You’ve researched about the best way to invest your retirement savings. In order to diversify your portfolio you’ve finally settled for an IRA account. But what options do you have? A lot of people don’t know the many options they have when it comes to opening an individual retirement account. The main advantage of traditional IRA is that it offers a tax deferred growth. This simply means that your assets will not be taxed until the time comes for you to withdraw. But the tax advantages will depend on the type of IRA you choose.
Traditional and Roth IRAs
Traditional and Roth IRAs have certain contribution limits and withdrawal penalties that dictate how much you can contribute per year depending on your age and the penalty imposed if you want to make early withdrawals. The process of funding both accounts is the same. You are allowed to include IRA cash or cash equivalents in your accounts in the forms of stocks, mutual funds, bonds, ETFs and the like. You just put your money in the individual retirement account and then decide on the type of investment you want to allocate any given amount.
The differences between Roth and traditional IRAs come when you talk about the tax deductions, income limitations and even the withdrawal policies applied. With a Roth IRA, you get a tax advantage in the long run when your investments increase and you will not pay any income tax if you need to withdraw the money. However if you open a traditional IRA, you will only pay taxes for the income you get minus the annual contribution you make towards the individual retirement account. That is, if you contribute $5,000 every year and earn a salary of $50,000, you only pay income tax on $55,000.
The other major difference between the Roth and traditional IRA is that when it comes to traditional IRAs, anyone who is under 70.5 years is allowed to contribute regardless of how much they earn. On the other hand, a Roth IRA is only for those who make less than $129,000 as individuals or less than $191,000 annually as married couples.
In many cases, you’ll have to stop contributing to your traditional IRA when you turn 70.5 but the Roth IRA can continue for as long as you like. When you want to withdraw your money from a Roth IRA without any penalties, you’ll have to wait for a period of 5 years from the time you opened the account. Roth is best for adults who don’t have very high incomes and need the flexibility to withdraw their investments.
Whether you have a traditional or a Roth IRA, if you wanted to roll either of them over into a gold IRA, to further enhance your retirement plan, well this is something you could do. Of course it isn't as simple as switching a switch, you will need to get a professional IRA consultant to check how your retirement account has been set up, as this will determine whether or not your account can be rolled over easily or will need some work.
What To Do Next
One of the best ways of investigating if this is a viable option is to speak to one of the leading gold ira companies that are on the market. They will be able to best advise whether you can roll your existing ira or need to start a independent one for your precious metal investment.
Now there are a multitude of companies out there in the market that can advise and help with regards to your IRA and precious metals investment, so finding the right one can be time consuming. We looked into this and found a website that provides financial information and neautral unbiased insights into all the various gold ira companies on the market. They have reviewed companies like Bullion Direct, Regal Assets and twenty others, to help you determine the best company for you. We recommend you check them out, they are called Transfs.
Check out our page on investing gold into your IRA retirement plan
You may also be interested in this website which discusses What to Know Before Investing in Gold