401k To Gold IRA Rollover – All You Need To Know

Find out all about 401 k to gold ira rollover in this informative guide.

If lately, youíve been contemplating turning a part of your 401k into bullion coins and bullion bars, your on the right track. The truth is there are countless benefits that you get with the process known as 401k to Gold IRA rollover.

By diverting a fraction of your retirement account away from standard assets bound to the dollar, like stocks and bonds, your protecting your wealth against economic turmoil and currency debasement.

This is true of any precious metal. However, itís particularly true of gold.

Gold has been a safe haven for investors throughout history. People have always kept physical gold as the ultimate preserver of wealth. Amid a crumbling economy and uncertain political climate, gold not only survives – it thrives.

As one of the rare assets that act as a hedge against both inflation and deflation, possessing gold is a blessing in any crisis. Unlike any paper currency, gold has maintained its value through thick and thin, which is why investors and 401 k owners are rushing to get their hands on it.

If you want to find out:

  • how to buy physical gold with 401k
  • how to move 401k without penalty
  • what is a gold IRA account
  • all about IRA rollover to gold

keep on reading!

How Does A Gold IRA Work


A gold IRA functions identically to a regular IRA, with one difference: the gold IRA allows the account owner to hold precious metals – gold, silver, platinum, or palladium.

If your 401k retirement plan does not offer free access to the gold and silver investing you need, you can opt out of the 401k into a self-directed investment retirement account – IRA. A gold IRA is a special type of investment retirement account that allows individuals to add gold or silver in the form of bullion coins and bars to their tax-sheltered retirement accounts.

Self-Directed IRA

In many ways, a self-directed IRA is similar to a regular IRA. However, the main difference has to do with restrictions on investments.

With a self-directed IRA, your in total control of the investments you want to put into your account. You donít get the same level of freedom with a regular IRA as the custodian may impose restrictions on the type of investments youíre allowed to hold.

In a nutshell, with a self-directed IRA, your free to invest as you please, as long as you follow the IRS regulations, of course.

The IRS allows precious metals such as gold and silver bullion to be held as a part of a retirement account, otherwise known as a precious metals IRA.

One more thing to know about the self-directed IRA is that you can set it up as Roth or Traditional.

It doesn’t come as a surprise that precious metals IRAs are popular now more than ever. They have become significantly more popular since the 2008 financial crisis and the resulting Great Recession.

Gold IRAs appeal to investors who are looking to diversify their investment portfolios. Since gold prices move in the opposite direction of paper holdings, adding a gold IRA to a portfolio provides a sort of insurance policy against inflation. The consensus is that precious metals IRAs smooth out the risk of holding solely paper assets. This is especially true in the long run.

If you decide to buy precious metals and invest them in your individual retirement account, there are a few things you need to know.

First and foremost – a trusted IRA custodian is worth its weight in gold. Many companies offer the 401 k rollover service, but before you opt for one, make sure to do the groundwork, compare the prices, client reviews, etc.

Secondly, you ought to know which gold bullion qualifies to be a part of a gold IRA. For precious metals to be eligible for retirement accounts, they must be produced by a recognized national mint or they have to be manufactured by refiners that either have ISO 9001:2008 certification or are named on an industry-standard list.

In addition to this, the physical gold and silver you put in your IRA have to be stored in a depository approved by the IRS. What this basically means is no stashing the gold at home, in safety deposit boxes, and similar.

Furthermore, be aware that you will probably need to pay fees for the storage. For instance, some companies charge hefty fees each time you add, withdraw, or sell your precious metals from the storage. Whatís more, some additional fees may apply too, like insurance, shipping, or handling fees.

Last but not least, itís important to know that all the rules about IRA contributions, disbursements, and taxes apply.

The main takeaways about precious metals IRA you should keep in mind are:

  • Itís a self-directed individual retirement account – IRA
  • It comes with higher fees than a traditional or Roth IRA

Transferring Funds From 401k To Precious Metals IRA

ira or 401 k?

One of the crucial questions that need answering is what ís a 401 k rollover and how itís done. In simple terms, a 401 k rollover is when you direct the money transfer in your retirement account to a new retirement plan or an IRA (in this case, a gold IRA).

By rule, the IRS gives you 60 days to complete the rollover. More precisely, the IRS allows one tax-free rollover of IRA funds per year, and that rollover must happen within 60 days of removing the funds from your current account to avoid penalties.

What happens if you don’t complete the transaction within 60 days?

The money will become a taxable withdrawal and you will need to pay the 10% early withdrawal penalty if you are under 59 Ω.

Since gold and silver as physical assets can be added only to a self-directed IRA, you will need to do the 401 k to gold IRA rollover.

You should know that 401ks have slightly different rules for gold IRA rollovers. The rules also depend on whether you have a 401 k from a previous employer or a current employer. If itís from a past employer, you should be able to do a 401 k to gold IRA rollover with a new custodian of your choosing.

On the other hand, if you have a 401 k through your current employer, check with them before you get into a gold IRA rollover.

There is one decision you’ll have to make when rolling over the 401 k to IRA: Traditional IRA or Roth IRA?

  • Traditional IRA

The main advantage of a traditional IRA is that your investment is tax-deductible now up to a certain amount. You deposit pre-tax money into your IRA and that amount is subtracted from your taxable income. However, you must pay taxes on the money (and its earnings) later when you withdraw the funds.

Speaking of, according to the traditional retirement plan, your required to start withdrawing the funds at age 72 by a rule known as taking a required minimum distribution.

  • Roth IRA

When you go with Roth IRA rollover, you have to treat the entire account as taxable income immediately. If you maintain the Roth IRA for a minimum of five years, your after-tax contribution and earnings on them are tax-free. Furthermore, Roth IRA doesn’t feature lifetime distribution requirements.

If you are wondering which one to go with and whether it will trigger any taxes, the general rule is to roll over between retirement accounts that are taxed in a similar way: Traditional 401 k to Traditional IRA, and Roth 401 k to Roth IRA.

Technically, you can do a Traditional 401 k to a Roth IRA rollover, but it ís a more intricate process.

One of the most important, if not the most important things is to ensure that you choose a certified and trustworthy company to handle your gold investments and retirement savings. Once you find a reputable gold IRA custodian, you can rest assured they will help you with the rollover.

A reliable IRA custodian should provide all the necessary paperwork and other information that you need to arrange and complete an IRA rollover. Don’t forget there might be fees associated with the rollover, depending on the IRA custodians rules, so make sure to gather all the details beforehand.

Once you’re able to purchase gold and other precious metals with your IRA account, keep a few things in mind.

Firstly, know that the IRS has strict rules about the physical gold that can be allocated in your IRA account.

The coins and bars you choose need to be pure 24K gold. The exception to the rule is the American Gold Eagle, which is a 22K coin but it is recognized as the official bullion coin of the United States, and therefore allowed to be included in a gold IRA.

Besides gold, Internal Revenue Service (IRS) allows you to add silver, palladium, and platinum coins and bars to your IRA account.

Your options include some of the most prominent and sought-after coins worldwide, like the American Eagle, American Buffalo, Canadian Maple Leaf, Austrian Philharmonic, Britannia, and many others.

National mints around the world manufacture most of the IRA-eligible gold coins and bars. The most famous mints include the United States Mint, Royal Canadian Mint, Perth Mint, Royal Mint, etc.

When you purchase the bullion, your IRA custodian will ship it to a proper IRS-approved depository, and you have to pay certain fees. Its best to discuss all applicable (current and future) fees with your IRA custodian prior to the purchase to avoid surprises.

The main takeaways about the rollover process:

  • Pick a trusted self-directed IRA custodian.
  • Roll over the eligible funds within 60 days to avoid penalty.

401 k To Gold IRA Rollover – Advantages and Disadvantages

pros and cons of 401 k rollover

One thing is for sure – converting a part of your retirement savings to physical gold has its advantages:

  • Gold preserves wealth.

To understand why gold is so important for today’s economy it’s enough to look at its history. Throughout centuries, gold has successfully preserved wealth. The same cannot be said for paper-denominated currencies, which is why many investors rush to purchase gold and add it to their retirement portfolios.

  • It thrives during the political and economic turmoil.

Gold has not only survived many calamities, but it actually rose to the top while other assets plummeted. It’s safe to say that gold is one of the most certain holdings you want to own during a crisis.

  • It acts as a hedge against inflation and deflation.

One unique thing about gold is that it is unbothered by both inflation and deflation. Historically, gold has served many a time as a hedge against both those scenarios. When investors realize their money is losing value, they turn to hard assets that have always maintained their value, like gold. Furthermore, gold also benefits from a declining US dollar as it is priced in USD globally.

  • It balances out the paper assets in your account/portfolio.

Holding only paper assets like stocks and bonds in your retirement portfolio poses a certain risk. As mentioned earlier, gold has proven to be a valuable tangible asset almost always, no matter the political or economic climate, which is not true of paper holdings.

When you convert a portion of your holdings to gold, you ensure a better balance between the two.

  • Gold prices are steady in the long run.

Although gold prices on the stock market fluctuate on a daily basis, they’re quite steady in the long run.

Are there any downsides, though?

Well, of course. The main downsides or rolling over your 401 k to gold IRA are:

  • Legal protection

401ks are protected by federal law from all types of credit judgments (besides IRS tax liens) including bankruptcy, while IRAs are protected by state law, whose shielding power varies.

  • Early retirement benefits

With an IRA account, you will face a penalty of 10% for early withdrawal if youíre under 59 Ω, whereas with a 401 k, you can access your funds as early as age 55.

  • Stable value funds

Company 401ks have access to a special type of fund – stable value fund, which is not available in the individual market and typically offers better interest rates compared to money market funds.

  • Greater buying power

401 ks can purchase funds at institutional pricing rates, which is not (usually) true of IRAs.

These are some of the biggest upsides and shortcomings of a 401 k to gold IRA rollover. Cogitate about each of them carefully and investigate further with a professional if you have any specific concerns.

All things considered, when weighed out, you can get far more benefits than disadvantages when you roll over 401 k to gold IRA.

401k To Gold IRA Rollover – Final Word

Ask any investor and they’ll tell you that investing in gold is always a smart idea. Gold is an asset that has a sort of value you cannot get from many other investments. Not only is it a profitable investment, but it also carries a minimal financial risk, and it’s a precious addition to any retirement portfolio.

In the past years, the popularity of gold IRAs has been on the rise, and for good reasons. Converting a part of your retirement savings into gold can be extremely beneficial.

Investors have been turning to gold for decades as it is a safe haven and a proven hedge against economic crises. Owning gold has always been worth a kings ransom and you definitely won’t make a mistake by turning a portion of your savings into a gold IRA.

However, the 401 k to gold IRA rollover is an intricate process and you need to get your facts straight before you dive into it. Hopefully, this 401k to gold IRA rollover guide has cleared things up, so you know how to go about it.

Find a reputable company like GoldCo that will guide you through the entire process and make sure everything is legal and legitimate. Pick the gold you want to include in your gold IRA account, but do it carefully, with all the things mentioned above in your mind.

Once you’re absolutely sure about the gold, it can be safely tucked away at an IRS-approved depository.

Word to the wise – make 100% sure that everything is done according to the IRS (Internal Revenue Service) regulations. Otherwise, you might face serious tax events that can be triggered by an audit and lose your savings in the blink of an eye.