How to Open a Gold Account
How to Open a Gold IRA? You may have heard about the benefits of opening a gold IRA and wondered what you’d need to do to make it happen. If so, you’re not alone – there are millions of investors just like you who have realized that having your retirement savings in precious metals can be incredibly beneficial. Setting up a gold IRA takes time and patience, but with this guide, we hope to make it easier by helping you understand everything you need to know about opening and managing your new account.
Investing In Gold Through A Traditional IRA Account : You may have heard of investing in gold, but did you know you can actually invest in physical gold through your individual retirement account (IRA)? The process is very simple and comes with many tax benefits. We’ll go over some information on what you need to open a gold IRA, how long it takes, and how much money you need.
What Is A Gold IRA?
A gold IRA is an individual retirement account that allows you to invest in gold. You can use your own cash or make contributions with pre-tax dollars through your employer. There are no restrictions on what types of assets you can invest in, though many individuals like gold because it tends to hold its value better than other assets, such as stocks and bonds.
There are two primary types of gold IRAs: physical and paper. Paper gold IRAs allow you to purchase bullion with IRA funds and are listed on a stock exchange. These are typically more liquid than physical gold, but they don’t give you actual possession of the gold.
A physical gold IRA is an account that allows you to purchase actual gold bullion for your retirement fund. The main benefit of owning physical gold is that you can take possession of it. If stored properly, it doesn’t have any chance of going down in value like paper investments, such as stocks and bonds do. This way, your retirement funds won’t be susceptible to outside influences.
Gold in an IRA – How to Open a Gold IRA
If you want to add gold or other precious metals to your retirement portfolio, there are two primary ways of doing so: by investing in physical metal or by purchasing non-physical gold exchange-traded funds (ETFs). Each approach has its own pros and cons. In either case, you’ll need to open a self-directed individual retirement account (IRA) with an independent custodian.
There are two primary ways of investing in physical gold through an IRA: using allocated storage, or unallocated storage. With allocated storage, your custodian holds all of your metal for you in secure, insured vaults and issues statements outlining your account balance and activity. You own that physical metal in its entirety; no one else can claim any ownership rights or have any control over it. You’re free to sell it whenever you like, with delivery completed directly from your custodian into yours hands.
With unallocated storage, your gold is held in custodian vaults and all statements are based on those holdings. Your assets aren’t physically segregated from others, which means that you might be subject to lien issues if other investors go unpaid. Most importantly, when you open an unallocated account, your assets don’t technically belong to you; they belong instead to whoever holds them at any given time.
Gold ETFs also have their own distinct advantages and disadvantages. You can purchase any of dozens of gold-based ETFs, which are traded as stocks on public stock exchanges; you’re not buying physical metal, but instead buying certificates that represent your ownership interest in gold. The value of those certificates is tied directly to the market price of gold.
The History Behind Gold IRAs
A long time ago (1980s) in a country far, far away (United States), banks were not allowed to offer Individual Retirement Accounts (IRAs). Instead, there was only one type of tax-advantaged retirement plan: The 401(k). But what if you wanted to invest in precious metals? You were out of luck. Thankfully, times have changed and now banks can create IRAs that include precious metals. So now people have a choice: should they open up a traditional or Roth IRA?
Today, gold IRAs are more popular than ever. And according to various surveys and studies, including data from IRS filings, investors are choosing precious metals like gold and silver for their retirement accounts over stocks or bonds. And if that’s not convincing enough for you, consider some of these benefits: • Diversification: Gold IRAs provide a way for investors to diversify their holdings outside of traditional investment options such as stocks and bonds.
• Control: One of the main reasons why investors choose gold IRAs is that they give them more control over their investments. For example, while traditional stocks and bonds are subject to fluctuations in value based on market forces, you can be sure that gold prices will always go up over time (as long as inflation doesn’t get out of hand).
• Estate Planning: When you die, your heirs will not have to deal with an executor or probate court because your gold holdings pass directly from you to them. As such, gold IRAs are often used for estate planning purposes.
• Safety: Gold IRAs are backed by FDIC insurance. This means that if your bank or financial institution goes out of business, your gold will be protected up to $250,000. If you have more than $250,000 in gold holdings at one institution, then you’ll need multiple gold IRAs (one for each $250k). One last thing about safety is that with traditional stocks and bonds (and other investments), there’s always risk associated with unforeseen circumstances.
Setting Up a Gold IRA
How to Open a Gold IRA
Ready to put some gold in your retirement account? Not so fast. Before you can set up a gold IRA, you have to meet several requirements—namely, gold must be approved as an investment by both your financial institution and custodian. While it’s not difficult for institutions and companies to comply with these regulations, it does take time; opening a new gold IRA will likely take six months or more from start to finish.
Setting up your gold IRA can take as little as 10 minutes, or it can take six months. In some cases, you may not even need to go into your financial institution at all—some companies allow you to purchase and set up your account entirely online.
The process of setting up a gold retirement account is generally split into two main stages: applying for approval and completing your application.
The first step in applying for approval is making sure your financial institution and custodian have approved gold as an investment. The second is working with them to create a new account—but depending on where you’re opening your gold IRA, some companies may allow you to do both at once.
After you’ve decided on a gold retirement account, you’ll need to open an account. Depending on your institution, you may be able to do so online—others may require that you go into your branch or financial advisor’s office in person. In any case, make sure you have all of your documents and information organized before beginning the process; it can help make things go much more smoothly.
Investment Requirements for a Gold IRA
Before you can start investing in gold with an individual retirement account, there are several general requirements that you need to take care of. The three most important factors are:
(1) your age, (2) your income level and (3) your ability to make investments outside of work. If you meet these three prerequisites, then you will be able to open a gold IRA at one of many investment institutions available today.
There are two main types of gold IRA’s, which include traditional and self-directed. Both have their own benefits but they also both require you to make minimum investments. When first opening an account it is best to begin with one that is easier for you to meet, as many new investors find themselves overwhelmed by all of their investment options.
In addition, investors can choose from several different companies that offer gold IRAs such as: Augusta Precious Metals, Goldco, Birch Gold Group, and Noble Gold Investments.
If you do not meet certain age or income qualifications then there are other types of accounts available for your needs as well.
Transferring Precious Metals into an Account
How to Open a Gold IRA
When you buy precious metals, they must be transferred into an account. There are three types of accounts: self-directed, custodial and retirement. A self-directed gold IRA has more investment freedom than other types of accounts. You also have more responsibilities as an owner, including monitoring your precious metals yourself instead of hiring someone else to do it for you.
The amount of money you can invest in precious metals is limited. For example, if you want to purchase an investment-grade gold coin worth $1,000, your total investment in precious metals cannot exceed $250,000. Some types of retirement accounts have limits as low as $1,300. All other assets and investments must be liquidated before your savings can be used for any form of precious metal purchase.
The process of setting up an account is not complicated, but it does require time and some initial paperwork. First, you’ll need to decide which type of account will work best for your situation. Then you can open an account at one of several reputable online brokers. This step involves providing all required personal information, including your Social Security number and other identification numbers, as well as filling out tax forms and other papers required by law. You may also be asked for proof of citizenship or residency status in some cases.
How Long Does the Transfer Process Take?
There are two ways you can open an account with a brokerage firm that allows for precious metals IRAs. The first is by transferring your existing retirement account, in whole or in part, into a new precious metals IRA. In order to do so, however, your current provider must allow for such transfers. This isn’t always possible: Some banks and other financial institutions only allow direct rollovers from 401(k)s and similar tax-deferred accounts—and not from regular IRAs.
The second option for transferring your existing retirement funds is via trustee-to-trustee transfer. In other words, you can have your assets moved from one financial institution directly into an eligible precious metals account at another firm. There are some potential drawbacks to using a trustee-to-trustee transfer, however; we’ll go over them in more detail below.
If you have your retirement account at one of just three large financial institutions—Bank of America, Wells Fargo or Charles Schwab—then you’re out of luck. These banks only allow direct rollovers into existing accounts, and not trustee-to-trustee transfers. If you don’t have an account at one of these banks, though, then your options are broader.
If you decide to go with trustee-to-trustee transfer, then your financial institution will do all of the work for you. They’ll fill out all of the necessary paperwork and handle any other procedural items. The only thing you’ll need to do is sign some forms and give them your old account details. The downside is that trustee-to-trustee transfers can take anywhere from 3–6 weeks—compared with just days or weeks when transferring through an intermediary.
Another potential issue is that trustee-to-trustee transfers are not considered rollovers for tax purposes. This means that you’ll be taxed on any gains your investments have made over time—even if you reinvest those gains into another precious metals account in your name. (This does not apply to existing retirement accounts, such as IRAs.)
While it can take up to six weeks for your assets to arrive at their destination, once they do get there then all of your assets will already be gold-ready; that is, they won’t need further conversion or processing before they can start earning interest and growing in value. However, if you have any non-retirement accounts involved—that is, any accounts owned by you individually—then you may encounter some snags along the way. If so, you’ll want to talk with your financial institution directly about their policies regarding such matters.
So which option is best for you? If you plan on moving your account from one bank or brokerage firm to another, then direct rollover is probably your best bet. But if you’re just getting started and don’t have an existing account, then it might be better to go with trustee-to-trustee transfer.
Our Top Company Recommendations
Our #1 Company Pick, Goldco
If you have an existing Individual Retirement Account (IRA), and want to convert it into physical gold, you can roll over your assets from a financial institution into a Precious Metals account. You will still be able to enjoy tax-deferred growth of your investment, but in order for your gold holdings to qualify as an asset in your self-directed retirement account, they must be physically delivered.
In addition, you can invest in silver and other precious metals products with your IRA. Goldco has been a trusted leader in the gold space since 2006, and has the highest level of customer service ratings with all the major ratings services including: Trustlink, BBB, Trustpilot, and more.
Just click on the banner below, request info, and they will get in touch with you shortly!
0ur #2 Company Pick: Augusta Precious Metals
Augusta Precious Metals makes buying physical gold and silver bullion a breeze with its buy-and-store program. Customers simply open an IRA or Self-Directed 401(k) account, fill out some paperwork, transfer their existing retirement account over, buy a storage plan and—done!—they’re set up with a physical precious metals portfolio they can call their own. Prices on investment-grade gold and silver bullion are always competitive, too.
After deciding that you want a physical precious metals portfolio, then figuring out how and where to buy physical gold and silver is probably next on your list. Fortunately, Augusta Precious Metals makes buying gold easy. Click the banner below, request info, and one of Augusta’s helpful representative will be in touch with you promptly!