Q. Can I do a rollover from my current IRA or 401(k)?
A. Yes. As a matter of fact, most precious metals’ retirement plans at USAGOLD begin with a rollover. The current law allows for both transfers from IRAs as well as rollovers from qualified retirement plans, such as 401(k), 401(a), 403(b), 457, Thrift Savings Plan (TSP), and annuities. We have a great deal of experience with this process and can help you navigate it with a minimum of brain damage. Because of the annual fees for storage, insurance, and management (approx. $225/year), precious metals IRAs are most economical when their value is higher, and that is where a rollover makes a great deal of sense. Someone just starting an IRA would need a few years to accumulate a large enough account to make it cost-effective, even with maximum yearly contributions. Please see our IRA rollover Q&A for detailed guidelines.
Q. What is the difference between my current plan and a self-directed IRA or 401(k)?
A. All the rules, particularly pertaining to tax treatment, apply to conventional retirement plans and apply to self-directed plans. Generally, conventional plans do not allow for diversifications into physical gold because of the special circumstances that accompany precious metal ownership – storage, insurance, and custodial responsibilities. Typically, the client planning for retirement who wishes to purchase precious metals in physical form, i.e., coins and bullion, must establish a new account with a trustee that allows self-directed retirement plans. The client then transfers funds from his or her current trustee to a new trustee that allows these special transactions.
Q. Can USAGOLD help me choose a trustee that sponsors self-directed IRAs or 401(k)s?
A. Yes. At this time, we have direct working relationships with three trust companies that offer self-directed plans.
Q. What is the role of the trustee in my retirement plan?
A. Self-directed trustees do not render investment advice. They simply provide the administrative and reporting services, and work with various vendors, like USAGOLD, that offer specific, permitted precious metals investments (listed here) under the Internal Revenue code. Of course, the trustees charge fees for their services, and those charges are generally listed on their websites. As a result, the client planning for retirement can get a sense of the costs before making a commitment.
Q. Why is it important to choose the right vendor for your gold rollover?
A. Choosing the right gold firm can mean the difference between success and failure as a gold owner. Choose the right firm, and it will help you stay the course on protecting your assets from economic uncertainties. Choose the wrong firm, and your funds can be diverted to an assortment of bullion-related investments and/or derivative investments that are not truly asset preservation vehicles. Gold stocks, for example, are an investment in stocks first and gold bullion second. Mint state and proof coins graded by independent services usually sell for high mark-ups over their gold value, which immediately puts the buyer at a disadvantage. Precious metals exchange-traded funds and certificates introduce counter-party and systemic risk to the investment equation. These are just three examples of the kinds of investments that can lead the investor away from the stability of conventional coin and bullion investments and generally should be avoided by investors whose goals include building a hedge against economic certainties or a long-term store of value. (Related: Please see “Beware proof gold and silver American Eagles including graded PF70, American Buffalos and Eagles graded MS70″)
Q. How can the average person planning for retirement distinguish between the good vendors and the bad?
A. First and most important: Check the Better Business Bureau’s profile on a company before doing business with it. Check not only its rating but the number of complaints, the type of complaint, and how those complaints were handled. A consistent record of complaints can be a warning sign even if it has managed to keep an A+ rating. This is a simple and straightforward step every first-time investor should take, but it is amazing how many ignore it. Second, choose a gold firm that has a solid track record. Ten years in business is good; fifteen years or more is even better. Third, choose a firm with a commitment to keeping you informed, i.e., one that is interested in answering your questions now and keeping you informed in the future. If a salesperson gives you short shrift or hits you with a heavy sales pitch, take it as a warning.
Q. What are the mechanics of a gold rollover?
A. It is quite simple and straightforward. After an initial telephone consultation, we send an e-mail that contains links to trust companies we use to administer the program. The client chooses which trust company he or she wants and then submits the completed paperwork by e-mail, fax, overnight courier, or standard US Mail. The process of opening and funding the account is handled by the trustees involved in the rollover. Usually, in the course of about two weeks–sometimes less–the funds are “rolled-over” from the current trustee to the new trustee. At that point, the client is able to contact USAGOLD to purchase metals for his or her IRA or 401(k).
Q. What happens once my IRA has been funded?
A. After your account has been funded, you are ready to make precious metals purchases within your IRA. Here, you can put our forty-plus years of gold market experience to work for you. One of our IRA consultants can help you choose the best product mix to fit your individual investment goals. Once you have selected the coin or the bullion product[s] you wish to include, we will fix the price verbally with you by telephone. Next, you instruct the trust company to transfer funds to USAGOLD for your purchase. Upon our receipt of payment, we deposit the metals directly into your account at the depository. You can rest easy knowing your precious metals are stored in a secure depository in a fully-insured allocated account. We will work closely with the custodian through each stage of the process to ensure your transaction goes smoothly.
Q. Is now a good time to do a rollover into gold?
A. Gold, first and foremost, is wealth insurance. You cannot approach it the way you approach stock or real estate investments. Timing is not the real issue. The first question you need to ask yourself is whether or not you believe you need to own gold. If you answer that question in the affirmative, there is no point in delaying your actual purchase or waiting for a more favorable price that may or may not appear. Cost averaging can be a good strategy. The real goal is to diversify so that your overall wealth is not compromised by economic dangers and uncertainties like the kind generated by the 2008 financial crisis or the on-going sovereign debt crisis in Europe.
Q. Is a checkbook gold and silver IRA a viable strategy?
A. We at USAGOLD see the checkbook IRA as a risky, problematic approach to precious metals retirement planning and a bad choice for our clientele. The traditional self-directed IRA account placed with a solid trust company is still the safest avenue for the retirement investor and the one most likely to deliver the intended results. Here we provide a full analysis of this approach to using precious metals for your retirement plan. We strongly suggest reading it before committing your hard-earned retirement funds to this questionable strategy.
Note: After posting this page, the Wall Street Journal published an article stating that the “IRS has issued a stern warning” against personal storage of IRA gold holdings. The IRS, says the WSJ, “warns taxpayers to be wary of anyone claiming that precious metals held in your IRA can be stored at home or in a safe-deposit box.”