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The Guide To Understanding Gold IRA

Date : Oct 01, 2017 Category : Finance
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Understanding Gold IRA

When most people want to purchase gold, they will generally use their retirement accounts to buy an exchange-traded fund (ETF) like gold. The most common reason they do this is simply because they are not aware of another way to buy it.

However, what if you were told that there is another way to own gold, and it is a method that millionaires have been using for many decades?

What Is A Gold IRA?

Do you have a retirement account like a 401(k), IRA or a TSP (Thrift Savings Plan)? If so, you can choose to take the account and ‘roll it over’. The retirement account will then be referred to as a self-directed IRA. However, it does not work any differently than a 401(k), a traditional IRA or even a SEP IRA. The main difference, and the only difference, is you will have more control over the money in the account.

A gold IRA also has tax protection until you begin to receive distributions.

This is the same method that millionaires use to purchase gold and other precious metals.

Once their retirement account is rolled into a self-directed IRA, they take funds from the IRA to purchase gold and/or silver bullion coins. What is the result? They then have physical silver and gold in their retirement accounts.

Will You Take Possession Of The Gold?

A common question from investors interesting in buying gold or silver if they will take possession of the actual metal. You will not possession of the gold you purchase, but it will become a taxable asset if you ever take possession of it.

Instead, the gold will be stored in a facility. One of the most widely recognized storage facilities for these types of items is Brink’s. It is a safe company that is publicly traded. Although there are other storage facilities that can be utilized, Brink’s is the preferred choice of many investment companies.

Once the gold and/or silver is taken to a storage facility, and it is held in a safety deposit box that has your name on it, you have the opportunity to take physical possession as a distribution.

This is a very important step because it is the only asset in your retirement account that you can take physical possession of instead of having to liquidate it into cash.

Distribution – Traditional IRA Versus Gold IRA

Conventional distribution occurs in retirement accounts that include stocks. If you are over 70, and you are ready to take a distribution, you may want to raise the capital. This means that you will have to sell the stock, turn it to cash, and pay take on the appreciated value of the stock before receiving the money.

With a Gold IRA, you begin getting distributions out of the account after you turn 59 and before you turn 60. You take the distribution out of the secured safety deposit box, pay the tax on the appreciation of the gold while you owned it and then have the physical bullion coins delivered to your home or another predetermined location.

Does It Really Matter Where The Bullion Coins Go?

At the moment, the stock market is seeing record highs. Unfortunately, the dollar appears to be on the brink of collapse. This means that there are a limited number of places you can place your money where you can be sure it will be safe.

One of the biggest fears retired people have is that they are going to lose their retirement accounts. This happened to many in 2008, and many retirement accounts lost over 50% of their value. A viable alternative is to invest in physical metals like gold and silver to protect yourself and your account in case of another economic collapse.

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