The high level of uncertainty in the investment marketplace has led many investors to seek out methods to protect their investment portfolios. One powerful investment strategy is diversification. Investors that diversify their holdings protect the total value of their investments. The risks are limited when there is a downturn in a specific investment type. Many wise investors have chosen gold and other precious metals as a key component of their diversification strategy.
A Gold IRA can be a vital component of an investor's portfolio. An IRA (Individual Retirement Account) backed by gold is a secure investment vehicle that allows an investor to avoid the risks associated with conventional, paper based investments such as stocks and bonds. Many investors have chosen to enjoy the benefits of a Gold IRA and the peace of mind they bring.
A Gold IRA will provide the same tax-deferred benefits as an IRA that is invested in paper-based assets. Additionally, an IRA backed by gold is subject to the same rules that apply to other IRAs. The process of diversifying with a Gold IRA is a relatively simple one.
A typical approach taken by diversifying investors, is to "rollover" an existing IRA into a Gold IRA. Rollovers are generally used by investors who are retiring or are changing jobs. These types of changes in circumstances often require the investor to make changes in how his or her retirement accounts are held.
Rolling a traditional IRA into a Gold IRA is accomplished by using either an indirect rollover or a direct rollover. An indirect rollover takes place when an investor chooses to take possession of the assets before placing them into a new IRA. The investor must place the assets into an eligible plan within 60 days. Also, the IRS can withhold 20% of the transferred assets.
A direct rollover occurs when the plan administrator moves the assets to the new plan. The owner does not take possession of the assets. In a direct rollover, the IRS does not withhold the 20% amount. An investor may also be able to direct the current IRA administrator to add gold to the plan.
Contributing to a Gold IRA is dependent on many variables as outlined by the IRS Contribution Rules. There are limitations to how much income can be contributed. Also, limitations to when a contribution can be made and up to a certain age (70 1/2). The due date for contributions, according to the IRS is stated as such; "For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015."
Contributions can be complicated. Seeking qualified advice on setting up a long term tax deferred retirement, plan such as a Gold IRA, should be the next step in any investors to do list. For more on understanding IRA contribution rules by clicking here.
The physical gold that is held in a Gold IRA cannot be in the possession of the investor. The gold must be placed into the custody of a trustee or custodian. Eligible custodians are usually banks, brokerages, credit unions and even insurance companies. Remember that custodians sometimes charge a fee for their services.
As you can see, the benefits to owning an IRA backed by Gold can be substantial. This type of Individual Retirement Arrangement can offer a stable diversification option in a turbulent market. Additionally, a precious metals IRA can provide the same tax-deferred advantages as other IRA vehicles.
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