Gold IRA Tax Rules

What Do You Know About Gold?

Have you ever thought about buying gold? Does it sound risky to invest in gold for your IRA (Individual Retirement Account)? This might sound strange if you don’t have all the facts. The truth is, we live in an unstable world. Buying gold can be one of the best financial decisions you’ll ever make.

Let’s start with the basics. In our everyday lives, the beauty of gold is easily recognized. Gold is given as a luxurious gift by those with exquisite taste. It is regularly used for jewelry and given as a token for special occasions, like weddings and anniversaries. This practice isn’t new, and it goes back centuries past. Gold is a trusted precious metal.

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The Gold Standard: Gold As Money

What about using gold for financial transactions? What about using gold as legal tender? The truth is that investing in gold goes back to ancient times. In centuries past, gold was actually used to evaluate how valuable a currency was. This was referred to as “The Gold Standard.” And yes, it’s true, gold was used as money! Just imagine, instead of the paper bills you have in your wallet, having gold instead. This gold would have been the money you would use to purchase the products you wanted and needed. Unlike the value of modern money, which can rapidly decline, no one would have questioned the value of gold. In the so-distant past, the world relied on gold for regular monetary transactions.

A Brief History of Gold

So how did gold make its way into the portfolios of so many smart investors? Here’s a quick history of the modern gold rush in America:

  • In 1974, the public was first introduced to the Individual Retirement Account (IRA). The IRA was used to encourage people to invest in their own retirements. The IRA offered people a key incentive: funds placed into an IRA would not be taxed until the funds were withdrawn from it. A sweet deal, right?
  • In 1986, the Internal Revenue Service (IRS) updated their rules to give investors something new. Their new guidelines would include an advantage: being able to collect gold coins issued by the American government.
  • In the early 2000s, investors were recognizing the potential gains. The price of gold was increasing! This was the new gold rush!
  • In 2007, the IRS made another change that would benefit investors. Gold invested in Exchange Traded Funds (ETFs) were no longer classified as investing in a collectible. This was a game-changer for investors.

Why Should I Invest in A Gold IRA?

Smart investors live by the saying, “Never put your eggs in one basket.” And it’s true: not diversifying your portfolio is a strategy that will set you up for failure.

Still, it’s a worthwhile question to ask: why should I invest in a gold IRA? With so many investment options available today, you might be wondering why this is the right fit for you. Especially if you have clearly-defined investment goals, you might be wondering what’s in it for you. Why should you buy gold, and why should you place your gold in an IRA?

What Are the Benefits of Buying Gold?

Today, gold is traded around the world. It is one of the most popular investments. If you’re looking for security and stability in today’s rocky investment world, gold is something to consider as you evaluate all your options. The uncertainty of tomorrow makes it wise to select something that many other investors trust.

It’s also important to think about inflation. Inflation is quickly devaluing our currency. If you do not want to outlive our money, you must choose an investment that will retain its value. Inflation can eat away at your hard-earned money, if you let it. However, gold not only retains its value – fighting against inflation – but gold also increases its value. This is a win-win for you.

While you’re looking for an investment option that will increase the value of your money, you must consider the tax implications of any gains you will make. The tax penalty you may pay with any investment is an important factor. Gold offers flexibility to help you maximize your profit and minimize your tax penalties.

Investing in gold is also affordable. While some investments are too expensive, gold is affordable.

Times have changed, and you have options. You too can invest in gold without owning any physical gold.

Are you ready to learn more about how to become a gold IRA investor?

Investing in Gold Tax Considerations: What You Need to Know

Investing in a Gold IRA is a wise decision. You won’t regret it! Before you get started though, there are some things to think about. If you skip this important step, you might not be able to maximize the amount of profit you yield from your gold investment.

Before you put your money into gold, consider the length of your investment time frame. Do you plan to invest in gold for less than a year? Do you plan to invest in gold for longer than a year? Knowing your timeframe is important for tax purposes. Here’s why.

  • Thinking about buying gold for the short-term? Let’s say you decide to sell it after holding it for less than a year. Any potential profit from your gold will be taxed as ordinary income or short-term capital gains.
  • Thinking about buying gold for the long-run? Let’s say you buy your gold and keep it for more than a year. In this case, your profit will be taxed as ordinary income. The tax rate will be, at most, 28 percent.
  • Have a plan in mind for when you will withdraw the funds from your gold IRA. Only withdraw the funds at the scheduled withdrawal time. When you cash out, keep in mind that you will pay taxes on your gains. Ensure your ability to pay these taxes.
  • Know the cost of withdrawing your funds early. Keep in mind that if you withdraw prematurely, there is a 10% early withdrawal fee. Also, you may have to pay an additional tax and additional fees.
  • Be aware that gold IRAs have a mandatory distribution date. Even if you don’t want to withdraw the funds, you must begin taking distributions by the time you turn 70 and a half.

As you can see, it’s important to have a plan before investing. Early withdrawal fees, taxes, and other fees can eat away at your gains. Have a strategic plan so you can get the most from your gold IRA.

What Kind of Gold Should I Get?

Once you have clarity on the details above, there is still more to consider. Purchasing gold and storing it at home might seem like an appealing option. This is cheap, which is a top reason why many investors do it. However, a major downside to this method is protecting your asset, that is, purchasing additional insurance to protect the gold. There’s a risk of theft, fire, and so on. Investing in gold funds with a broker alleviates this risk. There are fees for the storage and management when a broker handles this for you.

Investing in Gold, Without Buying Bars

Most people think of gold as the bars you store at home, but what about the new ways? Can I invest in gold without buying bars? The answer is yes. Yes, you can invest in gold without buying bars. You can invest in gold without storing gold at home.

Storing physical gold comes with problems and risks. Where will you store your gold? How will you prevent theft of your gold? There are solutions to these problems. Plus, if you’re investing in gold through an IRA, IRS regulations specify that you cannot physically hold the gold. This means your gold must be stored through an intermediary, that is, a third party. So what are your options?

You can invest in gold mining stocks. A gold exchange-traded product (ETF) or other various funds is another way to invest in gold without purchasing gold bars. You can also purchase gold through a brokerage account.

Gold IRAs: In a Nutshell

There are many reasons to invest in gold. Gold can be a trusted haven to guard your money against inflation. A gold IRA offers the flexibility to invest in gold without owning physical gold. No matter what your investment timeframe, a gold IRA can help you maximize your profit while minimizing your tax liability.

Next Steps to Own a Gold IRA

Now that you’ve decided to invest in a trusted, secure, gold IRA, what’s the next step? You need a trusted advisor to guide you along the way. You can start by contacting one of our hand-picked, reputable gold companies to get started.

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Want more information before you start investing? We can help with that. Simply request a free 2022 Gold IRA kit today to learn more. This guide will help you learn how to protect your retirement savings by investing in gold. Request your guide today!

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