Gold for retirement refers to gold commodities, such as physical gold and stocks, held in an individual retirement account (IRA). IRAs are retirement plans that have the backing of the government (represented by the IRS- Internal Revenue Service in America) that allows tax-deferred statuses of funds geared towards retirement. Planning for retirement is important as people’s productivity tend to dwindle as they grow old, yet they still have needs that require catering. It is, thus, important for people to plan for retirement wisely.
Why gold for retirement?
Economic stability and durability
There are numerous reasons as to why gold makes an excellent investment for retirement. As one of the precious metals, the others being rhodium, silver, platinum and palladium, gold has limited reserves available in this planet. The general rule of demand and supply stipulates that the higher the supply (Inflation) of any commodity, the lower its price go. Seeing that gold is in limited resources, there will never be a risk of having too much gold in the market or an extreme price drop. Again, gold, although mined in less-durable forms, is refined through high temperatures that increase its strength and durability, further. This means that gold can weather dust, water, moth, dump, fire and sun destruction; thereby lasting way longer than traditional assets (buildings, autos, and businesses).
IRAs Available in Diverse Forms
Every investor seeks to minimize the risk of his/ her investment, but increase chances of investment growth/ profit through investment portfolio diversification. Gold is available in diverse forms that includes gold bars, gold coins and numismatics, as well as bullion. Additionally, the coins are of a diverse nature (ranging from American Eagles to Australian Philharmonics), whereas gold bars and bullion come in varying sizes and weights, thereby varying prices. A person can plan to have varying gold coins, bullion and bars in his retirement plan; minimizing the risk of one of the gold forms performing poorly in the marketing, yet maximizing his profits through high performance of any of the other gold forms.
Apart from the minimal fees that some companies charge, purely for their own service provision policies, investing gold for retirement has been made hassle-free and almost free by revenue authorities. Governments, through revenue bodies, encourage gold investment for long term purposes, such as retirement, by making addition of gold into an IRA, or new IRA gold investment, cost-free. Including other assets, especially traditional assets such as real estate, in an IRA cost an investor high fees. There are also many licensed gold companies and professionals that can assist people invest gold into their retirement plans at affordable fees.
Gold investment process in an IRA
For the purposes of this article, gold investment for retirement purposes can be achieved through two ways; direct ownership of gold items, and gold IRA for retirement. The difference between these two retirement investments lies in how the gold is acquired, handled and stored. People can choose to do away with IRA and buy gold items that they store safely, or give someone to store for them. In this gold ownership, the owner can dispose of the gold items as he deems fit without incurring trading expenses. IRA gold, on the other hand, must be acquired through an IRA custodian (with the approval of an investor), stored in approved depositories and only be disposed according to the specific IRA guidelines. Failure to comply with the above regulations attracts penalties on the investment. IRA guidelines and investment disposal regulations are geared towards discouraging unplanned and unnecessary withdrawal of the pooled retirement funds, and encouraging people to leave the investments to grow.
The process of investing gold in an IRA
Unlike direct ownership of gold items for retirement, gold for retirement purposes in an IRA require the presence of a valid individual retirement account. Clients that do not have IRAs must sign-up for the IRA, and have authorized IRA custodians setup those IRAs. Not all IRAs can receive and hold gold for retirement; approved existing IRAs can easily transfer funds for gold acquisition, but other IRAs must roll over funds into the newly-created
Potential investors of gold for retirement should confirm that their IRAs qualify to be rolled over before attempting to do so (rollover) because bounced transactions can be treated as early withdrawals, thereby attracting high tax penalties. As aforementioned, funds in a rollover transaction can be withdrawn and deposited into a new gold IRA without their losing their tax deferred status. Any delays (over 60 days) in depositing the withdrawn funds into the new IRA, or any mistakes in the rollover process can cause the funds to lose their tax deferred statuses.
Gold Acquisition, Storage and Management
Once a gold IRA account is up and running, an investor can authorize his IRA custodian to purchase any gold form(s) of his choice for that account. The funds are withdrawn from the gold IRA to pay for the newly acquired gold. This gold must be stored in approved depositories for safe keeping, and to prevent the black market trading of gold when the general population is allowed to handle gold. The gold IRA holder can direct/ manage his gold transactions, or he can appoint a manager to trade that gold as it deems fit, for best revenue.
Acceptable Forms of Gold IRA Gold
Whereas there are no regulations of what forms of physical gold or stocks a person can directly own, store and manage for his/ her retirement, there are rules and regulations that govern IRA gold acquisition and handling. Common physical forms of gold that can be invested in an IRA include coins, bullion and bars. Bars and bullion must constitute 99.995% pure gold (24 karats). Acceptable coins include the Australian Philharmonics, South African Kruggerands, American Eagle and American Buffalo coins, as well as Canadian Maple leaves. Potential IRA gold investors should confirm with their revenue authorities (in America, the IRS-Internal Revenue Service- is the revenue authority) the acceptable gold coins, bars and bullion for an IRA.
Investing gold in retirement plans is part of retirement planning. People invest gold in their IRAs for various reasons including its inflation-proof, economic stability, durability and availability of investment assistance. Investors have the option of diversifying their portfolio with a variety of assets such as real estates and gold IRA for retirement. Investors need valid IRA accounts to invest gold, approved custodian for IRA gold storage, and compliance to withdrawal/ deposit regulations of gold into an IRA.