When it comes to a gold and silver IRA, as it involves the holding of actual physical commodities unlike other IRA types, an investor would require a broker (to purchase the metals) and a custodian (to hold the them).
If you are interested in seeing our FREE gold investment guide, we attached it to help you.
Please note that under IRS regulations, the owner of the gold and silver IRA account is not allowed to physically keep the metals, which is why a custodian must be appointed. Hence, it is very important that an investor selects the right broker and custodian for the job.
Once you’ve selected among the better gold IRA companies, you can now rollover your 401(k) or other plans into this type of IRA account.
While the best companies will definitely assist you with the process, for your information, we will describe the steps in performing a rollover into a precious metal IRA below.
Please see our Gold IRA Guide for a step by step explanation of the gold iRA rollover process.
Rollover Methods
Generally speaking, there are two methods in doing a rollover: direct and indirect. A direct rollover, sometimes referred to simply as a ‘transfer’, is the safest and most common method. In this method, the funds are directly transferred from your first retirement savings account into your new selected one, in this case being the Gold IRA.
Experienced IRA companies will already have done this process many, many times before and will probably have it automated.
A direct rollover is reportable but not taxable and you can perform an unlimited number of direct rollovers.
In an indirect rollover, the money from the first retirement savings account is deposited in your own bank account and then only into the Gold IRA. Once the funds are received, you will have 60 days to deposit it in the Gold IRA.
You must also inform your IRA representative that you do not want taxes withheld as you intend to redeposit the funds within the stipulated 60-day period.
If the funds are not redeposited within this period, it will be considered as a distribution and you may be hit with income taxes as well as potentially early withdrawal penalty taxes.
You are also only allowed one indirect rollover within a 12-month period; anything over that and you will be hit with the relevant taxes.
Further, if you withdraw the money from your first retirement account and then decide to redeposit it into two different IRA accounts, the IRS will consider that as two indirect rollovers. In that case only one will be tax-free and the other (if you choose to deposit it in an IRA anyway) will be hit with a 6% excess contribution tax for as long as the rollover money is in the account.
Which Method Is Best For You?
Given the reasons above, it is clear that barring exceptional circumstances, such as if an investor needs to use the withdrawn funds on a short-term basis (within the 60-day period), a direct rollover is the way to go.
And indirect rollover carries too much risk of being slapped with penalties which may occur due to simple human error and forgetfulness.
Gold Investment 