A Gold IRA Rollover: Moving Over to a Retirement Plan that Works
These days, it’s not easy for Americans to plan for retirement. Fewer companies offer pensions which means most workers need to pay for retirement on their own. At the same, traditional investments like stocks and bonds have really struggled making it hard for Americans to save up any real money.
One possible investment strategy that seems to get around this problem is investing in gold. The IRS has recently made it much easier for Americans to put their retirement savings in gold by using a Gold IRA rollover.
The government launched the Individual Retirement Account to help Americans save for retirement.
These accounts come with a few significant tax advantages. First, when you invest in an IRA, you delay taxes on your investment gains. As long as you keep your money in the account, you won’t owe taxes on your gains. In regular brokerage accounts, you need to pay taxes on your gains every year, even if you reinvest the proceeds.
In addition, you get another tax break depending on what type of IRA you open. The Traditional IRA gives you a tax deduction for your contributions. This means by investing in this account, you’ll lower your tax bill today while also putting money away for retirement.
The Roth IRA saves your tax deduction until retirement. When you take money out of a Roth IRA in retirement, you don’t owe any taxes on your gains. This means your investment gains will be completely tax-free. When you take money out of the Traditional IRA in retirement, you need to pay taxes on your gains. This account only delays taxes on your money.
The Problem with Traditional Investments
IRAs offer a few solid tax advantages which definitely help Americans get closer to their retirement goals. The problem is that most of these accounts restrict you to only investing in traditional investments like stocks and bonds. These investments are facing some serious problems.
In 2008, the stock market had one of its worst crashes in history wiping out years of savings for many investors. While the market eventually recovered, it still set many retirement plans back for years, especially for Americans who understandably panicked and cashed out when the market was low. Bonds have also struggled because interest rates are very low. These investments hardly earn anything.
The future is also uncertain and troubling. The World economy is still shaky so another stock market crash is definitely possible. At the same time, government debt is rising which can cause inflation. This is when the government spends and produces too much money causing the value of each dollar to go down. Because of these debt worries, countries around the World are considering not using the dollar as a reserve currency. All these factors hurt the value of the dollar which means assets based in the United States, like stocks and bonds, could take a hit.
The Benefits of Gold Investing
Gold gets around these problems. Over the past decade, the price of gold has gone up 225%. This is more than triple the return on stocks; the S&P 500 only went up 72% over this same period. When the economy is shaky, investors turn to precious metals like gold to protect their money which pushes the price up. Gold is also getting a boost from new demand in emerging markets like China and India. Consumers in these countries are buying more gold jewelry as they get rich while investors in these countries are demanding more gold to protect against their own problems.
Gold is also a solid hedge against inflation because it is a physical commodity. There is only a limited supply of gold in the World. When the value of the dollar goes down, it costs more dollars to buy gold. In other words, the price of gold goes up. If America deals with inflation problems, it will boost the return on gold.
How a Gold IRA Rollover Works
In the past, investors were stuck having to choose between the tax advantages of an IRA or the investment advantages of gold. That changed because the IRS now allows investors to buy gold for their IRAs. Now, you can make a Gold IRA rollover.
A rollover is when you transfer your money from one retirement plan to another. Since you are just transferring the money, you don’t owe any taxes on the switch like you would if you took money out of the retirement plan.
This gives you an easy way to invest some or all your retirement savings in gold. Once you’ve found a company that offers gold IRAs, tell them you want to move your current IRA over. All you need to do is sign a few forms and you’ll be able to transfer the money over. You won’t owe any taxes on the move and the fees should be minimal.
Gold IRA Rollovers for Work-Sponsored Plans
If you have your money in a work-sponsored retirement plan like a 401k, it can be a little trickier to make a gold IRA rollover. You can’t roll over a work retirement plan while you are still an employee of the company offering the plan. Once you leave the company though, you can roll over the account into a Gold IRA. This would be your chance to make a Gold IRA rollover. It’s pretty well the same easy process and you won’t owe any taxes on the shift.
While you’re working, you can still invest in gold by setting up a brand-new Gold IRA and adding money to this account each year. Once you quit or retire from your job, you can roil over the money from the work-sponsored plan as well.
When you consider the benefits of gold investing and the straightforward process for rollovers, it’s easy to see why gold IRA rollovers are a popular retirement strategy. As the World economy remains uncertain, expect gold IRA rollovers to become a regular part of the average retirement plan.