Gold IRAs are special retirement accounts designed to allow you to invest your retirement funds in precious metals tax-free. Contributions are made before taxes are taken out, with distributions tax-free when taken during retirement.
Before withdrawing funds from your Gold IRA, there may be fees and restrictions you should be aware of.
Taxes
Tax implications associated with withdrawing from a gold IRA depend on what type of account was established. Withdrawals made from traditional or Roth gold IRAs will be subject to income taxes at your current tax rate.
When creating a Simplified Employee Pension (SEP) gold IRA, withdrawals are subject to an early withdrawal penalty of 10% unless one of the IRS exceptions apply. As such, it’s wise to consult an expert gold IRA custodian that can guide and advise on taking out distributions as tax efficiently as possible.
As much as possible, cash distributions should be preferred over in-kind distributions; this will save the extra expense associated with physical possession of your precious metals. You should also ensure you meet all deadlines and abide by IRS regulations; an experienced gold IRA advisor can keep you abreast of changes to IRA rules and regulations.
Minimum Required Distributions
Gold IRAs follow the same rules as other IRAs: contributions are made using pretax dollars, with distributions taxed as regular income. Furthermore, withdraws may incur penalties and taxes depending on your age and the type of account held by you.
The IRS mandates that you withdraw a specific amount each year from your Gold IRA or risk incurring an early withdrawal penalty of 10%. Your RMD amount is determined based on an IRS life-time table which considers factors like your age.
As with traditional IRAs, Gold IRAs allow for either in-kind or cash distribution options; however, precious metals may not make an ideal option for RMD purposes due to their less than liquid nature; your IRA custodian will advise on which will best suit your unique financial circumstances.
Early Withdrawals
Gold IRAs are self-directed individual retirement accounts that allow investors to invest in physical precious metals, following all IRS regulations for such accounts and subject to early withdrawal rules similar to traditional IRAs.
If you withdraw assets before reaching retirement age, they are usually subject to an IRS penalty of 10% in addition to income taxes. There may be exceptions under certain circumstances; medical emergencies or paying for college education for your children could qualify as exceptions.
Precious metals in an IRA must be stored at a depository until retirement age has been reached, making it essential that you work with a reliable gold IRA company that can assist in moving or rolling over existing assets into your new account without complications or pressure tactics such as promising excessive amounts of free silver upon opening an account. Unfortunately, some businesses have been known to employ questionable practices such as promising excessive free silver when opening new accounts.
Tax Implications
No matter if you are considering opening or already invested in a gold IRA, its tax implications must be fully understood. Gold IRAs fall under the same IRS regulations as traditional IRAs; therefore you will require working with a custodian who respects these guidelines.
Gold IRAs provide you with the opportunity to diversify your portfolio by investing in precious metals as physical investments, offering both market protection and an alternative store of value. Gold is also an effective hedge against inflation as its purchasing power remains unchanged while fiat currencies lose purchasing power over time.
Fund your gold IRA using funds you already hold in another retirement account such as a traditional or Roth IRA or with new money. Most gold IRA companies specialize in making this process smooth by initiating an institution-to-institution rollover, which helps minimize hassle while adhering to IRS guidelines. Alternatively, a self-directed IRA rollover may also be an option with cash or securities you have in an investment account held personally by yourself.
