The First Step To A Precious Metals IRA Rollover

Using a Rollover to Fund a Self-Directed IRA 

A self-directed IRA (such as our precious metals IRAs) can easily be funded through an IRA transfer or a rollover from a defined contribution plan.  Eligible defined contribution plans include qualified 401(k) retirement plans under Internal Revenue Code Section 401(a), 403(a), 403(b), and governmental 457(b) plans.

The Most Common Way to Fund a Self-Directed IRA

Transfers and rollovers are two types of transactions that allow movements of assets between like IRAs. An IRA transfer is the most common method of funding a Self-Directed IRA or Self-Directed Roth IRA, both of which can hold tangible assets such as precious metals or real estate.

IRA Transfers to a Self-Directed IRA with a Traditional IRA

IRA-to-IRA transfers are the most common approach to moving assets from one IRA account to another. A transfer usually occurs between two separate financial institutions, however, a transfer also occurs between IRAs held at the same institution. If an IRA transfer is handled correctly the transfer is neither taxable nor reportable to the IRS. With an IRA transfer, the IRA holder directs the transfer, but does not actually receive the IRA assets. Instead, the transaction in completed by the distributing and receiving financial institutions. In sum, in order for the IRA transfer to be tax-free and penalty-free, the IRA holder must not receive the IRA funds in a transfer. Rather, the check must be made payable to the new IRA custodian. Also, there is no reporting or withholding to the IRS on an IRA transfer.

Self-Directed IRA Transfers – How They Work

First you must establish a new Self-Directed IRA account at a new FDIC and IRS approved IRA custodian, such as New Direction IRA. The new custodian will then, upon your direction,  request a transfer of IRA approved precious metal assets from your existing IRA custodian in a tax-free and penalty-free IRA transfer.   When your IRA funds have been transferred to the new IRA custodian, the new custodian will then be able to invest the precious metals into your new IRA. Upon completion of your funds transfer, you, as manager of the IRA, then have control over your retirement funds so you can make precious metals IRA investments on a tax-free and penalty-free basis.

401(k) Plans & Qualified Retirement Plans

Expanded rollover opportunities between employer-sponsored retirement plans, such as 401(k) Plans and IRAs are a result of the 2001 Economic Growth and Tax Relief Reconciliation Act Since 2002.  This Act allows individuals to rollover both pre-tax and after-tax 401(k) Plan fund assets from a 401(a), 403(a), 403(b), and governmental 457(b) plans into a Traditional IRA tax-free and penalty-free.

A plan-triggering event is usually necessary in order to rollover qualified retirement plans to an IRA.  The plan documents will define specifically what qualifies as a plan-triggering event, but they typically include the following: (i) the termination of the plan, (1) the plan participant reaches the age of 59-1/2, or (2) the plan participant leaves the employer. (3) the plan is terminated.

Direct Rollovers into a Self-Directed IRA

A direct rollover occurs when a plan participant chooses to move their eligible retirement plan funds to an external IRA custodian. The direct rollover is defined as being between the qualified retirement plan and the IRA.  A transfer however, is directly between IRA institutions. In other words, a direct rollover is between a qualified retirement plan and an IRA, whereas, a transfer is between IRA financial institutions.

Completing a Direct Rollover

Our Closed Loop IRA service establishes a Self-Directed IRA account at New Direction IRA*. With a direct rollover from a defined contribution plan, the plan participant must initiate the direct rollover request. What this means is that the plan participant must request the movement of 401(k) plan funds to the new IRA custodian, not the IRA custodian, like with an IRA transfer. We will assist you in completing the direct rollover request form which will allow you to move your 401(k), 403(a), 403(b), 457(b), or defined benefit plan assets to your new precious metals IRA account.

Indirect Rollovers to a Self-Directed IRA

Indirect rollovers are when your IRA assets or qualified retirement plan assets are moved to the IRA holder or to you,  the plan participant before they are finally sent to an IRA custodian.

60-Day Rollover Rule

A person typically has sixty days from receipt of their eligible rollover distribution to roll the funds into an IRA. Please note that the 60-day period starts the day after the individual actually receives the distribution. You may rollover the entire amount  of the eligible distribution received, or any portion thereof.  Any portion of the eligible rollover distribution that is NOT rolled over (either directly or indirectly)  to an IRA is usually included in the individual’s gross income.  This amount could also be subject to a 10% early distribution penalty if the individual is under the age of 59-1/2.

How the 60-Day Rollover Works with a Self-Directed IRA

Fisher Precious Metals will assist you in rolling over your 60-day eligible rollover distribution to New Direction IRA*.  Upon completion of the deposit of the eligible rollover distribution with the new IRA custodian (within the 60-day period,) New Direction IRA will be able to invest the precious metals into your new IRA. Once the funds have been transferred to New Direction IRA, you, as manager of the self-directed IRA, have control over your retirement funds so you can select and make your precious metals investments.

60-Day Rollover from an Employer Retirement Plan

In general, when a plan participant requests a distribution from an employer qualified retirement plan. IRS rules require the employer to withhold 20% from the amount of the eligible rollover distribution. If an individual receives an eligible rollover distribution and then elects to rollover the assets to an IRA custodian within 60 days, the individual can make up the 20% withheld by the employer retirement plan provider for federal income tax purposes.

Employer sponsored retirement plans are required to withhold at a rate of 20% on all eligible rollover distributions of taxable funds or assets, unless the participants elects to directly rollover the distribution to an IRA or to another eligible retirement plan. In other words, when taking an indirect rollover from an employer qualified retirement plan, the employer is required to withhold 20% of the eligible rollover distribution. The 20% withholding requirement is not applicable for IRA-to-IRA transfers or for direct rollover distributions.

*  New Direction IRA is the custodian that is integrated with our Closed Loop IRA.  We are able to facilitate your precious metals Self-Directed IRA with any other custodian if you choose to elect an alternative custodian.