SIMPLE IRA to Gold IRA: Convert SIMPLE IRA to Metals
A SIMPLE IRA does not allow direct gold investments, but small business employees and employers can roll over a SIMPLE IRA into a Gold SIMPLE IRA diversify with precious metals.
Before starting a SIMPLE IRA rollover to a Gold IRA, understand its eligibility, tax implications, benefits, steps, best companies, and costs you will face during this process. Focus on the User covers everything you need to know about this rollover process for SIMPLE IRAs below.
- To roll over your SIMPLE IRA to a Gold SIMPLE IRA, you must set up a self-directed SIMPLE IRA and work with a reputable Gold IRA company.
- SIMPLE IRAs are designed for small businesses, offering a straightforward way to invest in gold through a rollover process.
- A SIMPLE IRA holds traditional investments but can be converted into a Gold SIMPLE IRA for physical gold holdings.
What is a Gold SIMPLE IRA?
A Gold SIMPLE IRA is a type of Savings Incentive Match Plan for Employees (SIMPLE IRA) that allows individuals to invest in IRS-approved physical gold such as bars and coins. This account operates as a self-directed IRA, managed by a specialized Gold IRA custodian. Contributions are made by both the employee and the employer, similar to a traditional SIMPLE IRA, but with the added benefit of diversifying retirement savings through gold investments. The IRS regulates the types of gold allowed and contribution limits.
Eligibility
To be eligible for a Gold SIMPLE IRA, employees must work for an employer offering a SIMPLE IRA or be self-employed. Typically, employees need to have earned at least $5,000 in any two preceding years and be expected to earn at least the same amount in the current year.
Self-employed individuals can also open a Gold SIMPLE IRA under the same eligibility rules, with contribution limits aligned with regular SIMPLE IRAs but allowing for investments in physical gold.
Tax Implications
Contributions to a Gold SIMPLE IRA are tax-deferred, meaning taxes are paid upon distribution in retirement. The growth of gold investments within the account is also tax-deferred, allowing for potential long-term gains.
Withdrawals before the age of 59½ may incur penalties of 25% in the first two years and 10% after, per IRS rules. Additionally, Required Minimum Distributions (RMDs) start at age 73, potentially requiring the sale of some gold to meet distribution requirements.
Benefits of Rolling Over Your SIMPLE IRA to a Gold SIMPLE IRA
Diversifying your SIMPLE IRA into precious metals such as gold offers many benefits to keeping your savings safe and secure.
- Broader Investment Options: Gain access to physical gold investments, beyond the limited options in a traditional SIMPLE IRA.
- Inflation and Market Stability: Gold adds stability to your retirement portfolio, particularly during periods of inflation or market downturns.
- Tax Advantages: Maintain the same tax-deferred growth with additional asset diversity in your Gold IRA.
- Long-Term Security: A Gold IRA preserves purchasing power and reduces dependency on paper-based assets.
See all pros and cons of Gold IRAs, understand exactly what makes these IRAs so unique.
SIMPLE IRA vs Gold SIMPLE IRA
| SIMPLE IRA | Gold SIMPLE IRA | |
|---|---|---|
| Investment Type | Stocks, bonds, mutual funds | Physical gold and other precious metals |
| Inflation Protection | Limited, tied to market performance | Strong hedge against inflation |
| Diversification | Primarily paper-based | Diversifies with tangible assets |
| Control Over Investments | Limited, with basic fund options | High, with flexibility in asset choices |
| Can Hold Gold | No | Yes |
How to Roll Over Your SIMPLE IRA to a Gold SIMPLE IRA
Rolling over a SIMPLE IRA to a Gold IRA involves several steps. A Gold IRA company can assist you through the process:
- Check Eligibility: Verify if your SIMPLE IRA is eligible for rollover, usually after the initial two-year holding period.
- Select a Gold IRA Company: Choose a reputable Gold IRA provider that specializes in SIMPLE IRA rollovers.
- Open a Gold IRA: Create a self-directed Gold IRA account with your selected provider to receive the rollover funds.
- Initiate the SIMPLE IRA Rollover: Request the rollover of your SIMPLE IRA funds into your newly opened Gold IRA.
- Choose Gold Assets: Work with your Gold IRA provider to select IRS-approved gold coins or bullion.
- Buy Gold For New Gold IRA: Complete the purchase of selected gold assets, which will then be securely stored within your Gold IRA.
Similar to rollovers for physical Gold IRAs, a SIMPLE IRA can be converted easily with the help of the company you are working with.
Fees
When rolling over your SEP IRA to a Gold SEP IRA, you will face various fees, including setup fees, annual maintenance fees, storage fees, and transfer or rollover fees. The expected costs are listed below to help you understand the typical expenses involved in the process.
| Fee Type | Range | Details |
|---|---|---|
| Setup Fees | $50 to $300 | Covers the initial account creation. |
| Annual Maintenance Fees | $80 to $300 per year | Charged for ongoing account management. |
| Storage Fees | $100 to $500+ per year | Ensures secure storage for your gold, either segregated or non-segregated. |
| Transfer/Rollover Fees | $25 to $260 | Incurred when moving your SIMPLE IRA funds to a Gold SIMPLE IRA. |
Fees can vary based on the Gold IRA company, the type of account, storage options, and service levels. We feature all the fees you can expect in a complete list, allowing you to make informed comparisons and plan your investment accordingly.
Common Mistakes to Avoid During SIMPLE to Gold IRA
Setting up or rolling over a SIMPLE IRA to a Gold IRA can be a great way to diversify your retirement portfolio, but there are common mistakes that can lead to penalties or reduced returns. Here’s what to avoid when managing a Gold SIMPLE IRA:
- Not meeting IRS gold purity standards (99.5% purity for gold), which is required for Gold IRAs.
- Choosing a non-IRS-approved custodian or trustee, which could lead to non-compliance and disqualification of the IRA.
- Neglecting diversification, putting all your assets into gold without considering other investment options.
- Ignoring fees such as setup, storage, and annual maintenance fees, which can add up over time.
- Not following IRS contribution and distribution rules, especially around Required Minimum Distributions (RMDs), which could result in penalties.
- Missing the 60-day rollover window in case of an indirect rollover, leading to tax penalties.
To avoid these pitfalls, it's crucial to work with a trusted Gold IRA provider and consult with a financial advisor to ensure your Gold SIMPLE IRA is managed properly.
Storage Requirements
When rolling over your SIMPLE IRA to a self-directed version to invest in gold or silver, IRS regulations require the metals to be stored in an approved facility. You can choose between two options: Segregated (Allocated) Storage and Non-Segregated (Commingled) Storage, each offering different levels of security and costs.
Segregated Storage (Allocated Storage)
In this option, your metals are stored separately from those of other investors, ensuring that you receive the exact metals purchased upon liquidation. It offers maximum privacy and security, with annual fees ranging from $100 to $300+.
Non-Segregated Storage (Commingled Storage)
Here, your metals are stored alongside other investors’ assets. This is a more budget-friendly option, with fees typically ranging from $50 to $150+ per year. While you may not receive the same specific metals, their value remains consistent.
Your choice of Gold IRA storage depends on your security needs and investment amount. Work with your custodian to determine the most suitable storage solution for your SIMPLE IRA rollover.
IRA-Approved Precious Metals for New Gold IRA
Once you have converted your SIMPLE IRA to a Gold SIMPLE SDIRA, you can invest in gold and silver that is IRA-approved for your account. It's important to note that not all precious metals are allowed in this SDIRA.
American Eagle Gold Coins
Mint:
U.S. Mint
Purity:
91.67% (22-karat)
Denominations:
1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Key Features:
Iconic design, most popular Gold IRA coin, recognized worldwide.
Canadian Maple Leaf Gold Coins
Mint:
Royal Canadian Mint
Purity:
99.99% (24-karat)
Denominations:
1 oz, 1/2 oz, 1/4 oz, 1/10 oz, 1/20 oz
Key Features:
Known for purity and security features, widely accepted.
Austrian Philharmonic Gold Coins
Mint:
Austrian Mint
Purity:
99.99% (24-karat)
Denominations:
1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Key Features:
Europe's best-selling gold coin, recognized worldwide.
Credit Suisse Gold Bars
Manufacturer:
Credit Suisse
Purity:
99.99% (.9999)
Sizes:
1 gram to 1 kg
Key Features:
Widely accepted, serial numbered, highly reputable.
Choose a Gold IRA Company For Your SIMPLE IRA Rollover
Comparing the industry-leading SIMPLE Gold IRA companies with the best reputations across the board. Focus on the User reviewed all of the leading companies so you can easily find one perfect for your SIMPLE IRA rollover to gold.
Gold SIMPLE IRA FAQ
Yes, after two years from the date of your first contribution, you can roll over your SIMPLE IRA into a self-directed Gold SIMPLE IRA without penalties.
The contribution limits for a Gold SIMPLE IRA are the same as a standard SIMPLE IRA, which are generally lower than those for 401(k) plans but higher than for traditional and Roth IRAs.
No, IRS rules prohibit transferring existing gold into an IRA. All gold must be purchased by the IRA directly through the custodian.
No, only IRS-approved bullion coins and bars that meet purity standards can be added to a Gold SIMPLE IRA. Collectible coins are not allowed.
Custodians use IRS-approved third-party depositories with advanced security features, including 24/7 surveillance, strict access controls, and insurance coverage for all stored assets.
How Focus on the User Helps You Invest Your SIMPLE IRA in Gold
Focus on the User's team offers expert guidance to help you invest your SIMPLE IRA in gold. From step-by-step instructions to choosing the right custodian and understanding tax benefits, we provide the resources you need to diversify your retirement savings with gold. Learn more in our free Gold IRA Guide.
Wait! Don't Invest In a Gold IRA Just Yet..
Our free eBook helps you plan your Precious Metals IRA, and avoid penalties and hidden fees.