Investing in precious metals, such as gold, has always been a popular choice for individuals seeking to diversify their retirement portfolios. However, transferring those funds into a gold IRA can seem daunting, especially for those unfamiliar with the process. In this article, we’ll walk you through the steps involved in converting IRA funds into gold, including selecting a reliable custodian and choosing the right metals dealer.
To put IRA funds into gold, you have to establish a self-directed IRA. This is a type of IRA that the investor manages directly and is permitted to own a wider range of investment products than other IRAs. For a gold IRA, you need a broker to buy the gold and a custodian to create and administer the account. This company will store or hold your bullion, says John Johnson, president of GoldStar Trust, headquartered in Canyon, Texas.
Custodians are usually banks, trust companies, credit unions, brokerage firms, or savings and loan associations approved by federal and state agencies to provide asset custody services to individual investors and financial advisors. They do not select metals dealers for their IRA clients. This is the investor’s responsibility. However, established custodians have relationships with several hundred dealers nationwide and may be willing to share that list.
It can also work the other way. “Some metal dealers may recommend an IRA custodian,” says Johnson. “However, consumers are always free to search for custodians independently.”
Choosing which company to use is complicated, as it is a specialized task that major brokerage firms generally don’t offer, according to Moy. “When I did my homework, there were a few criteria that were important to me,” he says. These include:
- Transparency: Knowing all your costs upfront can avoid any nasty surprises, such as hidden fees after you invest.
- Track record: Look for a company with an outstanding reputation from objective third parties, such as the Better Business Bureau or the Business Consumer Alliance. Moy says it may also be helpful to dig into what customers say about the company, especially the number of complaints filed. He looked for firms that were “educational and not pushing a hard sell.”
- Flexibility: Each investor’s needs and goals differ, so Moy suggests choosing a company that will cater to you rather than having a one-size-fits-all approach.
- Qualifications: You should only deal with a company that has all the appropriate and required licenses, registrations, insurance, and bonds to protect your investment. Ask for verification of those licenses and other information.
In conclusion, transferring IRA funds into gold requires careful planning and selection of the right custodian and metals dealer. By researching and understanding the criteria to choose the right custodian, investors can rest assured that their gold IRA investments are secure and profitable. With patience and persistence, you can convert your IRA funds into gold and reap the rewards of a diversified retirement portfolio.
