is by doing a gold IRA rollover.

What is a Gold IRA Rollover?

This effective and recommended rollover is the option to convert a portion of your existing IRA into a gold account. Rather than allow unstable stock to diminish the value of your retirement fund, you can protect yourself and your future by investing in one of the world’s most precious metals. Just over the last decade, gold has seen a 300% increase, an unprecedented number. The increase in the value of gold can be attributed to a number of factors.

According to Kenneth Rogoff, a professor of economics and political science at Harvard University, the price of gold tends to rise during uncertain fiscal policy, inflation, poor stock performance, and an overall poor economy. Additionally, above all such factors, the most constant influence on the price of gold are emerging economies such as India, China, and the Latin Americas. With more world economies involved in the global market, gold becomes more in demand, which thus results in an increase in value and price. Therefore, it is more prudent and worthwhile than ever to invest in gold, as not only will emerging economies have more of an influence in the coming years, but there are few economic indicators of an economy that will begin to improve.

Using an IRA to Buy Gold — The How

The gold IRA rollover decision can be undertaken in two ways, each of which depends upon what type of IRA account one has. The two types of IRA accounts are a managed IRA account and a self-directed IRA.

A managed IRA account in terms of a gold IRA is when you have a custodian or trustee of the IRA who administers the investment. Typically, this option involves a legitimate and well regarded gold broker company that will send you a starter kit with all the information needed to start and undertake the gold IRA process. They provide direction during the process and maintain strong relationships with the individuals they work with. This option is excellent for those that are unsure of implementing the process themselves or have little to no background in a rollover IRA. The broker also manages your account and overlooks the safety of the investment.

The second type of IRA account is a self-directed IRA. A self-directed IRA is an account where you are the sole custodian and you are the only individual who decides where your funds go, how much gold to buy, and so forth.

What About the Gold in a Rollover IRA?

Upon finding the proper broker to help you with your investment, and once the process has been completed, the designated amount of gold that has been purchased is not delivered directly to the purchaser. Rather, the gold is delivered to a designated depository. Once it has reached the depository, the owner of the IRA account will be notified the total amount that has arrived and when it arrived exactly. The gold will count towards the value of your IRA. A benefit of this is that the owner of the gold rollover IRA will not need to worry about the funds, as they are protected and overseen by a manager.

Which Gold Sources are Valid for a Gold IRA Rollover?

The choice to invest in gold is a serious decision, and therefore it is important to be aware of the kind of gold that the custodian is purchasing for the IRA account. The US Internal Revenue Service designates the types of gold that are bought for a gold rollover IRA. However, not every single type of gold coin or bullion will suffice since sources can be unclear and uncertified items can be made of a mixture of gold and other metals, reducing their overall value.

The types of gold that will be bought for a rollover IRA that are approved by the IRA are American Gold Eagle coins, Canadian Gold Maple Leaf coins, American Platinum Eagle coins, and bullion that are 99.9% – 100% pure. Gold that is now permitted are South African Krugerrand and impure bullion bars. These measures are simply to ensure that the owner IRA is receiving the backing that the rollover provides, as the Internal Revenue Service is the sole authority on what are the stipulations of an IRA account partially backed by gold and so forth.

References: IRA FAQs - Investments - Internal Revenue Service