If you are planning to rollover your IRA you may be wondering if you are better with a traditional or Roth IRA or moving your money into gold. Traditional and Roth IRAs are the standard choices and if you already have one of them, you will need to understand how they work to know if you can transfer your money into a gold IRA.
A traditional IRA has a few substantial benefits and one of them is that you can deduct your IRA contributions on your taxes, depending on your income level. You cannot withdrawal the money until the age of 59.5 (with some specific exceptions) and you must withdrawal the money by 70.5. You will be taxed on the money when it is withdrawn but it is only taxed as income. So it will be counted as your income for that year.
You can use the money in your traditional IRA to purchase a wide variety of assets however this will be based upon what your custodian is willing to do. Most people have their money with an IRA that is completely controlled by the custodian so that they have little say in how the money is invested. This is one of the reasons why many people do choose to transfer their traditional IRA to a custodian that is willing to invest in gold and create a gold IRA.
It is important to keep in mind that while everyone can have a traditional IRA you will not be able to withdrawal the money until the age of 59.5. If you do withdrawal the money early you will be subjected to a 10% penalty. There are a variety of different types of traditional IRA include the self-directed IRA in which you can have a say in how your money is invested. You should speak with a financial adviser to learn which type of IRA is right for you and how you may be able to turn your IRA into gold.
When it comes to a Roth IRA you will not be able to deduct any of your contributions on your taxes. However, there are plenty of other benefits that make Roth IRAs look very attractive. The first is that there is no mandatory distribution age, you can take the money out of your Roth IRA whenever you need it. The second is that you will not be taxed on the money that you withdrawal as long as you follow all the rules and regulations that govern your Roth IRA.
Just like a traditional IRA, you will be able to put your IRA funds into a wide variety of investments as long as your custodian is willing to follow your guidelines. However, unlike a traditional IRA it is not open to everyone. If you are single you must make less than $95,000 a year in order to open a Roth IRA. If you are a married couple you must make less than $150,000 in order to be able to open a Roth IRA.
Which Is Better?
When it comes to figuring out which option is better for you it really starts with whether or not you are even eligible to open a Roth IRA. If you do have the option for both then it really is better to look into a Roth IRA. You will be able to withdraw the principle at any time (you will not be able to withdraw earnings from your investments until 59.5 however) and you will not be taxed on anything that you withdraw.
On the other hand while opening a traditional IRA allows you to make tax deductible contributions, you will be taxed on all the principle that you withdraw from the account, even once you reach 59.5. You will not be taxed on any of the earnings of your investments but these taxes often exceed the money you save by being able to deduct your contributions.
If you want to open a traditional or a Roth IRA and invest the money in gold, you do have that open with both types. You are no limited to choosing one or the other just because you want to put your money in gold. If you feel that you want to put your money into a Roth IRA and have the added security of investing in gold, you can contact any of a number of firms that are willing to be gold IRA custodians. They will help you through the process and make sure that Roth IRA is the right choice for you. Keep in mind that while both traditional and Roth IRA can be self-directed and you can invest in gold, it is important to work with a company that is trustworthy and will help you make sound investments for your future.