What does it mean to have a retirement plan? If you work in a corporate environment chances are high that you are familiar with this term. In fact, you probably already have one like the 401k plan that most employers provide for their employees. This plan allows an automatic withdrawal from the employee’s paycheck and is used in any investment of the employee’s choosing.
If you are a small business owner or someone who doesn’t have access to a retirement plan option, there are various choices to consider, like the individual retirement account (IRA) which will be discussed below.
A retirement plan is essential especially as you prepare for your golden years. Irrespective of whether or not you have a retirement plan it is important that you consider those options that are flexible enough to give you access to a wide range of investment choices. In this article we will be discussing individual retirement accounts (IRA) as well as approved gold for gold IRA to help you make a decision.
What is an Individual Retirement Account (IRA)
An individual retirement account or IRA is an account with significant tax advantages that allow individuals to save and conduct long term investments towards their retirement. IRA’s present a great opportunity for people to prepare for their retirement.
Small business owners and people who do not have access to jobs that can provide them with retirement plan opportunities or a 401k plan can prepare for their golden years through IRA’s. If you are looking for options that can help you invest and save even more money towards your retirement, IRA is an option you should consider.
How Do IRA’s Work
When you open an IRA, you can save any amount of money that can be used to invest in various assets such as stocks, bond, and many others. What sets it apart from the usual 401k plan that employers provide is that there is no limit to the type of investment you can make. This means you can control how and what your money is invested in.
Another opportunity IRAs provide is flexibility in your investments. This means that you have the power to split your money among various investments; you can also move your money from one investment to the other. For example, you can decide to move a part of the money you invested in CD’s to bonds without getting capital gains taxes.
When making investments, you have to keep in mind that while you have the freedom to move your money from one investment to the other, you cannot take out your money before time. The purpose of an IRA is to prepare for retirement therefore; taking out your money early will result in payment of taxes and a penalty that will cost you heavily. You can also read this article for more details on gold IRA
Exceptions can only be made when you have a special reason for taking out the money like buying a home or paying for college and those exceptions can only be made with certain conditions.
As stated earlier, having an IRA can give you many investments options, it is not only limited to holding paper assets, it can also be used to hold assets like precious metals. There are four precious metals allowed to be held in an IRA and they include gold, silver, platinum and palladium. This article will be focusing on gold IRA’s and the necessary details you need to know about them.
What Are Gold IRAs?
A Gold or precious metal IRA is similar to a regular IRA. It is also an individual retirement account. It allows an individual to hold physical gold (in bars or bullion coins), silver, platinum and palladium instead of paper assets as a retirement investment.
A Gold IRA must operate separately from a regular IRA. Because it requires buying and storing physical assets, it requires a custodian or trustee like a brokerage firm or a bank that will be responsible for managing the account.
Gold IRA funds can also be used to invest in gold-related paper investments, such as stock in gold mining companies, exchange-traded funds (ETFs), etc. The downside is that because these accounts require that you purchase and store precious metals they come with more fees. You can visit: https://worldfinancialreview.com/3-reasons-to-invest-in-gold-ira-right-now/ for more details on why you should invest in gold IRAs.
Types of Gold IRA’s
The following are the three types of gold IRAs:
- Traditional Gold IRA: A traditional gold IRA is a tax-deferred retirement savings account and works very much like pre-tax traditional IRAs with regards to taxes. Your funds and any gains won’t be taxed and, as a rule, your funds are tax deductible as well. The IRS draws annual payment limits of $5,500 if you are under 50 and $6,500 if you are above 50. With a pre-tax IRA you are going to pay taxes on your payments during retirements.
- Roth Gold IRA: A Roth Gold IRA is basically an after-tax retirement savings account. It is like any Roth IRA. As there is no upfront tax deduction, the fundamental benefit of a Roth IRA is that you will not need to pay any taxes when you begin to collect payments during your retirement.
- SEP Gold IRA: SEP gold IRAs is an account that is available to business owners and self-employed individuals. It is very similar to a pre-tax traditional IRA, in that your payments are not taxed, but it offers a higher payment limit. You can contribute up to 25% of your income or $53,000 instead of the $5,500 limit.