Gold IRA rollovers allow you to invest in physical precious metals. If your 401k plan supports this investment option, a fund rollover must take place between your custodian and one of several gold IRA providers such as Goldco Precious Metals or Augusta Precious Metals).
Process can be complex due to specific regulations that must be observed; however, the good news is that it’s actually easier than one may imagine!
If you wish to move funds from an old employer-sponsored retirement account into a new retirement account type like an IRA without incurring tax consequences, two methods exist for doing this without incurring penalties: direct rollover or transfer. Both have distinct funding options that could trigger different tax effects if handled improperly; it is therefore advised that before making this decision consult a financial or tax professional first.
Direct rollovers involve an individual asking their plan administrator to transfer funds directly from one account into the new account, usually by mail with a check made payable directly to the recipient of said account (rather than themselves) – such distributions can either go into their retirement plan or an IRA, depending on what’s best for them. Many individuals opt for this type of rollover because it obviates having to deal with 60-day time limits of their taxable event and avoid having taxes withheld upon receipt.
Direct rollovers require completion within 60 days or the distribution will be taxed as income to the recipient. If you miss this deadline, any re-deposit will be treated as an ordinary distribution with applicable taxes and penalties applied accordingly.
Re-deposits require that recipients of distributions contact their custodian and request they re-deposit it into their account. The custodian may withhold any amounts withheld from your distribution originally; phone calls may often be quicker. Individuals should submit Form 1040-R in order to report this change and avoid potential penalties.
Indirect rollovers may be more complicated, but they can still help individuals avoid tax-deferred status for their retirement assets. An indirect rollover occurs when an individual takes a distribution from one retirement account and re-contributes it into either another account owned by them within 60 days or 12 months – in either case to maintain tax deferral status for retirement assets.
Cashing out an old 401(k) account may seem like an attractive solution, but it may come at a steep cost. Your former employer will typically withhold 20% of the distribution amount to pay Uncle Sam and you may incur penalties for early withdrawal from the plan. A better solution for tax savings would be opening an IRA instead, where all of your retirement savings can be invested together with low-cost mutual funds and commission-free ETFs from multiple providers – Bankrate has reviewed top places where people can open an IRA which offer brokerage or robo-advisor options suitable for every investor.