Thinking ahead to retirement age isn’t something we always like doing, but it is necessary to ensure our financial health in the future. Having investment accounts dedicated to it is one way that we can prepare. What if we want to put alternative assets in these accounts, though?
The Internal Revenue Service here in the United States doesn’t allow certain types of assets in traditional individual retirement arrangements (IRAs). This includes precious metals, real estate, and other commodities. That being said, there are ways that we can move these investments out of a 401(k) or IRA account and into a self-directed one.
If this is something that sounds appealing to you, make sure you stick around. Learning this sort of thing is a valuable life skill, after all. Even if we don’t fully understand all to do with economics, savings are a critical part of our lives.
What is a 401(k)?
Before we can dig deeper into this topic, let me explain what these accounts are. You can learn more on this page first, for a brief overview. However, in essence they are a form of retirement account that is contributed to by both you and the employer who sponsors it. So, usually your own deposits are matched by the hiring company.
It’s a nice way to build up your wealth over time. There are yearly limits on how much you can contribute, of course. However, they are not overly stringent.
Why Gold?
This is probably the next question weighing on your mind. Why should we even invest in gold? I mean, it’s not paper currency, so some people wonder what value it has.
When we’re looking into investment guides, so many mention precious metals. Why is that, though? Part of it is that they can serve as a hedge against inflation. Especially in the times we’re in right now, this is something that is on the mind of many of us. Inflation rates are high and wages are low, after all.
Gold in particular is a metal that has had long-standing value throughout the centuries. It’s a symbol of wealth, for one thing. However, that’s not the only thing it brings to the table. It’s quite versatile, used in things such as jewelry and even electronics. So, if you want to invest in something that has proven value and uses, this might be an option for you.
You might be wondering about other precious metals. The primary ones in terms of the economics world are silver, platinum, and palladium. All of them are also worth getting into, though for somewhat different reasons. The later two in particular are quite expensive and rare compared to silver and gold, so while it might be harder to find them they are still good to research.
How do Roll Overs Work?
This is the next part that gets a bit tricky. I recommend reading this article, https://www.investopedia.com/articles/personal-finance/071715/8-reasons-roll-over-your-401k-ira.asp, to get some context and understand why you might want to anyway. I covered some of them already above, as well.
The first step of this process is to decide what account you want to open for the new one. So, this might be a gold IRA or self-directed one, depending on your goals. This will influence the rest of things.
What I mean by that is your decision will determine things like who is in charge of running the account and the costs involved. You’ll also want to think about what tax benefits you are looking for, since they vary depending on what is selected. This should be the step you take the most time on.
Next, you need to figure out where the money will go. If you’re creating an IRA account, a broker will need to be chosen. What I did was read several reviews on brokerage firms as I chose the one that suited my needs best.
Once you’ve completed those two things, it’s time for the rollover to take place. Now, be sure to consult with the customer service at whatever firm you’re working with. Most have different processes for how exactly they occur, you see. So, that’s why I think it’s so critical to consider those first two choices carefully – you don’t want to end up stuck!
The final thing I’ll note here is that there is a time limit on this. You have about sixty days to complete your rollover before it will be a taxable move. Obviously, we don’t want this, since it’s a loss of money that can be easily prevented. Just be sure to plan accordingly.
Is it Worth it?
If you’re someone who prefers to diversify their investing portfolio, it’s probably a good idea. We never want to put all of our eggs in one basket, and given the rise of inflation and the depreciation of value of the United States dollar, a lot of us are looking for alternative options.
For anyone who fits into that category, it’s something to consider at the very least. While it might be complicated to do the research and find the right broker for us, for example, that time and energy will be well worth it at the end of the day. Once you’re able to invest your precious metals and feel safe about their storage and worth, you’ll understand.
So, if you enjoy investing and learning about economics, think about it. You might find it’s the solution you’ve been looking for!