About Gold Roth IRA’s
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For people who have worked all their lives, perhaps the most important decisions they will have to make involve their financial future including Gold Roth IRA’s. That is why as early as possible, people prepare for their eventual retirement by looking at various retirement plan options available and determine the best possible plan for them. One popular type of retirement account is the Roth IRA.
What Is an IRA, specifically a Roth IRA?
An IRA is an individual retirement account, and the Roth IRA is a type of IRA that allows an individual to allot a specific dollar amount from his after-tax income. The name is derived from Senator William Roth of Delaware, the US Senator who sponsored the bill that created the tax-privileged retirement plan.
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The Roth IRA offers tax-free growth for your invested money in exchange for getting tax deductions. Similar to an umbrella, you may place practically anything under it. The IRA may be invested in bonds, stocks, certificates of deposit, mutual funds, and money market accounts. You can set up an IRA account at a brokerage house, bank, or any financial institution.
The Gold Roth IRA
Over the past few years, Roth IRA’s invested in traditional assets have seen a consistent decline in value primarily because these types of investment are directly associated with the US dollar. Because of this, a majority of current investors have resorted to adding physical gold to their IRA’s as a safety measure.
On the other hand, Gold IRA’s are experiencing an upward trend since they first became available; thus, offering more security and appreciation to the account holders.
Why IRA Gold?
For retirement planning, gold is a solid choice. Because, throughout history, gold has been seen to thrive regardless of the prevailing economic condition. The best proof to this is the fact that even with the current recession, the price of gold increased significantly and steadily over the last five years. Very few investment vehicles can claim the same stability and success.
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Both the traditional and Roth types of IRAs are intended to accrue retirement income. Obviously, the account was opened with the hope of having the fund grow over time, or keeping its value stable, at the very least. Also, to give the investor some assurance and peace of mind that when the time for retirement comes, he can count on a certain amount of money that he can live off in his retirement years. This highlights the significance of the investment stability that gold provides.
To define it simply, an IRA rollover is simply moving your investment into a qualified RA (retirement account). This account may be a traditional or a Roth IRA. One distinct advantage of rolling over an account is that taxes will apply only during the actual rollover and not upon withdrawal, unlike other investment options.
This means that your dollar invested in a Roth IRA will be worth more than the same dollar if invested in a conventional IRA plan. Likewise, no taxes are imposed on the compound interest earned by a Roth IRA. There are no restrictions imposed on the withdrawals which mean you can keep the funds untouched in the account, and enjoy tax-free interest for a longer period.
You have to realize that not all account types are qualified for rollover procedures. Accounts that can be classified as pensions, profit sharing, stock bonus plans, annuity plans (whether tax-sheltered or not), and deferred compensation plans are examples of accounts that can be rolled over. One other thing to consider in the rollover is the account’s filing status. If the owner is married but files taxes separately, it must be established that he has been living separately for a year or more to qualify for an IRA rollover. Likewise, there are specific income requirements that must be met before a rollover can take place.
Your modified adjusted gross income (MAGI) must not exceed US $1,000 to qualify for an IRA rollover. In converting a traditional retirement account, it must be noted that only a part of the account can be converted. The partial conversion will not include the tax-free portion of the funds. You should take note of this early on so you can avoid potential problems with the IRS in the future. To be sure, you can consult your custodian, your financial or tax adviser for a clearer direction on the matter. Banks and brokers that function as custodians are in a good position to provide sound advice on IRA investments. Also, take note that an inherited traditional IRA from someone other than your spouse cannot be rolled over.
These rules must be strictly adhered to. Otherwise, you may incur stiff penalties from the IRS. To make sure you understand the rules, read the fine prints and find ways on how you can benefit from the tax breaks that come with all types of IRA. Invest in financial education and learn what will benefit you more in the long run. It may take time, but the effort will be worth it.
How to Convert Your Roth IRA to a Gold Roth IRA
The entire process is not necessarily difficult, especially when performed by a specialist from a reputable and credible company. You can rest assured that the transaction will be very secure. Likewise, the Roth IRA conversion process is tax and penalty free, and this is something that many investors find appealing.
Opening a new account
A professional may also be enlisted to assist in the opening of new accounts in case the investor does not have an old account to transfer or convert. When opening this type of account, due care and consideration must be given in the selection of an account custodian who will have the gold kept in an Internal Revenue Service-approved third party depository. Therefore, it is important that you choose a reputable account custodian.
Other Important Things to Note
Since contributions to the Roth IRA are made with after-tax income, there are no additional taxes and penalties imposed when withdrawing the money. However, the owner of the account must at least be 59 ½ years old at the time the money is withdrawn. Otherwise, applicable fees will be charged.
With traditional individual retirement accounts, the account holder ceases to contribute once the age of 70 ½ is reached. With Roth IRAs, on the other hand, additional contributions can be made for as long as the account holder wants.
Storing the Gold
The gold IRA custodian is responsible for the physical storage of the assets. Investors are not allowed by regulations to keep their precious metals on their own. Instead, the gold is mandated to be stored at a third-party depository or facility. The owner likewise cannot take possession of the asset as this would be tantamount to distribution, which is not allowed by law. For people under the age of 59 ½, these actions would merit penalties and sanctions.
Considering all the facts, it is not difficult to see the benefits of a Gold Roth IRA for people who are looking forward to their retirement. If you need assistance in opening such account or converting an existing IRA, do not hesitate to seek the advice and assistance of an experienced and reputable financial planner.