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Far too many seniors find that they haven't earned enough wealth by the time they reach retirement age. The best thing you can do to avoid experiencing this problem in your own life is to start saving and investing for retirement earlier in life. This will involve taking on a somewhat aggressive investing strategy, but it also means protecting some of the wealth you do earn.
You can safeguard your retirement wealth by investing in precious metals. Earlier in your adult life, you should invest up to 15% of your wealth in precious metals. As you reach your midlife and senior years, gradually increase that percentage to protect more of your savings. To begin investing in precious metals, you will need to learn more about rolling over your savings into a self-directed precious metals IRA.
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Can You Use Your 401k to Invest in Precious Metals?
While opening a self-directed precious metals IRA is the best way to invest in gold, silver, and other precious metals, it's not the only option open to you. If you're not ready to roll your 401k funds over or if you have just started saving for retirement, there are some paper investments that will provide you some of the same benefits as directly owning gold or silver.
Invest in Precious Metals Stocks and Funds
A simple way to indirectly invest in precious metals is to buy stocks and mutual funds related to gold and silver. Many precious metals companies focus on discovering new sources of those metals and mining them to add to the market. You can invest in one company directly by buying stock in that company. Alternatively, you can invest in a mutual fund that backs several precious metals companies. A mutual fund offers a better potential for gains since it invests in multiple companies. As new gold or silver ore is discovered, the value of the company and its stocks will rise.
Invest in Precious Metals ETFs
Talk to your 401k manager to learn if they work with a brokerage firm that increases the range of investments open to you. If so, you may be able to invest in exchange-traded funds or ETFs that focus on precious metals. The ETF invests in companies that physically hold gold, silver, and other precious metals. This gives you many of the advantages of investing in precious metals without having to physically hold bullion or coins in a vault of your own. In this way, you can avoid some of the costs associated with maintaining a vault or buying individual precious metals.
What is a Self-Directed IRA?
One of the ways in which the IRS regulates investment accounts is that it prevents you from holding physical assets. This is true for your 401k or any traditional IRA account. If you want to invest directly in precious metals, you'll need a separate account that's designated as a self-directed IRA. This type of IRA does allow you to hold physical assets, such as real estate or precious metals.
Once you open an account with a self-directed precious metals IRA company, you can roll your 401k funds over into the new account. This allows you to fund the account without having to worry about the IRA contribution limits imposed by the IRS. Once your account is funded, you can begin buying precious metals in the form of bullion and coins. Make sure you buy precious metals that meet the IRS' standards for purity. You can learn more about purity requirements from a representative with your IRA precious metals company.
What's Involved in a Precious Metals IRA 401k Rollover?
There's a process involved in rolling your funds over into a self-directed IRA account. While this is a complex process, you can get help along the way from customer service representatives if you choose companies that offer comprehensive customer services. Here is a brief overview of this process so you'll know what to expect before you get started.
Find a Custodian
There are a few things you'll have to do before you can initiate your rollover and finding a depository is chief among them. The IRS prohibits investors from keeping precious metals in their own homes when those metals are a part of a self-directed IRA. Instead, you'll have to store your gold, silver, and other metals in an IRS-approved depository. Fortunately, there are approved depositories or custodians in every part of the country, and you can store your precious metals in any of them.
Consider the custodian's fees, state taxes, and insurance coverage in choosing a custodian. When you start looking for a precious metals IRA company, you'll find that some of them partner with specific depositories. You might choose to work with one of their depositories for convenience, or you can choose another custodian that offers more favorable terms.
Choose a Precious Metals IRA Company
You'll also need to choose a precious metals IRA company that sells gold from approved sources. In addition to setting purity requirements, the IRS also qualifies specific distributors of precious metals. As you research each IRA company, be sure to specify that you're interested in buying IRS-approved metals since some companies also sell products that don't comply with IRS regulations. Those products are available to collectors and others who are not using their purchases to protect their retirement wealth.
When choosing a precious metals IRA company, look into each company's level of customer service, fee schedules, buyback programs, and their library of educational resources. These factors will help you determine if you'll have access to the help you'll need to use your precious metals purchases to meet your retirement goals.
Open Your Self-Directed IRA Account
The final step before you can initiate your 401k rollover is to open your account with the precious metals IRA company you have chosen. Inquire about whether or not they will assist you with the account setup process since some steps may be more complicated. Many companies will provide you with a startup kit and live online assistance when setting up your account.
Be sure to tell your account representative that you plan to fund your account by rolling over your 401k funds. This is important because many companies have an initial purchase requirement that you'll have to meet. They can help you set that up and prepare your account for the rollover.
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Process Your 401k Rollover
You're now ready to roll your 401k funds over into your new self-directed precious metals IRA account. Before you initiate the rollover, you should know how much of your money you want to invest in precious metals. You don't have to roll the entire account balance over into your IRA account and, as previously mentioned, you shouldn't invest everything in precious metals. Once you know how much you want to use to fund your precious metals IRA, you can proceed.
One method for rolling over your 401k funds is to request a check for the amount and hand deliver it to your precious metals IRA company. This process is slower and more complex. After you deposit the check, you'll have 60 days to notify the IRS of the rollover. If the IRS doesn't receive the documentation on time, they will charge you income taxes and early withdrawal penalties on the amount you took from your 401k. Most precious metals IRA companies will assist with this process to help new customers avoid those penalties.
The second and more popular method is to initiate a wire transfer of the funds. Your IRA company will work with the 401k manager to process the rollover electronically. This process is much faster and reduces the risks of errors that might occur with the previously mentioned process. It can also save you time since you won't have to physically deposit the check. Most investment advisors recommend this method.
Start Investing in Precious Metals
Now that your account is funded, you can start buying precious metals with your retirement wealth. Depending on the type of metals you want to buy, the IRS establishes different purity requirements. When buying gold bars and coins, the products will need to have a 99.5% purity rating. Silver products must have a rating of 99.9% while palladium and platinum need a 99.95% purity level. A customer representative at your precious metals IRA company can help you choose products that meet these requirements for fineness.
Know the Top Precious Metals IRA Companies
There are many precious metals IRA companies on the market today, but the quality of service varies greatly among them. You can save a little time in researching companies by looking at a few of the best rated companies in the market. The following three precious metals IRA companies maintain high ratings with the Better Business Bureau and customers consistently provide positive reviews for them.
Augusta Precious Metals (WINNER)
You'll get assistance with setting up your account and with every step of the process with Augusta. They provide their customers with access to live agents to help them with the setup process, and they provide financial guidance. Through live consultations and a library of educational materials, you'll learn about the precious metals market and investing in their products. They primarily deal with gold and silver in the form of America the Beautiful, American Eagle, and Canadian Maple Leaf coins.
Augusta partners with three different depositories: Equity Trust, Gold Star Trust Company, and Kingdom Trust. Since the company works closely with each of these custodians, you'll have fast and easy access to your account at any time.
When looking for a precious metals IRA company, many investors choose Goldco for their superior customer service and wide range of products. A representative will work with you every step of the way and help you choose products that will meet your retirement investing goals. If you're interested in investing in gold, they offer gold bars as well as American Eagle, Freedom and Hope, and Maple Leaf coins. For investing in silver, choose bars or American Eagle, Maple Leaf, or Lucky Dragon coins.
You can choose a depository of your own and have your purchases shipped directly to that custodian, but working with one of Goldco's depositories may qualify you for free storage. Their library of resources will teach you about investing in precious metals, growing your retirement wealth, and protecting your wealth with silver and gold products.
This is a family-owned precious metals IRA company that emphasizes quality customer service and reasonable prices. They also offer an excellent buyback program that will help you cash in your precious metals through a transparent process. While you don't have to sell your precious metals back to American Hartford, doing so will help you pay less in liquidation costs.
They sell IRS-approved gold and silver in the form of bars and coins. Additionally, you can invest in platinum products that also meet IRS regulations for purity and fineness. While you can view their products online, you'll have to speak with a representative to obtain pricing information. While this complicates the buying process, it does provide you with an opportunity to get more information before buying new precious metals.
American Hartford will ship your purchases to the custodian of your choice, or you can ask to use one of the depositories with which they have partnered. Currently, the company works with Brinks Global Services and Delaware Depository Service. They insure the delivery of your products and don't charge extra fees for shipping. Your shipments will be tracked for security surprises, allowing you to verify the arrival of your precious metals.
Final Words
When it comes to growing wealth for your retirement, diversifying your investments is a key factor. While investing in precious metals will help you protect your savings and grow more wealth, you shouldn't put all of your money into gold and silver. Maintaining some paper investments will help you hedge your risks and protect your future. Look for a variety of investment types to ensure you will grow enough wealth to help you retire comfortably.