What is a Gold IRA Rollover? Step By Step Guide (Update 2021)

Out of all the valuable metals that exist in this universe, it can be said that gold or physical gold is the most prominent metal that is popular among investors. Some might question the true value of gold and its relevancy in the stock market. The real answer to this question is because when the stock market decreases, the value of gold often increases which then leads to investors buying physical gold. So, are you curious to know what is a gold IRA rollover? Now, let’s get into the in-depth nuts and bolts of gold IRA rollover through this article.

Why Gold IRA is significant in today’s era?

The Individual Retirement Account (IRA) was first presented back in 1974 when Congress passed the Employee Retirement Income Security Act (ERISA) that works as a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. However, in 1997, the Taxpayer Relief Act or also known as the relief act of 1997 was implemented in a sense where individuals were allowed to hold certain physical precious metals such as gold, silver, platinum and palladium in their retirement accounts.

The Gold Individual Retirement Accounts or also known as Gold IRA has been the talk of the town recently among retirees. Basically, this IRA rollover can be described as where investors hold physical gold bars or coins instead of taking care of virtual stocks or other types of investments. For instance, when a retiree decided to shift his or her existing retirement account to an IRA that holds the physical metals in custody from a third-party depositary. This type of Gold IRA rollover can also be identified as a precious metal IRA that works specifically as a special retirement account that allows you to invest in gold bullion and coins. Typically, people who own a gold IRA are looking to expand their assets and hedge against inflation.

The rising popularity of Gold IRA

The financial crisis in 2007-2008 was a huge turning point that affected the financial and economic markets around the world to collapse. The crisis cost many people to lose their jobs, businesses, and source of income. But astoundingly, this gold IRA rollover popularity has risen. 

A gold IRA rollover requires a self-directed IRA in which it lets investors gold bullion. Although it is not a physical gold in a regular IRA, people can still invest and can invest in a variability of assets with exposure to gold, such as stocks of gold mining companies or gold exchange-traded funds (ETF). Gold IRAs follow the same universal rules as the initial IRAs when it comes to tax benefits (traditional or Roth), contribution limits, and withdrawal rules. Whichever version, be it traditional IRA or Roth IRA, a gold IRA rollover can only be invested in actual gold, whether coins or bullions.

What is a self-directed IRA? 

A self-directed IRA is an individual retirement account with its investments that are being fully controlled by an investor. Although the account is administered by a custodian, it is directly managed by the account holder which led to the reason it is being called as self-directed. The prime variance between self-directed IRA rollovers and other IRAs is the types of investments you can hold in the account. While a traditional IRA or Roth IRA might be used to invest in mutual funds, a self-directed IRA can be invested in many other alternatives such as gold, silver and other precious metals, cryptocurrency, underdeveloped land, and many more.

If you want to open a self-directed IRA, you’ll need a qualified IRA custodian that specializes in that type of account. Since custodians aren’t allowed to give investment advice, as the account holder, you’ll need to personally manage these assets.

There are many benefits of a self-directed IRA. One of them is it can increase your investments’ potential. By this matter, your assets during market fluctuations are being protected whereby it can increase your growth opportunities instead of just fully depending on the growth from one particular investment industry. You may also have the advantage of entering a fairly mature market for this type of investment field. During the Great Recession a few years ago, a huge demand for gold IRAs has risen steeply along with the gold values. Thus, the process was reorganized as a growing number of organizations started offering precious metals IRAs, and the cost reduced significantly.

Direct rollover vs. Indirect rollover 

Moving money from one type of retirement account to a different type of retirement account, that is known as a rollover. The two types of rollover are called as direct and indirect rollover. 

Let’s start by defining the direct rollover, it is where you must cash out your old retirement plan and reinvest the funds in a new plan in 60 day or less. In most times, the rollover will be direct so that any risk that the individual will lose can be eliminated. Generally, it can be said that a direct rollover is simple it will be a situation where you will be sent money directly to your new account from your retirement account manager without having to do anything which means no money is withdrawn for taxes.

As for an indirect rollover, it is basically a transfer of money from a tax-deferred 401(k) plan to another tax-deferred retirement account to keep the track record the funds that are given to the employee via check for deposit to a personal account. This type of rollover process must be done within 60 day if a tax penalty is to be avoided. With this rollover, your manager withdraws out your retirement account and sends you a personal check called a rollover distribution. Theoretically, rollover distributions are considered taxable income. That is why the only purpose to practice the indirect rollover is you as the account holder has urgent matters to use money.

How to invest in a Gold IRA? 

Gold or other precious metals are subject to their own forms of instability, many believe them to be superior long-term investment choices. If you are interested to open a gold IRA account, you have to carefully select a custodian to hold the assets for you. There are few simple steps if you want to invest in this gold IRA rollover process. 

First and foremost, by opening a self-directed IRA that you need to manage directly with the help of a trustworthy custodian that you have chosen. Why a custodian is needed in opening a gold IRA account? Generally, a custodian must be an Internal Revenue Service or IRA approved financial organization for instance bank, brokerage firm, trust company, credit unions, or load associations. However, you must take note that the chosen custodian must have been approved officially by the federal or state agencies to offer asset custody services to individual investors. This step is very important as of today because there are many scammers or illegal custodians who are not certified. If investors fall into the trap of a forged custodian, it is most likely all of his or her retirement savings will be forfeited before even starting this gold IRA rollover. From this matter, a trustworthy and responsible custodian will help fellow investors by providing a systematic procedure in handling the required paperwork and other information or data needed to arrange the IRA rollover. 

The second step is you are required to select a precious metals dealer that will make the actual gold purchases for your IRA. By having your new custodian as your assistant, it is great for the custodian to recommend one based on the strict rules and regulations that the IRS has presented. The strict rules stated that coins need to be minted at least at 99.9% purity level or even higher. For example, a gold and silver that is being invested should be 99.9% pure but at the same time the IRS approved its originality. Yes, it is indeed very simple to purchase any bar or ingot, but either of the two metals can promise a pass in the IRS strict rules. It is firmly advised that physical metals must meet IRS’s quality standards as in their weight and purity, and stored in a protected IRS permitted depository. If you ended up choosing or buying unapproved coins, the IRS will consider it as an extraction in which it will be charged on your income tax. Therefore, always keep in mind when it comes to precious metals in IRA, you should never just simply invest in any type of coins. 

The third step is to fund the account with a contribution based on a qualified plan, such as 401(k), 403(b), 457, or TSP plans. Basically, these types of qualified plans are retirement accounts that are qualified for a gold IRA rollover. The 401(k) plan is a type of plan if you are no longer affiliated with any company, then you can implement a gold IRA rollover. Moreover, if you are over 59.5 years old with an IRA or 401(k) through an existing employer, you may be qualified for an in-service distribution, allowing you to do a partial gold IRA rollover. As for the 403(b) plans, it is a retirement account offered to employees of public schools and tax-exempted companies. After you have terminated your employment in any organization, you can proceed to do the gold IRA rollover with a 403(b) plan. In another way, you can do a partial gold IRAs rollover after you’ve turned 59.5 years old via an in-service distribution. Meanwhile, the 457 plan is a retirement account presented to state and local government employees, such as teachers, police officers, firefighters, and other civil servants. A gold IRA rollover is only permitted with 457(b) plans once employment is terminated or when someone who is aged 70.5 and above but is still working. Another qualified plan is known as TSP that stands for Thrift Savings Plans. Generally, this plan is a government-sponsored retirement account for federal employees, such as public servants, bureaucrats, and the army forces. In this TSP, a gold IRA rollover can proceed once employment is terminated. Same like the other plans mentioned, TSP also to do a partial gold IRA rollover via an in-service distribution if you have reached the age of 59.5.

Last but not least, you can finally select investments for the account. Then, with the help of your custodian and metal dealer, the transaction can be completed in a simple manner after all the paper works are done. With all of these straightforward and productive steps, now you can simply establish your own gold IRA rollovers. 

The pros and cons of Gold IRAs

Before you want to store your precious metals such as gold, silver, platinum, and palladium in your retirement accounts, there are various of pros and cons that can be identified in these precious metals of gold IRA rollover. It is just like any other investment. Now, let us take a look at some of the pros and cons of gold IRA below:

Pros of having a Gold IRA

1. Greater Freedom of Control

Even though the IRS has implemented strict rules on which types of precious metals products that you can purchase, but with a gold IRA rollover, you can still have a massive freedom and control compared to a standard individual retirement account. Some of the eligible IRA-approved gold bullion that you can have full control of are American Eagle, American Buffalo, Australian Kangaroo, Austrian Philharmonic, Canadian Maple Leaf, and various bars and rounds. Basically, all of these gold bullion can are IRA approved bullion that can be bought for a precious metals IRA account. 

Apart from that, gold IRAs are always self-directed whereby you, as an investor will be able to directly manage your holdings and decide on all of the investment’s necessities and decisions. In this case, a gold IRA allows you to control the market too by purchasing it in a low amount and selling it high. Merely just by holding the earnings in the market fund until the perfect time to purchase it again can be seen. Therefore, if the gold prices are declining, you can proceed to take another measure by selling your coins and bars in order to avoid forfeiture on your investment.

2. Tax Benefits

Gold IRA offers a similar tax incentive just like a traditional individual retirement account alongside with a bonus of protecting the savings through a portfolio diversification. For instance, contributions are made to traditional self-directed IRAs are tax-deductible and it is qualified for any withdrawals from Roth accounts as it will be tax-free. 

3. Diversify Portfolio

A gold IRA will be able to help you to diversify your portfolio. If there is an occurrence of extreme market fluctuations, gold will still move in the opposite direction of stocks bonds because precious metals like gold are most likely to improve greater alongside with the stock market.

Characteristically, the worth of gold goes up as the value of the dollar continue to diminish. Also, this is due to the fact that gold has served as a store of value and unit of exchange ever since the era of civilizations. 

Though other types of investments such as a fixed-income investment can be beneficial, the effect that inflation has on them might make you uneasy and doubtful, thus making investing in a gold IRA the most obvious choice.

Some investors might question why gold’s performance is being glorified over the past years. It is mainly because the financial crisis was just 13 years ago and that has caused many people to lose their retirement savings during the peak time of recession. The American public paid a huge price when they bet their entire life savings in the stock market. 

In conclusion, a gold IRA can definitely assist in your retirement portfolio to help minimize the menaces of inflation and financial, political, or economic catastrophe. 

4. Long-term Investment

Precious metals such as gold, silver, and palladium are seen as an investment that holds a long-term value. Given that it is a long-term investment, it can be determined that gold fits perfectly to an IRA, whose assets you interdict from touching for decades generally up until you be pensioned off. 

Cons of having a Gold IRA

Despite the numerous benefits in establishing a gold IRA, there are still a few drawbacks that needs to be take into account. Gold for example, is not a liquid asset. Once you reach retirement age and you need to make Required Minimum Distributions (RMD), making a withdrawal will be expected as a thorny move to run the risk. Hence, when investing in gold or starting a gold IRA, there are significant upfront costs.

1. High cost of expenses

When you want to initiate a gold IRA rollover, you need to hire a trustworthy and certified custodian, not just a merely upholder or curator that can assist you in the investment field. In this situation, you need to be prepared to hire and pay a verified custodian to protect and store all of the precious metals that you hold in the IRA. Please also be reminded that most gold IRA custodian charges have a high tendency to be pricey, as well as its management fees compared to a regular existing IRA. 

Apart from that, there are other certain expenses in holding precious metals in your retirement accounts such as a one-time initiation fee, annual fees for custodian, and storage fees. But the fees and expenses differ as it depends on the custodian company and precious metals dealer that you are working with.

  1. No interest, dividends, or tax advantage income:
  • This gold IRA rollover does not own any tax advantage income, this is because gold bullion does not provide or pay any interest, dividends, yields, or other revenues. In this case, you as an investor will only get an influence on any capital gain that you have acquired from selling your gold in the stock market at a good amount of quantity, and it is in contrast with asset-backed commercial financial assets. Nevertheless, those perquisites of stocks and bonds come with jeopardies as it had happened previously to older Americans in a way where small gains from interest and the whole saving can be mislaid on the spot. So, this type of loss may happen again.  
  1. Funding restriction: 
  • As stated, a custodian will be taking care of your precious metals, storage, and other transactions. By this mean, there will be restrictions on your gold IRA in a sense where you are not allowed to disturb any coins or bars, as well as personally buying other precious metals to store them in your gold IRA. This is due to the fact that your verified custodian will be the one managing this kind of official matter on your behalf. 
  1. Scammers in investing: 
  • Nowadays, there are many existing scam cases happening around the world especially in this investment field. A growing number of people have started to invest in precious metals such as this physical gold which then lead to theft and fraud. There is a huge risk specifically towards new gold IRA investors in starting a gold IRA because of the lack of understanding and being naïve. In this matter, you need to be aware of scammers because IRA custodian can steal from the clients. Some custodians might fake their certificates and trust ability just for the sake of scamming. Not only IRA companies that can-do fraud, but even precious metals dealer can do it too, so new gold IRA investors need to be aware of buying only IRS approved coins or bars. If you want your gold IRA rollovers to be your safe-haven, then your gold must be accepted. Therefore, this type of drawback can be a huge risk for investors in the gold IRA field. 


All in all, a gold IRA rollover can be the best sanctuary to protect and aid your monetary treasure against any economic instability or recession. It may have its pros and cons, but it is best believed that with a proper and thorough planning before starting this type of investment, a prosperous welfare can be guaranteed as the colossal rise in gold prices keeps on snowballing.

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