Gold has long been seen as a smart investment option to protect against inflation. Though gold shouldn’t be your sole retirement portfolio asset, precious metals IRAs provide an effective means of diversification.
Gold IRAs differ from traditional IRAs in that they impose specific withdrawal and tax rules; before withdrawing your assets from such an account, however, certain IRS requirements must first be fulfilled before withdrawing them.
1. Contact your IRA custodian
Your Gold IRA provider should have a process in place for handling RMDs; typically they’ll provide you with a distribution request form that indicates how much of an RMD to send, either via direct deposit (ACH payments are usually free; checks incur fees).
Your dealer will give you an Investment Direction form that details exactly which items you plan on withdrawing from your Gold IRA, depending on whether it be allocated or commingled storage. Once signed, they should return it.
Commingled storage involves having your precious metals stored with other IRA accounts from the same dealer in one container, but without enjoying all the advantages that dedicated storage offers. There may also be higher fees associated with this form of storage.
2. Fill out a withdrawal form
Liquidating gold IRA metal can incur numerous fees, such as one-time account setup fees and annual maintenance fees; dealer markup on spot market prices (known as seller’s margin); storage costs; insurance fees covering precious metals at your IRA depository facility and cash-out costs – which all add up quickly and can eat into investment returns.
Most individuals set up their Gold IRA with a self-directed IRA company; however, funds may also come directly from cash or assets. Most IRA experts advise investing in both traditional and Roth IRAs in order to diversify retirement savings rather than investing all funds in one asset class.
Existing IRA owners can convert their funds to a Gold IRA simply by filling out the necessary paperwork. A direct rollover is best, since this transfer of money goes from your 401k directly into your new Gold IRA without taking possession of or controlling over those funds.
3. Contact your dealer
As with any investment, gold IRAs come with costs. This may include one-time account setup fees, annual maintenance fees and storage fees from dealers grading or shipping metal to you. But some fees can be avoided by working with an approved precious metals dealer/IRA custodian; such companies will set up self-directed IRAs and facilitate fund transfers into them.
Additionally, gold IRAs offer lower returns than other retirement accounts and don’t benefit from tax-advantaged growth, so it is wise to carefully consider your retirement goals and investment strategy before committing funds in one. Also seek advice from an outside financial advisor or fee-based planner as investment advice may differ between accounts.
4. Liquidate your metal
Gold IRAs can provide an excellent way to diversify your retirement portfolio through physical precious metals, but before making this investment decision, consult with financial, tax and legal experts before making your final decision.
If you want to add a gold IRA to your portfolio, there are two approaches you can take: transfer funds from another retirement account or open one yourself. Many investors fund their new IRA with funds from an IRA, Roth IRA, or 401(k).
Gold IRAs follow the same rules as any other IRA, meaning you can withdraw them anytime after reaching age 59 1/2 with no penalty whatsoever. Any distribution before this age will incur income taxes and a 10% penalty; additionally, depository storage fees must also be paid if retrieving precious metals from them.