Breaking Down an IRA Rollover

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An IRA rollover can either occur through the direct transfer method, in which one financial institution or 401(k) plan directly transfers the payment to a second plan or new IRA account, or via check. Typically, payment by check is not ideal, as it comes with a hefty taxation. Federal law requires IRA checks to be taxed 20% or higher. However, most retirement plan payments can simply be rolled over into the IRA of your choosing, within 60 days of payment. Many people choose a Roth IRA rollover or a simple IRA rollover to safeguard their retirement funds by allowing their money to grow and appreciate over time without the hindrance of taxation.

 

IRA rollover

How Rollovers Work

If you work for a company that contributes to a 401(k) or other retirement plan, you can request that your administrator start making payments directly to a new plan or an IRA of your choosing. The specific instructions and stipulations will vary between companies and investment firms, but generally speaking, this can be the smoothest way to switch between plans. Alternately, trustee-to-trustee transfers can make payments directly from your existing IRA to another IRA without incurring fees or holding you responsible for exorbitant taxes. An across the board 60-day rollover feature allows you to deposit the funds from an IRA or retirement plan that was paid directly to you. This type of IRA rollover will likely incur taxes, and may not be the best option for most circumstances.

Yearly Limitations

The IRS imposes a “one rollover per year” limit. This limit includes all IRAs that you may own. As of 2015, you may only rollover one IRA to another, regardless of how many IRAs you have. While these limits are now in place, there is a somewhat lengthy list of exceptions regarding rollovers. For instance, the one-year limit does not apply in the following scenarios.

Plan-to-plan rollovers

IRA-to-plan rollovers

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Plan-to-IRA rollovers

Simple IRA rollover to a Roth IRA

It is best to discuss the details of your Roth IRA rollover or your simple IRA rollover with a tax or investing professional. The nuances of the rules surrounding transferring or streamlining your retirement plans can be confusing to the layman. Seek the guidance and advice of someone who has years or even decades of experience before you start transferring funds. While it may seem like a great idea to the naked eye, you may find yourself hit with unforeseen taxes and penalties if you proceed without consulting the experts, which can quickly diminish the nest egg you have worked so hard to provide for you and your family. 

Gold Rollover

Another option when considering how to wisely invest your retirement plan, is to open a gold IRA. The primary benefit of opting for gold, is that it allows you to create an investment that appreciates independently of the stock market, paper money, real estate or even your personal equity. Since gold is a tangible, physical investment rather than merely a piece of paper representing a monetary value, you can expect to be subjected to fees. Just like any other major purchase, when considering buying gold bullion or coins, it pays to shop around. Gold has an intrinsic market value, but there will be certain markups to look out for when doing your research. One-time fees include the seller’s fee, which varies greatly depending on the quality and quantity of the product, as well as the company providing the services. Another one-time fee to be mindful of is the amount the vendor will charge to set up the retirement account for you. This also will vary depending on where you take your business, so be sure to ask about it up front.

Custodial and Storage Fees

An IRA rollover into a gold IRA will still require the payment of custodial fees, even if you physically keep the gold on your property. Federal law decrees that all forms of IRA be tracked and regulated by a custodian. It is their job to protect the assets of the IRA holder. Custodial fees typically are charged as an annual sum, though it is possible to pay more some years than others due to various transaction fees. While certain loopholes and exceptions exist that allow investors to keep gold on their property, most gold IRAs will be held in storage facilities. This is generally the safer and more secure of the two options, especially when dealing in larger quantities of bullion.

When to Make the Switch

The easiest time for a simple IRA rollover or a Roth IRA rollover is during a career shift, when you are already working with retirement plan administrators to transfer or set up a new account. It is not necessary to wait for a new job to come along to initiate an IRA rollover, however, and in most cases the entire process is relatively painless. Companies such as Regal Assets are set up to provide investors with extremely efficient and professional customer service, and will ensure the two custodians communicate with each other with minimal involvement from the investor himself. Often times the entire process takes only a day or two between filling out the application and discussing your precious metal options with an account representative.

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An IRA rollover does not have to be a complicated process. With the help of your financial advisor, you can find the rollover that can best help you make your current financial situation turn into your ideal financial goals. An increasingly popular way to sidestep inflation and an unreliable economy is to take your assets to a precious metals investment firm and purchase gold and silver rather than stocks and bonds. Spend a significant amount of time consulting with a financial advisor, going over your options on your own and with your family, and really doing your research to find a reliable, established company you can trust with your investments.

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