Gold IRA Rollover – Protect Your Wealth Against Possible Economic Collapse
Last updated: March 5, 2020
US residents may be eligible for a precious metals backed IRA for protecting their wealth against stormy economic times ahead
Why should you consider a Gold IRA?
In the current volatile economic landscape, more and more people are searching for different investment instruments, like a gold rollover to protect their retirement savings. The Center for Retirement Research at Boston College reported in 2017 that 52 percent of working-age households in the USA will be unable to maintain their standard of living once they retire, as measured by The National Retirement Risk Index. Comparison with previous years shows that the situation is gradually becoming worse over time and it is leaving Americans concerned. Gallup poll conducted in 2018 revealed that nearly six out of ten adults are moderately or very worried about not having enough money for retirement.
In the last few years, precious metals backed accounts have become increasingly popular. The reason behind this is the fact that historically precious metals moved in the opposite direction of mutual funds, stocks and bonds. The technical term is that gold is negatively correlated to stocks.
Today, gold still plays a critical role in the marketplace and is the most appealing precious metal. Gold is still a mark of wealth and prosperity because of its rarity and perceived value. Since 2001, the price has risen more than 4 times in relation the US dollar, reaching a high of $1,913.50 in 2011.
How Does It Work?
Precious metals have long been a safe haven investment in times of economical and political uncertainty and if you want to protect your savings against financial crises and volatile situations, creating gold IRAs is an excellent choice. Precious metals have held their value throughout the ages and have been a tried and tested method to preserve wealth for much longer than fiat currencies and other forms of monetary assets. They are also an excellent hedge against inflation since their price rises alongside the increased cost of living.
Adding gold to your investments diversifies your overall portfolio, reduces the portfolio volatility and risks and helps to protect against downturns in the stock market. Not only is it a safe haven against crashes in any particular market, it is an insurance against broader systemic risks and geopolitical uncertainty. When world tension rises, people turn back to the safety of gold and other precious metals. Finally, they present a tremendous opportunity to increase the value of your assets. The growing demand, due to increased use in electronic devices, and dwindling supplies inevitably lead to rising prices.
Gold will continue hitting record highs in price for many years to come in case of the following:
- Failure of Currencies
- Failure of the Stock Market
- Higher Unemployment & Foreclosure Rates
- Continued Rising of Inflation & National Debt
Due to the rejuvenated momentum of the price, it is still viewed as a solid investment strategy, when paper currency has proven to be anything but stable. Gold has a reputation for offering protection against devaluation of paper currency and various other negative effects of unsound policies and government overspending. Rollovers are gaining popularity among investors offering protection of the retirement accounts or those that would like a more diversified and safe portfolio.
The IRS has a very clear distinction between a transfer and a rollover despite many people thinking that any movement of funds is a rollover. With a rollover, the funds first move to you and you then deposit into the other account. When you do a transfer the funds move from one custodian to the other without you seeing the money.
One of the major factors contributing to this situation is the shift away from the traditional defined benefit (DB) pensions in the private sector. The DB plans provide stable income that lasts all through retirement and are managed by institutions that exist specifically for that reason. Instead of the traditional form of employer-sponsored plans, most private sector employees must now rely on defined contribution (DC) plans, that have become prevalent in recent decades and shift the risk and most of the funding burden to the individual.
Most common DC accounts, like the Individual Retirement Account (IRA) and 401(k) plans, are not determined by a set formula, but rather depend on investment returns. Each individual, opting for a DC retirement plan, is responsible for the types of investment they choose and with most people typically lacking investment expertise, this choice poses a certain risk. The majority of assets in DC plans are invested in stocks and stock mutual funds and are susceptible to substantial losses in case of a market crash, like the one in 2008 that significantly reduced the value of many families’ nest egg. If the market takes a downturn like in 2008 again, estimates are that around thirteen million older workers aged 50 to 64 years would each lose over $20.000.
Investment market volatility is not the only potential pitfall awaiting the soon to be retiree. Inflation is an ongoing concern for someone living on a fixed income. Even low rates of inflation can seriously erode the retirement fund over a longer period while a stretch of high inflation can have devastating results. Real estate and home-ownership are another important part of the retirement assets for most retirees. Owning your home can provide a lower cost of living and the property should increase in value, but it is also prone to market volatility. A housing crisis like the 2008 real estate bubble can dramatically reduce property values and make a big dent in the resources saved for retirement.
It is evident that retirees face numerous financial risks, including investment losses, inflation, interest rates, potential large expenses for medical care, premature retirement and living longer than expected. The situation is not to be taken lightly as less and less households seem to be sufficiently prepared for retirement and it is hard to imagine anything as grim as struggling with finances in the autumn years of your life. You should be able to retire with dignity and independence and not seeing your plans and dreams shattered, your home sold to keep up with the bills because of market volatility, crashes or other things beyond your control.
With the pension coverage shifting from defined benefit plans to 401(k) plans and IRAs, the responsibility falls on the individual and it has become increasingly important to inform yourself, plan ahead and take positive steps to avoid financial uncertainty in the later years. Creating a retirement account, raising contribution rates, investment education and diversification should go a long way towards securing your stability.
Precious Metals Rollover – The process
Rolling over your existing account can be a daunting task, but when done correctly, it is cost and tax effective. If you decide to work with GoldCo (the company we can give our stamp of approval), here is the process:
- First, visit their website here – Opening a Gold IRA acount or give them a call (877) 385-0495
- Fill out the form
- Let the experts help you along the way
- After receiving your signed paperwork your account will be opened in as little as 24 business hours
It’s important to do your due diligence and research the top rated companies, before making your final decision – you can read more in our review of the best companies and learn more.
After you’ve reviewed the companies, it’s important to ensure that they are reliable when protecting your assets. Our team picked GoldCo because of their customer service, storage fees, reliability, transparency, flawless run-rate for years and their ability to protect assets.
Regal Assets pride themselves on delivering on their promises, making sure their customers are satisfied with their end-product and operating a first-class business. They offer a 7-day delivery guarantee. When it comes to shipping gold this is extremely rare.
If you are looking for additional justification for investing in gold, look no further than the stock market. When considering the security that a provide, consider the already seen trend of the New York Stock Exchange. In October 2007, the Dow Jones Industrial Average, reached its peak and closed at 14,164. Quickly after, the Great Recession of 2008-2009 followed causing it to drop to 11,000 in April 2008. The Dow Jones continued plummeting finally reaching a low of 7,552 in November 2008.
This was obviously horrifyingly painful for all investors whose retirement funds depended on those stocks. Shareholders started rushing to exit the market. Many stockholders experienced total loss in the value of their investment. In contrast, the decline of the Dow never affected investors that opted for gold investment.
Experts are still predicting another crash in the offing thus making a gold IRA plan increasingly attractive. Continued warnings regarding the recent bullish markets point towards an end in the offing and that investors should start seeking other vehicles, such as gold IRAs. This is especially relevant to the people near retirement who would be devastated by a large drop in the value of their portfolio.
Investing through 401k Rollover
By relocating investing a portion through a 401k to gold IRA rollover or any other instrument, you get to protect your portfolio’s value against any devastating drops. The price of gold is know to have a negative correlation to the stock market. So when the markets go down, precious metals, have a tendency to rise in value. It makes sense to invest in gold in these times since it involves minimal risk and is largely unaffected by such factors.
In 2011, the price of gold rose 32.8, which was preceded by 2-digit increases in all previous years starting 2008. The increase is primarily a consequence of investor activity in the precious metal market in form of gold IRA along with other vehicles that retain value regardless of the general currency supply. The sustained investment of this type eventually drove up the price of gold by over 50 percent in September of 2011.
Gold exposes its real significance as a protection against devaluation in case of high inflation offering returns of over 130 percent. Compare this to the 12-percent return, which is the average stock market gain. In times of inflation over the last decade, gold more than doubled in terms of value.
IRA Rollover Rules
Investing in gold IRA is similar to other individual retirement account vehicles. The key difference lying in the actual physical metals held by the account rather than paper currency. You need to transfer your current 401k or IRA via an Internal Revenue Service approved rollover procedure. It is tax-free. Your metals will be stored in a secure location until you choose to act upon it by either selling it for cash or having it shipped to you.
Your funds will be in custody of the company you choose and it will offer you different asset plans to choose from. All you need to do is fill out the required paperwork to open your personal IRA with your custodian of choice.
With a rollover you have 60 days from the date that you receive the funds to transfer the money to a custodian or a gold company. The funds become a taxable withdrawal if you don’t complete the transfer in the 60 day period and if you are aged under 59 1/2 a 10% early withdrawal penalty is applicable.
Standard IRA Vs Roth IRA Gold Rollover
You can choose either a Roth or standard account. In the standard IRA, your funds are invested in a tax-free manner until you choose to withdraw them. In the Roth IRA, rollover is typically applied once taxes have been assessed and can then be withdrawn free of tax. In either option, you must have complete the transfer of funds within 60 calendar days of the funds being removed from the original IRA to avoid the large fines or fees the IRS usually imposes.