A Roth IRA, or Individual Retirement Account is an individual retirement account where a person can set aside money to be used after age 55 1/2 for retirement. Unlike a regular IRA where a federal tax deduction is allowed for contributions to the plan, there is no deduction for deposits that go into the Roth.
Any interest or gain that accumulates in a Roth IRA from any vehicle used in the plan, does accumulate tax free, just as in a regular gold ira rollover, the gains are tax deferred. The difference is, however, when money is taken out of the Roth after age 55 1/2 there is no income tax on those withdrawals, where with a regular IRA, the withdrawals are taxed as ordinary income for Federal tax purposes.
Most commonly people will invest in stocks, mutual funds, bonds, or annuities. There is another medium that is becoming popular as well, and that is to use gold for the investment, so a person can set up a gold Roth IRA.
This is a very popular method because of the fact that gold has the reputation of never losing its value down to zero. Throughout history it has always been held to be the ultimate medium of exchange.
With this kind of arrangement, the investment can be made with gold EFT’s, or exchange traded funds. These are groups of stocks in the gold industry made up of gold mining companies. The ETF can also represent physical gold as well, and your IRA will hold paper to that effect. The ETFs are allowed to be included in a gold Roth IRA. In this way, you don’t actually have to store the physical gold or have someone else do it, but you still have the advantage of the investment.
Another way to do this is to set up a gold backed IRA. In this type of setup you have actual physical gold in your IRA and you store it in an IRS approved custodian facility. Your gold that you place in this type if IRA must be comprised of at least 99.5% purity in order to qualify for this type of arrangement. When you establish a precious metals ira in this manner, there are several steps that have to be followed in order to document that the correct procedures are being followed and documented.
By having the actual gold deposited in the custodial account, you can be assured that the actual asset will be available for you when you retire, and you can make the choice as to whether you want to sell the gold for income purposes or not.
The actual gold can be in the form of gold bars, or gold coins such as the American Gold Eagle coin, or the Canadian Gold Maple leaf coin.
People who set up a gold IRA are concerned with the value of the dollar being eroded by inflation, and over the years gold has shown itself to be a good hedge against inflation.