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Current conditions make it hard to determine the best place to put your retirement savings. If you’re not comfortable with stocks at this point, you may find the rate of return on bonds and standard savings accounts is hardly worth considering. A gold IRA might be a good choice for investment returns later and tax savings now.

When Do You Need the Tax Break?

The majority of us expect to have a lower income after we retire. With this expectation, we can save on taxes now by reducing our pre-tax income. In this case, if you have access to a 401k through your job, you will want to max it, or at least put enough in it to get your full match from your employer.

In addition to the 401k, consider setting up a traditional IRA. With a traditional gold IRA, you can reduce your pre-tax income and thus lower your adjusted gross and possibly move into a lower bracket. You will need to pay taxes on this money when you take the cash out of the account, but if you can avoid

  • early withdrawal penalty by waiting until your 59 and a half
  • only take out what you need to live well on top of your social security

The income tax burden created by this money will be much less than what you’ll pay during your working years.

Post Tax Investments

You can also set up a Roth IRA in which you can invest post-tax income. You will not get a tax break from your Roth IRA, but you won’t have to pay taxes on the money you take out later. Even better, any gains that you earn from your Roth IRA are also yours to keep as long as you carefully follow the rules on qualified distributions.

Start With A Gold IRA

The rules on moving money to gold in an IRA are not only confusing, but they keep changing. If the major breadwinner is already contributing the maximum to an IRA, they can set up a gold Roth IRA for their spouse, even if their spouse has no income. They can also set up one for their children.

If the owner of a Roth IRA is more than 50 years old, they can contribute more dollars to an IRA. The rules on the top limit keep changing, but you should be able to expect to contribute $6,000 to your gold IRA prior to the age of 50 and $7,000 after the age of 50. When you turn 70 and a half, you will be required to take minimum required distributions.

Spouses should carefully look at their retirement savings. If one spouse has little W2 income, retirement savings can be a challenge, but with a post-tax Roth IRA, the rules offer a bit more flexibility, so consider setting up a new gold IRA in this situation.

According to the experts at GoldCo, gold IRA rules are clear and easy to follow when you start from scratch.

Watch the Income Limitations

A standard or traditional IRA has an income limit on the low end. For example, if your W2 earnings are only $4,000 for the year, that’s all you can put in a traditional IRA. There’s also a contribution limit on the high end, which is $6,000 at this point if you are under the age of 50. However, even if your retirement contributions are maxed via 401k, you can still set up and contribute to a traditional IRA; you just won’t get the tax break.

Income restrictions can bar you from being able to put any money at all in a Roth IRA. If your W2 documentation indicates that your income is too high for a Roth, make sure that you are using your Modified Adjusted Growth Income numbers; after your 401k contributions are taken out, you may actually qualify to make contributions to a Roth IRA if you want to set one up.

Work With a Pro

Gold IRAs, both Roth and traditional, are unique vehicles. The rules on retirement savings are currently in flux and will likely continue to be a bit of a challenge. Changes in federal leadership will likely lead to policy changes as personnel are swapped out. If your retirement is looming and you really want to know that a portion of your savings is protected against inflation, a company that is tied directly into the precious metals market may be your best option.


Photo by STIL on Unsplash



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