Convert Roth IRA to Gold

In a Precious metals IRA (also known as a Gold IRA) you will own physical Gold but the IRS requires that a third-party Custodian stores the metal on your behalf.

This may seem strange but you have the same arrangement with the Custodian of your existing Roth IRA. Your Custodian holds your Stocks, Bonds, and Mutual funds in your name. The only difference is whether the Custodian is holding physical metal or paper securities.

The IRS requirement for a third-party Custodian is the major drawback to a Gold IRA. Ideally, we would take personal possession of our Precious metals and store them in a secure location of our choosing.

Unfortunately, there is only one way to purchase physical Gold using tax-advantaged money and that is a Precious metals IRA.

When we consider a Gold IRA vs physical Gold, we are really deciding whether we want to purchase Gold with tax-advantaged money or non-tax-advantaged money.

Before we get into the details of how you can convert your Roth IRA into a Roth Gold IRA, let’s briefly cover the history of IRAs and Precious metals IRAs.

In 1974 the Employee Retirement Income Security Act (ERISA) created Individual Retirement Accounts (IRAs). Regular IRAs were established for tax-deferred savings and Roth IRAs for tax-exempt savings. The Act also created self-directed IRAs, both tax-deferred and tax-exempt.

ERISA didn’t specify the asset classes that could be held in a self-directed IRA (SDIRA), but it did specify that life insurance contracts and collectible objects could not be held in an SDIRA. Most investors used their self-directed IRAs to hold Real Estate.

In 1997 the Taxpayer Relief Act significantly expanded the asset classes that could be held in an SDIRA. Physical Gold and Silver were added by the original Act and, in 1998, Platinum and Palladium were added.

Whether you are purchasing Precious metals to hold directly or to hold inside a Gold IRA, you always want to get the most metal possible for the least amount of money. This means you want to purchase bars and Coins with the lowest premium over the spot price of Gold. 

When you see a price quoted for Gold, that price is called the spot price and it is based on a futures contract for a 100-ounce bar of the yellow metal. The spot price is always lower than the price you will pay to purchase bars and Coins from a Broker. 

The difference between the spot price and the price you pay for any given bar or Coin is called a premium. In the current market (July 2022) premiums are 3-to-10% for Gold Bullion products and can be as high as 77% for special edition proof Coins. 

Some Gold IRA companies try to push investors into special edition Coins by telling them that the high-end Coins have greater investor demand when it is time to sell. This is absolute BS - Gold is one of the most liquid markets on planet Earth. And it doesn’t matter whether the Gold is a proof Coin with a certificate of authenticity or a beat-up Coin that’s been scratched and dented. 

Gold is Gold – don’t fall for tall tales told by pushy salespeople. If someone tries to sell you proof Coins don’t walk away, run! They are looking out for their own interest, not yours.

If you spend some time reading Gold IRA customer reviews on the Better Business Bureau (BBB) website, you will find that most negative reviews involve people who purchased proof or special edition Coins and then lost money when they sold those Coins. It’s easy to avoid this problem – don’t buy proof or special edition Coins!

It's always nice to know what other people think about a product or service before we part with our hard-earned money. Just this morning I purchased a $12 cable for my cell phone and based my final selection on the customer reviews posted on Amazon.

When shopping for a reputable Gold IRA company, the best customer reviews can be found on the BBB (Better Business Bureau) website. These are actual customers who were motivated enough by their experience to create a BBB account and file a review.

In contrast to these real customer reviews, if you search the internet for “best Gold IRA”, or something similar, you are going to find articles posted by affiliate marketers who get paid for sending business to the Gold IRA companies. Marketers don’t bother with BBB reviews because they can’t post their website links in a BBB review.

In order to maintain an A+ rating at the BBB, companies have to respond to complaints and negative reviews. Negative reviews are actually more valuable than positive ones because they provide some insight into how a company deals with its customers and clients when they aren’t happy about the service or product they received.

In this short article we have discussed the process of converting a Roth IRA to a Roth Precious metals IRA.

The process itself is quite simple and each of the Gold IRA companies have specialists who will walk you through the process.

After you research a few Gold IRA companies you will get all of your questions answered and, most likely, will decide which company works best for you.