Retirement Account Transfer Vs Rollover

Wednesday, June 12th 2024

Making smart decisions when making investments is a no-brainer. One of the smartest decisions you can make is to move a retirement account over to a precious metals IRA. These retirement accounts allow you to have precious metals in a retirement account. Precious metals have a trend of doing well in times when other parts of the economy are on a downturn.

With the state of the government and world making investments to prepare for a negative trend in the economy is a smart decision. You want to have a diverse portfolio should something bad happen to the economy. Gold is among the top of precious metals to invest in in order to protect your future. The benefit of doing it in the form of an IRA is that you get deferred taxes and secure storage. You don’t have to worry about your investment.

Other forms of IRAs do not allow you to invest in any alternative forms of investment, including precious metals. That means if you want to use your traditional IRA in order to invest in gold or another precious metal as part of an IRA you will need to create a specific type of retirement account – a precious metals IRA.

There are two ways to start a precious metal IRA, a gold IRA rollover or a gold IRA transfer. Each has its own benefits and its own drawbacks. We are going to explore both options and give you the information you need in order to make an informed decision.

What is a Gold IRA Rollover?

At the most basic level you can view a gold IRA rollover as taking your traditional individual retirement account and moving it to a new administrator in a new form of investment. Taking a retirement account and using the funds to start a new account without ever having said funds in your hands. This is just a simple summary of the process though.

The United States financial laws allow for you to take certain IRA accounts such as 401k, 4012a, 403b, 457, Thrift Savings Plans, and a few rarer accounts and roll them over into a gold individual retirement account. Typically, a gold IRA rollover is performed when you leave a workplace and you want to continue to have a retirement account with the money that you saved at your place of employment.

An IRA rollover can only happen once per year

Unlike many things in the financial world, a gold IRA is a pretty easy and doesn’t take to much work for the consumer. Your first step will be to find a gold IRA company to work with. Some companies offer full services, handling the purchasing of the gold, storage, and transfer. Others will require you to work with two or more companies in order to create an account.

Once you have found your company you will need to fill out paperwork. With completed paperwork the precious metals that you choose will be transferred to your account. Only certain precious metals can be transferred into a precious metal IRA, gold, silver, platinum, and palladium. For each of those metals, only specific forms and quality are permitted.

The company (or companies) will complete the physical transfer using proper custodian services and your precious metals will be stored at a custodian. With almost no exception, a precious metal IRA needs to be stored at an authorized depository. This is for the safety of your gold and also to properly ensure your retirement account.

What is a Gold IRA Transfer?

Another way to establish a gold IRA with an existing account is known as a gold IRA transfer. With a gold IRA rollover, the gold IRA companies involved do all of the work for you, including the transfer process. A transfer on the other hand, is the reverse of that, you perform the funds transfer yourself.

On the IRS website you will also see a gold IRA transfer referred to as a 60-day rollover. The Internal Revenue Service calls gold IRA transfers a 60-day rollover due to the fact that you have 60 days from the time that the check is issued to you to open your new account. In this case, a gold IRA account. In order to be considered opened, you will need to deposit the check from your previous retirement account into the account for your new gold IRA’s financial firm.

For some specific cases the IRS may be willing to lift their 60-day transfer window but you will need to talk with the IRS and an accountant. Typically the IRS allows a waiver for bank errors, errors at your IRA company, or you request a ruling and pay a fee.

Whether you plan to ask for the IRS to waive the window or not, it is always wise to talk with an accountant or financial planner before taking a big move such as opening a new retirement account. Make sure to do your own work too. There are plenty of resources out there for you to learn from, including ours.

A gold IRA transfer may be better for those that have financial institutions that are difficult to deal with or won’t easily perform an IRA rollover. You may also do it to have more flexibility when it comes to gold IRA companies. When you do that, you want to make sure to double check everything to ensure you are working with a legitimate gold IRA company (make sure to read our gold IRA reviews first).

Tax Implications of a Gold IRA Transfer

A gold IRA transfer works differently from a rollover. You will have tax implications when you transfer from one IRA to another instead of using the automatic rollover process. During a gold IRA rollover, the amount that you would be taxed normally along with the early withdrawal penalty will be held back from the check. Don’t fear, as long as you make the 60-day deadline, you will get all of that money back in the form of tax credit at the end of the year that you complete the transfer.

Which to Choose?

After reading this you are probably wondering what the best choice for you is. In most cases you will find that the gold IRA rollover is the better option. Not only is a lot of the work done for you but you don’t lose some of your hard earned retirement to tax. Even if you get that money back, that is money that you could be investing in precious metal and your future.

However, like we mentioned above, it is always a good idea to talk with a professional before making a decision. No one financial solution is right for every person. It is also wise to diversify your retirement portfolio so that you are protected against any changes in the market. That is one of the reasons you are considering a gold IRA in the first place anyways.

Investing in a gold IRA is a great decision for many people. It allows you to secure a portion of your retirement in a platform that does well when the rest of the economy is not. After you have learned about gold IRA rollovers and gold IRA transfers the next step is to start learning about different options when it comes to purchasing your gold and storing it. Make sure to take a look at some of our other articles to get an idea of what to expect and what to look for.

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  • Mark says:

    Hi Chris,

    Are there companies that facilitate rollovers into a gold IRA?

    • Hi Mark,

      Yes, most serious IRA companies offer to walk you through the process and facilitate it.

      Feel free to read our article on gold IRA companies review and comparison to find out which one offer this service.

      Happy investing!