Protection against inflation

Precious metals protect against inflation. The cost of gold increases as the value of the dollar decreases. This makes it a great hedge against inflation, which will inevitably occur. Investors look to gold to maintain value during times of political disruption. 

The value of precious metals is not confined within a nation or language. Platinum also maintains its value because it is more limited in availability than gold and is worth more per troy ounce. Precious metals are integral to numerous industries. Platinum is used for jewelry, vehicle catalysts, petroleum, and technology among other uses. 

Unlike paper money, you can’t exactly print out more precious metals. Therefore, the supply is limited making the demand likely to increase. Banks and financial institutions also invest in gold, purchasing tons. With precious metals, there is virtually no risk that you will be unable to sell your supply if and when the time comes.

Precious metals are highly liquid assets that can be converted into currency quite easily. Investors need a haven to protect their wealth against unforeseen catastrophes. A gold or silver IRA provides financial security during times of economic turmoil. 

Bear in mind that storing precious metals does not produce dividends or interest. However, the purpose of holding metals is to store wealth rather than to payout interest.

Why invest in precious metals?

One notorious fact about gold and silver investing is that it offers stable storage of wealth because of its ability to retain long-term value. Many investors choose gold assets because gold prices tend to increase as the value of paper money decreases. The value of gold tends to move in the opposite direction of stocks and bonds.

Investors choose to have a gold IRA as a part of their portfolio because it’s an investment option that doesn’t match the volatile nature of fiat money. Gold has endured throughout the years because it’s one of the oldest precious metals in use. It has a variety of useful applications including jewelry and technology. Precious metals are an excellent way to diversify if any one of your assets is not performing up to par.

Portfolio Diversification

Precious metals are tangible assets that cannot be destroyed by time or physical elements like water and fire. Gold and silver benefit from physical care, but they don't require much maintenance. You don’t have to worry about losing your wealth through robbery or natural disasters. Today, a great deal of wealth is digital. 

Precious metals cannot be digitally hacked or affected in this way. It doesn’t rely on cybersecurity, the internet, or the blockchain to verify its value. An important benefit of an IRA rollover is that you can avoid the penalty of early withdrawal. Asset diversity is paramount and most investors don’t put all of their eggs in one basket. 

It’s not likely that an investor will place all of their funds in a single asset class. Fortunately, you can use the IRA to access a wider variety of investments. This class of asset is reliable regardless of the current condition of fiat money. Precious metals are not centrally controlled by one entity and can be exchanged internationally. Plus, you can pass on your precious metals to your loved ones.

Benefits of retirement account rollover into precious metals

To start investing in physical precious metals using an existing account, choose between a direct rollover and an indirect rollover.

Direct rollover

Gold IRAs were made available by the Taxpayer Relief Act of 1997. You can take the funds that already exist in your 401k and roll them over into a precious metals IRA. For a direct rollover, start the transfer process by contacting the company that manages your 401k. The simplest way to avoid a penalty is the direct rollover option. Your retirement account provider will send your funds in check form to your custodian to open the account.

Indirect rollover

An indirect rollover involves withdrawing the funds so that they can be deposited into another account. Once you’ve chosen direct or indirect rollover, a check is issued to the IRA custodian or you. The indirect rollover needs to be completed within 60 days. Per the IRS, if you roll over your payment it’s not taxable. 

An exception may be made if you fail to complete an indirect rollover within 60 days. You are entitled to an automatic waiver of the 60-day rollover by the IRS. The IRS waiver request fee is $10,000. There is a viable way to avoid this fee. 

Alternatively, you can self-certify to make a late rollover outside the 60-day window. You can self-certify by completing the Model Letter in Revenue Procedure 2016-47. Submit the Model Letter to the financial institution handling your rollover for approval. 

Refer to the IRS website for the full list of requirements entitling you to a waiver. When the IRS audits your income tax, at this time it will be determined that you qualified for the waiver.

You can only make one rollover every 12 months. For a SIMPLE IRA, you may be only allowed to transfer money after two years. If you have a SIMPLE IRA, review your specific plan to determine the required waiting period for a rollover.

To execute rollover properly without penalty:

Importance of selecting a custodian

What is a custodian? It’s a term that refers to the financial institution that handles paperwork regarding your gold or silver whether coins or bullion. The depository is responsible for the physical storage of your gold. Many custodians work with Delaware Depository which ensures your assets up to $1 billion.

To keep a tax-deferred status, your retirement plan must be managed by a custodian. Keeping gold in your home doesn't include safety benefits. Once you are age-eligible, you can take physical possession of the assets in the account. The metals are shipped from the custodian to you.

Why a custodian is necessary

While you may want to have your gold close to you, it’s wise to select a custodian for this purpose. Having a custodian or trustee eliminates the risk and security issues of storing gold at home. Storing gold or silver in a safe deposit box subjects your assets to the rules of the banking system. Meaning, you won’t be able to access your metals on the weekend, holidays, or during banking emergencies.

Purchasing gold is a confidential transaction. Reporting to the IRS is required when both the transaction is greater than $10,000 and the purchase is made with a bank check, certified check, money order, or cash. You will likely be charged a one-time fee to set up your account. Note, that the custodian will allow you to see the gold.

Custodians have state or federal approval to offer asset custody services. It’s up to the individual investor to research and select a custodian. The broker is needed to purchase the gold and the custodian holds your coins or bullion. So how do you select your custodian? 

When you invest in gold via a custodian, you’re getting the best precious metals the world has to offer. You can start by looking for a company with a positive track record. Review the company’s reputation from the Business Consumer Alliance. Ask for license verification, insurance, and registration to ensure the protection of your investment. 

IRA gold must be .995 minimum fineness and IRA silver must be .999. IRA palladium and platinum required pureness is .9995. Therefore, the Gold American Eagle coin is not eligible for placement in your account because it is 91.67% gold. IRA approved gold coins include but are not limited to:

In-service withdrawal and penalty

If you take a distribution of your precious metals, you’ll be subject to paying tax. If your 401k does not offer precious metals investing, you can opt-out of the 401k and into a self-directed IRA. A self-directed or precious metals IRA will allow you to purchase gold and silver investments. 

If at your current position you have a 401k, you can request an in-service withdrawal to access the funds. An in-service withdrawal is defined as a distribution from a retirement plan sponsored by your employer. Roughly 70% of United States retirement plans allow in-service withdrawals. 

Check your specific plan to see if distributions are allowed without hardship. You can undertake an in-service withdrawal simply because you want to pursue a different investment. Withdrawal occurs under the following circumstances.

There is no penalty for an employee who: 

A traditional IRA doesn’t allow you to directly invest in physical precious metals, this is why the rollover is necessary. If you want more tangible assets than a gold ETF, you’ll need to open a self-directed IRA. A self-directed IRA is also referred to as an SDIRA.

By selecting one of the companies below, you will have a specialist who can review the pros and cons of investing in this asset class. Browse through the different custodial options to find the company that’s best for your plans.