An IRA is one of the most popular ways people save for retirement. For long-term investors seeking an alternative to paper assets, such as stocks and bonds, many experts recommend holding physical assets, such as gold or silver, in individual retirement accounts and the Gold IRA is gaining increasing popularity. With a traditional IRA, contributions are made with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. With a Roth IRA, contributions are made with money you’ve already paid taxes on (after-tax), and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.
A Rollover IRA refers to money “rolled over” from a qualified retirement plan — usually an employer-sponsored plan, such as a 401(k) or 403(b), into a Gold IRA, for example. Beginning January 1, 2015, the IRS has declared that you can only do one rollover in a 12-month period. If you own multiple IRAs, the rule still applies. So why would anyone want to rollover an IRA to another retirement plan? There are many reasons from job changes to finding a better investment plan to meet your financial goals or to exercise greater control over the assets in your retirement account.
According to the IRS, “…pre-retirement payments you receive from a retirement plan or IRA can be “rolled over” by depositing the payment in another retirement plan or IRA within 60 days. The good news is you don’t have to pay tax on roll overs. When you reach retirement age and start to withdraw the funds, you will pay tax at that time.
There are a few different types of Gold IRA rollovers:
- Direct rollover – The IRS says that you can ask your plan administrator to make the payment directly to another retirement plan or a Gold IRA. Sometimes your IRA plan administrator will simply draft a check for the amount of the rollover. No taxes will be withheld from your transfer amount.
- Trustee-to-trustee transfer – If you’re getting a distribution from an IRA, you can also ask the organization holding your IRA to make payments directly to a Gold IRA or retirement plan. Again, no taxes will be withheld from your transfer amount, according to the IRS.
- 60-day rollover – Some people prefer to handle the rollover themselves and send a check to another IRA or retirement plan. The IRS advises that you can do this “if a distribution from an IRA or a retirement plan is paid directly to you.” You will then have 60 days to deposit all or a portion of it into a Gold IRA or a retirement plan. In this case, “…taxes will be withheld from a distribution from a retirement plan (see below), so you’ll have to use other funds to roll over the full amount of the distribution.”
You can roll over all or part of any distribution of your retirement plan account except:
- Required minimum distributions (which is the minimum amount you must withdraw from your account each year.)
- Loans treated as a distribution,
- Hardship distributions for funeral and medical expenses for instance.
- Distributions of excess contributions and related earnings,
- A distribution that is one of a series of substantially equal payments,
- Withdrawals electing out of automatic contribution arrangements,
- Distributions to pay for accident, health or life insurance,
- Dividends on employer securities; or
- S corporation allocations treated as deemed distributions.