First off, congratulations on your decision to add precious metals to your IRA. You’ve started an important and advantageous investment path. Probably you know the basics about IRAs, but there is still a lot you need to learn. Understanding the ins and outs of IRAs will help you manage them properly. Here are some little-known facts about IRAs and how they work.
IRAs Are Safe From Your Creditors
Almost all tax-advantaged retirement assets are offered special protection from their owners in the event of bankruptcy. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 extended an exemption to IRAs, effectively removing them from the bankruptcy estate.
Most tax-advantaged retirement assets enjoy special protections under America’s bankruptcy system. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 extended this protection to IRAs, effectively removing them from the bankruptcy estate. Therefore all IRAs which store precious metals are protected from your creditors in case you declare bankruptcy.
This means that you cannot be forced by law to liquidate all your IRA investments; the rules apply even if you are liable for payment in a lawsuit.
These protections are not absolute, and there are exemptions. For instance, inherited IRA money does not qualify for these protections. Additionally, the limitation on exempted funds is $1 million for all total IRA assets in your possession (though a judge may waive this limit at their discretion).
IRA Beneficiary Designations Supersede Your Will
Having a will or trust in place does not determine how an individual’s IRA funds are dispersed. Each account has its own beneficiary designation, which overrides the language in any will or trust. Therefore, just because you put in your will that you want certain people to get your IRA does not mean this will happen. What matters most is the designation on your specific account
The beneficiary designation is assigned when the account is opened (changeable). So, if you want to name a different beneficiary for one of your retirement accounts besides what you’ve written in your will, update the beneficiary form.
When naming a beneficiary on your retirement account, it is essential to know that the only person who will inherit and treat the account as their own is your spouse.
Non-Deductible IRA Funds Can Be Transferred to a Roth IRA
If you are ineligible to take an IRA deduction, your account is considered a “Non-deductible IRA. Such an IRA has many of the same contribution limitations as a traditional IRA, but there are some key differences. When your IRA account is non-deductible, your taxes will make it harder to move those funds into a Roth IRA. A better approach is to create a separate retirement account solely for non-deductible contributions.
Let’s say that you made too much money last year and do not qualify to make a Roth IRA contribution by normal means. For a single person, this is the case if they make more than $129,000. For married couples filing joint taxes, it is $191,000.
Under these conditions, a retirement account typically loses the tax-saving value it is intended to have. Fortunately, though, there’s a workaround that may help solve this problem.
The IRS sometimes permits taxpayers to convert their non-deductible IRA account into a Roth IRA when they make contributions. This phenomenon is known as a “backdoor” IRA.
When you convert a Traditional IRA to a Roth IRA, this is considered a taxable event. Keep in mind that the IRS will calculate your basis by combining all IRAs, not just your Non-deductible IRA.
Investing in Gold is a Great Strategy for Protecting Your Retirement Portfolio
Investing in physical gold can provide you with the opportunity to profit even when equity and bond prices are falling. Precious metals, such as gold, maintain their intrinsic value no matter what the government does to our economy. Gold has historically maintained stability dating back thousands of years.
Gold also provides a unique investment approach that can be used to diversify your portfolio. While physical gold is an alternative in the market, its use as an IRA investment strategy is not new
Investing in gold for retirement is one way to protect yourself against uncertainty; it may happen. You never know what can happen with the economy or international relations. Gold is a haven for when there’s turmoil in the world.
For this reason, gold can be an effective way to add diversity to your retirement portfolio. It may not make you rich overnight, but it doesn’t have to for it to play a valuable role in protecting your future income.
Take action now by visiting our “top gold IRA companies” page today to get started.