The Process of Buying Gold With IRA Funds


More and more people today are trying to protect their wealth. They’ve already been ravaged by months of inflation that show no signs of abating, eating into the value of their assets. And now they’re afraid of the likelihood of a recession that could bring a repeat of the 2008 financial crisis.

Many of those people have turned to gold, which has a long established reputation as a safe haven asset during tough times. Still others would like to start buying gold but don’t know how to.

With numerous sellers, multiple different types of gold products, and a purchase process that isn’t always the most transparent, it’s not surprising that some would-be gold buyers keep putting off the decision to buy gold. But it doesn’t have to be that way.

An increasingly popular option for those looking to protect their wealth is buying gold through a gold IRA. It’s a process that doesn’t have to be difficult, and has many similarities with the processes you would go through to purchase assets with your existing retirement accounts.

H2: What Is a Gold IRA?

A gold IRA is just like any other IRA, only that it buys and holds physical gold coins and bars rather than financial assets like stocks and bonds. The coins you own in your gold IRA are managed by a custodian, stored in a bullion depository, and are available for you to take physical possession of when you decide to take a distribution.

H2: The Benefits of a Gold IRA

A gold IRA can offer you numerous benefits. Here are four of the most important ones.

H3: Portfolio Diversification

One of gold’s most important functions is in diversifying a portfolio. Too many people put all their eggs in one basket without realizing it.

They’ll invest in one type of asset, in one sector of the economy, or put all their savings into a single account at a single institution. Sometimes they can get away with it, but other times their lack of diversification can come back to bite them.

Putting all of your wealth into assets that derive their wealth from the health of Wall Street and failing to diversify your portfolio could cost you when markets turn south. And gold can play a role in helping diversify your portfolio, which could help lessen losses during bad times and could help make gains during good times.

H3: Inflation Hedge

Gold has traditionally also been seen as an inflation hedge. Gold maintains its purchasing power through thick and thin and tends to gain in value over the long term.

During the stagflation of the 1970s, gold’s average annualized returns were over 30% per year, providing outstanding returns during an era of high inflation and economic stagnation. And many people are banking on gold performing similarly today if high inflation becomes entrenched.

H3: Tax-Advantaged Asset Growth

As an IRA account, a gold IRA offers all the same tax advantages as any other IRA account. If your gold IRA is a Traditional gold IRA, you would buy gold with pre-tax dollars, your gains would accrue tax-free, and you would only be taxed when you take a distribution. If your gold IRA is a Roth gold IRA, you would buy gold with post-tax dollars, your gains would accrue tax-free, and you would pay no taxes when you take a distribution.

H3: Safety and Security

Gold is perhaps best known as being a safe haven asset. When the walls are crashing down, when paper money becomes worthless, and when everything seems like it’s lost, people flee to gold. Whether it’s used as an asset to protect wealth or used to buy goods when no other money is accepted, gold is often considered to be the ultimate form of money.

Paper currencies have come and gone over the centuries, but gold endures. And even if it isn’t in daily use as a currency anymore, its reputation for safety, security, and stability ensures that individuals, institutions, and governments still hold gold as the ultimate backstop in case things go wrong.

H2: Starting a Gold IRA

Starting a gold IRA isn’t that much different from starting any other IRA. You’ll work with a partner like Goldco, choose a custodian to manage your IRA assets, and eventually choose a depository to store your precious metals. But the biggest decision you’ll probably make when it comes to starting a gold IRA is how to fund your gold IRA.

H2: Funding a Gold IRA

While it’s possible to start a gold IRA from scratch, just like any other IRA, the same contribution limits apply to a gold IRA as to other IRAs. That means that you’re subject to annual contribution limits of $6,000 per year.

Not only is that sum so low that it makes it difficult to build up a nest egg with gold, but the fees for gold storage often take up a larger percentage of your assets with a gold IRA that small than if you were to start a gold IRA with $25,000 or more.

That’s why most people choose to fund a gold IRA with assets from existing tax-advantaged accounts such as a 401(k), 403(b), TSP, IRA, or similar account. One of the worries people have when it comes to protecting tax-advantaged assets in those types of accounts is how to protect them from loss without exposing yourself to tax liabilities. Once you take a distribution from a Traditional IRA, you’ll owe taxes on that distribution and, if you’re under age 59 ½, you could owe penalties.

So how do you go about making sure that you’re not exposing yourself to tax liabilities? You can do that by performing a gold IRA rollover.

H2: Gold IRA Rollover

Rollovers aren’t something that’s unique to gold IRAs, although they’re probably far more common when it comes to precious metals IRAs than to other types of IRAs. But they provide you a means of moving your tax-advantaged assets from one type of account to another tax-free.

If you wanted to cash out money from your 401(k) to buy gold coins, for instance, you would have to take a distribution from your 401(k) account, pay taxes on that distribution, and then buy gold coins with those diminished post-tax dollars. But with a gold IRA, you can do a 401(k) to IRA rollover, not have to pay taxes on the funds you roll over, and then buy coins to hold within your gold IRA with your pre-tax dollars. You’re using the assets you’ve already saved and invested to buy gold.

Rollovers and transfers can occur from numerous types of accounts, including a 401(k), 403(b), 457, TSP, IRA, SEP IRA, SIMPLE IRA, or similar account. Goldco’s experts have years of experience helping customers with rollovers and transfers from these accounts into a gold IRA and can answer questions about whether your existing tax-advantaged accounts are eligible for rollover or transfer into a gold IRA.

H2: Gold IRA Rules

Once you’ve established a gold IRA, it’s subject to all the same rules and regulations as any other IRA account. That means when it comes to annual contributions, distributions, rules against self-dealing, etc., you’ll just follow all the same rules as you normally would with an IRA account.

If you’re not already familiar with the rules surrounding IRAs, you’ll probably want to consult with your tax advisor or financial advisor. And it’s always a good idea to consult with a tax advisor or financial advisor before making changes to your retirement accounts, just to make sure that you don’t accidentally make a mistake that could leave you open to unexpected taxes or penalties.

H2: Ready to Start a Gold IRA?

If you’re like most Americans, you’re probably fed up with your rising cost of living and worried about what the future might hold. If you have significant amounts of savings and investments built up over the years, you may be worried about the value of those investments, and may be looking to protect them against loss.

Now is the time to start thinking about protecting your assets with gold. Thousands of people have done it already, and many more buy gold every day.

Do you remember the run-up to the 2008 financial crisis, and how everyone in the government insisted that there wasn’t going to be a recession? Once the reality of the economy’s dire straits finally hit home, markets plummeted.

Gold, on the other hand, began to take off, and at the worst part of the crisis it had actually increased 25% during the same period markets had decreased by more than 50%. Gold only continued to climb from there, and reached all-time highs within a few years.

Many people saw gold’s performance back then and were kicking themselves for not having bought gold. And many vowed that the next time crisis threatened, they would buy gold to protect themselves.

If you’re looking to protect your wealth with gold, and if you have questions about the process of buying gold with IRA funds, don’t wait any longer. Call the experts at Goldco today to learn more about how gold can help you safeguard your savings.


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About the Author: Paul-Martin Foss