401(k) to Gold IRA Rollover Guide


Why you should consider switching your 401(k) investment to a Gold IRA

Investing in gold is appealing for many investors planning for retirement as it offers diversification away from other volatile investment markets.

Investors are unable to own physical gold in a general IRA account, other than the option to invest in stocks of certain gold mining companies. However, with a self-directed IRA, investors are able to invest in assets such as gold and other precious metals. As such, a Gold IRA has the potential to be a great retirement investment solution, giving investors all the tax benefits of a Traditional IRA with fewer costs and greater portfolio diversification.

So have you heard of a Gold IRA before and considered switching your 401(k) to a Gold IRA account? In this article, we will give you the breakdown of what exactly a Gold IRA is, the benefits a Gold IRA offers, and an overview of the process of switching your 401(k) to a Gold IRA.

Top companies include Augusta Precious Metals, Hartford Gold, and Birch Gold Group.

What is a 401(k)?

A 401(k) is a retirement account that allows you and an employer to make contributions. A 401(k) allows you to make pre-tax and post-tax contributions depending on your preference and tax situation. Employers usually make a matching contribution to the account, resulting in the accumulation of funds that are then withdrawn in retirement in later years ahead.

401(k)’s can be great for potential tax savings, but they do come with some drawbacks. The funds contributed to a 401(k) usually go to investments in the stock market, leading to the growth of your investments based on the health and growth of the stock market. If the stock market is down, odds are your investments are too.

The employer contributions of the 401(k) are also only available if you are employed by that company. If you leave the company or even lose your job, you will also lose the employer matching contribution.

401(k)’s are a great investment for many planning for retirement, but this does have some potential risks and limitations. As such, many investors and people planning for retirements make the decision to consider other more stable investments, such as a Gold IRA.

401(k) Rollover

What is a Gold IRA?

A Gold IRA is a different type of retirement account that allows you to invest your money into gold and other precious metals, like silver and platinum.

Through a Gold IRA not only can you invest in physical metals, but you also have the ability to invest in stocks in the precious metal industry, such as coins and bullion. A Gold IRA is held separately from your other retirement accounts as you will be purchasing physical precious metals. In this case, the physical gold will be stored away with this being the big difference between a Traditional IRA and a Gold IRA account.

If you’re considering taking the leap of faith and rolling over your 401(k) to a Gold IRA, it’s worth understanding the IRS requirements for these types of IRA accounts. It’s important to note that only certain companies can hold the Gold IRA investment, and traditional brokerage companies are not able to help with the setup. It is recommended to set up a Gold IRA account with companies such as Augusta Precious Metals, Hartford Gold, and Birch Gold Group.

Despite the assets held in a Gold IRA differing from a Traditional IRA, the rules and regulations are similar. In 2021, the $6k contribution limit is in place for individuals under 50, and $7k for individuals over 50, which is the same for Traditional IRAs. The same 10% early withdrawal penalty also still applies for investments taken out before reaching the age of 60 years old.

What are the advantages of a Gold IRA?

Despite the similarities between a Gold IRA and a Traditional IRA, many investors find Gold IRA’s offer more in the way of advantages with fewer risks.

As an investor, you follow all the same rules and regulations as a Traditional IRA but get to skip out on the stock market volatility, whilst benefiting from exclusive tax benefits. An attractive benefit of a Gold IRA account for investors is the pre-tax contributions. Taxes are only paid when you withdraw the money. As such, a Gold IRA comes with the potential of passing the investments down to a beneficiary without paying inheritance taxes which is a huge benefit.

Other top benefits include the high liquidity of precious metals and the diversification a Gold IRA can provide. Gold is a highly liquid metal, meaning that if the market were to crash, you are able to easily sell off your physical precious metals to reduce any losses.

The majority of traditional retirement accounts mainly hold stocks, making them less diversified than a Gold IRA. A Gold IRA allows you to have portfolio diversification that is less prone to market risks when compared to Traditional IRAs. Typically, Traditional IRS’s are heavily influenced by market fluctuations due to inflation, and other economic events whereas Gold IRA’s are not.


How do I roll my 401(k) to a Gold IRA?

There are a few different options to roll your 401(k) investment into a Gold IRA. If you leave or lose your job, you will have to determine what to do with your existing 401(k) funds. Many people choose to cash them out, which is not a wise decision based on the early withdrawal penalties and income taxes.

Alternatively, other options include maintaining separate 401(k) accounts from your old and new employer and paying double the maintenance fees or attempting to roll your old account into your new one. The preferred option may be simply to roll your existing funds into a Gold IRA.

When rolling your 401(k) to a Gold IRA you can either choose an indirect rollover, which includes cashing out your existing funds and then depositing them into a Gold IRA. The funds need to hit the new Gold IRA account within 60 days to avoid taxes and penalties. The alternative would be a direct rollover, which is when the 401(k) custodian directly sends the funds to your new Gold IRA, bypassing any withdrawal issues.

It’s worth noting that if your 401(k) is through a government agency, additional steps will be required in the transfer process.

Benefits the move can provide

A Gold IRA offers many new benefits that a traditional IRA does not, such as:

  • New investment opportunities in precious metals
  • Stronger control over maintenance fees
  • More transparent access to your investment funds
  • Savings on fees associated with early withdrawals
  • Options to choose a trustee and the platform you want to invest on
  • Huge tax savings on your invest
  • The opportunity to diversify your portfolio with a Roth IRA and a Gold IRA

Fees associated with a Gold IRA

As many investors are aware, there are fees associated with any type of investment or retirement accounts. However, when choosing a Gold IRA you are able to benefit from reduced fees in comparison to other Traditional IRA accounts. Common fee savings with a Gold IRA include:

  • No annual fees
  • Minimal load fees
  • Reduced maintenance fees

Companies that specialize in Gold IRA’s

As mentioned above, only certain companies can hold Gold IRA investments with traditional brokerage firms not able to do the setup. If you’re looking to go ahead with the rollover process from a 401(k) to a Gold IRA, it’s recommended to work with one of the following companies:

Choosing the right company can be difficult, but with some due diligence and research, you can find the perfect fit for you and your investment opportunities.