Roth IRAs containing traditional assets have experienced a steady decline in value over the past several years because of the fact that these sorts of investments are subject to that of the United States dollar. For this reason, many of today’s investors have turned to adding physical gold to their Roth IRA as a safe alternative.
Gold backed IRAs have experienced a trend that is opposite to the one described above: they have enjoyed an increase in value ever since becoming available, and therefore offer more appreciation and security to their holders.
(This of course takes into account the non-linear curve that the value of gold follows, which also considers buying power and inflation, as opposed to only the correlations with the U.S. dollar or other world currencies).
The following are some essential facts about such IRAs for those who have not yet become familiar with this type of investment:
Provisions made in the late 1990s for those concerned about retirement fund options included the advent of the Roth IRA, which is a tax-free investment account. Another change that took place around this time concerned IRA regulations. This change was made to allow precious metals to be held in both Roth IRAs and traditional IRAs. These options were warmly welcomed by investors who were looking for alternative options to stocks and bonds.
The Wisdom of Investing in Gold
Gold is a wise choice for retirement planning because of the fact that gold has consistently thrived throughout history, regardless of the state of the economy. Additionally, when one considers the fact that the price of gold (and especially the buying power) has significantly increased over the course of history, through all the dips, and curves with economies etc., it is easy to see that few investments can rival this type of stability.
Both traditional and Roth IRAs are used for the purpose of accruing retirement income. The goal of obtaining such an account is obviously to have the value of its holdings increase, or at the very least remain stable, so that one can count on a specific amount of money for his or her retirement. Because of the aforementioned stability with which they are associated, gold Roth IRAs are a good choice for those who have this objective in mind.
Opening or Converting a Gold Roth IRA
IRA specialists assist individuals each day to transfer all or a certain percentage of their existing IRA or 401k plans into gold Roth IRAs. The process itself is not difficult, and when it is completed by a professional from a reputable company it is very secure. In addition, the process of conversion is tax-free and penalty free, which is appealing to many investors.
An IRA specialist can also assist investors in opening a new account if they did not previously have an account to convert or transfer. When opening a new IRA of this type, care must be taken to choose a reputable account custodian who will store the gold in a third-party depository approved by the Internal Revenue Service.
Since Roth IRA contributions are made with money that has already been taxed, there are no penalties or taxes imposed when the money is withdrawn. However, the account holder must be a minimum of 59 1/2 years of age at the time of withdrawal, otherwise certain fees will apply. With traditional IRAs, contributions must cease when the owner of the account reaches 70 1/2 years of age; however, with Roth IRAs one can contribute to the account as long as he or she desires.
Storing the Gold
As previously mentioned, the custodian of the gold Roth IRA is responsible for the storage of the physical assets. Regulations mandate that investors cannot store their gold on their own, but rather the precious metal must be stored at the aforementioned third-party depository. The account owner is not allowed to take possession of the gold, as to do so is considered distribution. For those under 59 1/2 years of age, this action would result in penalties.
When one considers all the facts, it is easy to see that a gold Roth IRA offers numerous benefits to those planning for retirement. Those who need help to get started regarding the conversion or opening of such an account should seek the advice of a qualified financial planner.
Now About the Gold Price
Being that the price is now bouncing around $1300 an ounce, and seems to be at the helm of a possible upswing, the price is something to consider, especially now. It can be argued that it may rise and fall.
At the same time, when one considers the actual purchasing power of gold, until there is a reversal in inflation, the actual purchasing power (the only solid barometer) will continue to remain where it is, or increase. This part isn’t so linear, but it is crystal clear when you simply look at the amount of goods that can be purchased with one ounce of gold.
If you’d like a bit of a more comprehensive idea of this, along with the actual purchasing power of other commodities, and their historical trends, watch the presentation slightly up and over to the right by James Turk of GoldMoney, where he takes into consideration various commodities and world currencies.
When you see it through that angle, it becomes a bit more easy to understand, and clear how the purchasing power of gold rises more than the prices indicate upon a first glance.
There are numerous companies that can help you with adding precious metals to your retirement account
If you are looking into who can do set up a precious metals IRA, here are some other companies to consider:
APMEX – Visit: APMEX.com
GoldMoney – Visit: GoldMoney.com
GoldSilver – Visit: GoldSilver.com
Merit Gold – Visit: MeritGold.com
Morgan Gold – Visit: MorganGold.com
Lear Capital – Visit: LearCapital.com
Capital Gold Group – Visit: StartWithGold.com
GoldLine – Visit: GoldLine.com
American Bullion – Visit: AmericanBullion.com
Broad Financial – Visit: BroadFinancial.com
Blanchard Online – Visit: BlanchardOnline.com
Here are some more thoughts on a Roth IRA and Roth IRA conversion rules for your reference by Jeff Rose over at Good Financial Cents.
An individual retirement account (IRA) rollover is moving your funds into a qualified retirement account. This qualified retirement account can be a traditional IRA or a Roth IRA. The advantage of converting funds into a Roth individual retirement account is that it will only be taxed when you do the actual rolling over and not when withdrawing, as is the case with other options.
In essence, this means that a dollar in a Roth IRA account is going to end up being worth more than a dollar invested in a traditional individual retirement plan. In addition, the compound interest on the Roth IRA account is not taxed. There are no requirements when it comes to withdrawal. This means that you can keep your funds in the Roth IRA account and get tax-free interest on the money for a longer period.
It is important to realize that not all accounts are qualified to be used in the rollover procedure.
The following accounts are some of the accounts that can be rolled over together with a traditional individual retirement account. These accounts are:
- Stock bonus plans
- Profit sharing
- Tax sheltered annuity plans
- Annuity plans
- Deferred compensation plans
All the rollovers tend to follow the same plans just as traditional individual retirement accounts.
Another thing that is taken into consideration when rolling over into Roth accounts is the filing status of the account. If you are married and you file your tax return separately, you must have been living separately for at least one year to be able to qualify for a Roth IRA rollover. When it comes to income, there are rules that govern a Roth account.
Your MAGI or modified adjusted gross income cannot exceed one thousand US dollars to be able to qualify for a rollover. In partial conversion of your traditional individual retirement plan, it is important to realize that you can only convert just part of your traditional individual retirement account to a Roth IRA.
This partial conversion cannot include the portion of the funds that are tax-free. It is important to realize this in advance so that you are not going to have problems with the Internal Revenue Service. If you do not understand the workings of this process, it is important to talk to your custodian, tax or financial adviser to give you directions in this matter.
Brokerage firms and banks that act as custodians are known to give the some of the best advice when it comes to IRA investments. You must also understand that you cannot rollover a traditional individual retirement account if you have inherited this IRA from someone else apart your spouse.
It is important to note that these rules are to be followed strictly. Failure to do this brings stiff penalties from the internal revenue service. In following these rules, it is important to read the fine print to enable you to take advantage of tax breaks that are inherent in all forms of IRAs.
One thing that you must do in order to have a safe retirement is to invest in your financial education. You must be able to know what is going to be more profitable for you in the long-term. This may take some time but is well worth the effort.