Gold IRA Rollover Vs Transfer
To add precious metals to your retirement portfolio, you need to open a self-directed Gold IRA and fund it.There are two main ways to fund your self-directed Gold IRA: an IRA rollover or an IRA transfer.
In this article, we are going to break down the difference between the two, and consider which is the better of the two options.
What Is A Gold IRA Rollover?
A Gold IRA rollover is the automatic transfer of funds from your current IRA to the new self-directed Gold IRA. An IRA rollover is simple to complete.
To implement your IRA rollover, all you need to do is to notify your current IRA administrator of your new self-directed Gold IRA. They will then initiate the transfer of assets to the new account on your behalf.
Features Of An IRA Rollover
An IRA Rollover is almost automatic. The funds are transferred from your current IRA administrator to your self-directed IRA administrator without your involvement.
You can transfer your funds in the form of cash or assets held in your current IRA. Thus, the assets in your portfolio don’t have to be liquidated to fund your Gold IRA. Stocks or bonds can be transferred quickly to fund your Gold IRA.
A rollover can take place from any type of traditional retirement account. This includes 401(k), 401a, 403b and annuities.
However, you are only allowed to carry out a rollover once a year.
The Steps To Complete A Gold IRA Rollover
Step 1. Identify a Gold IRA administrator and open a self-directed Gold IRA account.
Step 2. Notify your current IRA administrator of your new, self-directed IRA.
Step 3. Your new self-administered IRA account manager will contact your current administrator to transfer your funds to the new self-directed IRA.
Step 4. This process should only take two weeks for your new Gold IRA to be sufficiently funded to buy precious metals.
Step 5. With funds in your account, you can now instruct your Gold IRA administrator and precious metals dealer on the precious metals they have to buy for you. You can have your Gold IRA administrator advise you on the precious metals that you can hold in your Gold IRA.
The IRS regulates and approves the precious metals that one can invest in with a self-directed IRA. Pure gold, silver, platinum, and palladium are the precious metals allowed by the IRS.
Step 6. You can choose a custodian or depository of your choice or choose to use a partner of your Gold IRA administrator. Make sure that the custodian you choose is IRS-approved.
Step 7. Once your Gold IRA administrator buys the precious metals, they are credited to your account and delivered to the depository immediately. You cannot have your precious metals with you in your home. The IRS considers this an early distribution, for which you will be penalized and taxed.
What Is A Gold IRA Transfer?
A Gold IRA transfer is a manual transfer of funds from a traditional IRA to a new self-directed Gold IRA.
The process is manual as you are responsible for transferring the funds into the new self-directed Gold IRA.
This process is recognized by the IRS as a 60-day rollover. The 60 days start from the time you receive your funds from your old IRA. IF you use any or still hold the funds after sixty days, you are liable to pay distribution tax and a 10% penalty for unauthorized early distribution.
If you opt for a Gold IRA Transfer, there are certain instances for which you get a waiver of taxes and penalties if you miss the sixty-day deadline.
You can get an automatic waiver if there is an error at the bank while depositing to your new Gold IRA administrator. You need to have followed all the stipulated procedures.
You are also allowed to self-certify that you qualify for a waiver. In this case, the IRS will audit your income before the waiver is granted.
You could also pay $10,000 to apply for a waiver.
Advantages Of A Gold IRA Transfer
- Your traditional IRA administrator will liquidate your portfolio for you to have the funds to fund your Gold IRA.
- With 60 days to deposit the funds you can make an informed decision on the administrator and the precious metals you want to invest in.
- You can take advantage of a tax waiver to prevent penalties and tax for the early distribution of benefits.
Disadvantages Of Funding Your Gold IRA Via Transfer
- You will receive a smaller amount from your traditional IRA. A 10% penalty for early distribution and taxes are calculated for the amount liquidated. However, if you fund your Gold IRA before the 60-day deadline, you can get an assessment and receive a refund of the tax and penalty.
- If you don’t deposit the funds into a Gold IRA on time, you are likely to get penalized and taxed for illegal early distribution of retirement funds.
- You may have to pay $10,000 to qualify for a waiver of taxes and penalties if you don’t meet the deadline to deposit your funds into your Gold IRA. However, when you pay this amount, you can easily get a private letter that ensures you are not charged tax and penalties.
- Compared to an IRA rollover, a Gold IRA transfer is more complicated. A rollover is automatic and is carried out between two corporate entities. The entities communicate between themselves to arrange for the funding of your Gold IRA account then inform you once the funds are credited into the account.
A Gold IRA rollover is easier to carry out and more convenient than a Gold IRA transfer, and it means less pressure is on you, as the investor to get it right. Administrators will be responsible for moving your funds, and this will happen a lot quicker than if you are to transfer them manually.
To avoid penalties and taxes, and long processes, opt for a Gold IRA rollover to fund your new self-directed Gold IRA.