How To Move 401(K) To Gold Without Penalty 2023

Disclaimer: We are reader supported. We may be compensated from the links in this post, if you use product or services based on our recommendations. Please read our Advertising Disclosure.

Disclosure: The owners of this website may be paid to recommend Goldco or other companies. The content on this website, including any positive reviews of Goldco and others, may not be neutral or independent.

You can save funds for retirement through a self-regulated retirement account (IRA), or using a 401(k) plan. Traditional IRA’s and 401(k) plans can allow you to avoid paying taxes on your contributions. If you are looking to make your account more diverse, consider investing some of your 401(k) funds in gold.

Investing in gold is beneficial for a variety of reasons. One of the top reasons why people turn to gold is to protect their monetary portfolio from inflation. For thousands of years, people have turned to gold for investments, and it retains its value for this reason. Another reason people invest in gold is that they are worried about market volatility. When comparing gold to a corporation, gold cannot go bankrupt, while a corporation can. Regardless of what happens to the economy, your physical gold coins and bullion will always be sitting in your vault ready for you to use.

If and when you decide to invest in gold, it’s time to start thinking about how you’re going to get started. You may consider buying gold coins and bullion outright, but the disadvantage is that there are no tax advantages to this method. On the other hand, if you purchase your gold through your 401(k) plan, you are able to deduct your 401(k) contributions from your annual tax return. This way you won’t have to pay taxes on your investment until you eventually sell the gold and withdraw your earnings.

Not all precious metal pieces may be kept in an IRA due to certain IRS regulations. Gold coins and bars are required to be a minimum of 99.5% pure, while silver bars and coins are required to be 99.9% pure.
Invest in gold

How to Move a 401(k) into Gold

Now that you’ve decided to purchase gold, it’s time to carry out the plan. Considering many 401(k) plans to restrict your investment options, it is likely that your current 401(k) plan does not offer any gold investment options. You will need to find a new plan that will allow you to directly invest in gold.

In order to avoid paying taxes on this transition, you will need to do what is called a 401(k) rollover. A 401(k) rollover is when you transfer funds from your old 401(k) plan to your new 401(k) plan.

According to the Internal Revenue Service (IRS), this transfer must be completed within a 60-day time frame. If you do not transfer these funds in time, your transfer will be treated as a 401(k) withdrawal. In order to avoid paying taxes and penalties on your withdrawal, you will need to follow the IRS rules.

You’ll also be able to enjoy new perks when converting to a new 401(k) plan or IRA. Although employers do not have any incentive to shop around for a great plan, they offer these plans as a benefit to their employees. This is why these employer plans will often have limited options and high fees. Taking this into consideration, you may need to get a new 401(k) plan if you’re looking for more gold investment options, as well as cheaper investments and lower account fees.

To convert your old 401(k) plan into a new gold IRA or 401(k) plan, you will need to complete the following steps:

When performing a 401(k) rollover, not only do you get more investment options, but you can save on fees as well. Since employer plans often come with high fees, switching plans can save you a lot of money.

Roth IRA: When you rollover to a Roth IRA, you will need to pay taxes on the funds that you transfer. These allow you to perform tax-free withdrawals, but your initial contributions will be taxed.

Traditional 401(k): If you rollover to a Traditional 401(k), you will not need to pay taxes as long as you complete the transfer within 60 days.

Traditional IRA: Similarly to a Traditional IRA, these are a tex-deferred retirement plan.

The Government will allow you to own multiple IRA’s and 401(k) accounts. This means that you will be able to create a stand-alone 401(k) account or self-directed I.R.A. for (gold). The trustee will be both the custodian and broker of these physical metals.

You will be able to buy and sell gold when you use a gold IRA or 401(k) plan. In order to do this, you must follow government standards. Self-directed IRA’s and 401(k) plans do not allow you to physically hold the physical metals yourself.

A solo 401(k) plan and self-directed IRA are essentially the same things, but with one main difference. The 401(k) plan allows you to contribute more money each year, while the self-directed IRA does not. Other than this, both these options have very similar benefits and rules.

Setting up your account online is the easiest option. One way to do this is to use a robo-advisor. You can use a robo-advisor to invest in a balanced portfolio automatically. This way you don’t have to deal with the hassle of picking your payments. Another option is to use an online broker. With an online broker, you’ll have more control over your investments by choosing which investments you buy, while also having the ability to divest whenever you want. If you are choosing this route you should find a provider who charges low fees, as fees and commission costs can add up very quickly. You will also need to choose a provider who specializes in precious metals.

It is important to consult your old 401(k) broker about moving your funds early in the process because they may slow down the process because they do not want to lose your business. Always make sure to ask your provider to do a direct rollover so that the funds go directly into your new account rather than going to you.

This next step is very important. The funds that leave your old account must transfer into your new account within 60 days. If not, you will need to pay taxes and penalties on your withdrawal. Completing your rollover as quickly as possible is your best bet to avoiding penalties.

The process may vary but if you wish to carry out a direct rollover, most providers will require you to send in some forms. You should contact the administrator of your former employer’s plan to find out how to do this. Once you’ve sent in the paperwork, they can then send a wire transfer or check to your new account.

Although this option is much harder to do, you can technically do an indirect rollover as well. An indirect rollover is when the money is sent to your account first, and then you send the money to your new IRA within the 60 day window.

Indirect rollovers can end up complicating your taxes and end up in you paying income taxes and penalties on the rollover if it is not completed in time. Most providers withhold 20 percent of your withdrawal as a tax payment automatically. Since you will need to transfer the entire amount to your new account, you will need to provide the difference from your personal account.

After you’ve set up your indirect or direct rollover, you can now determine how you want to use your money. You may look at index mutual funds, or invest in physical gold. If you’re looking to diversify your gold portfolio, there are also other techniques you can use as well.

Gold futures & options

Essentially these contracts are agreements to buy or sell gold in the future at a set price. These contracts are traded on commodity exchanges and are therefore highly regulated by the federal government.

Stock in gold mining

If you’re looking to invest in a gold mining or gold refining business, you can purchase stock in a mining company. In order to observe if they are financially stable, you should always research the company beforehand. You can also buy shares in a mutual fund that invests in gold mining to reduce your risk.

Gold exchange-traded funds (ETF’s)

A gold ETF (known as a basket of other assets) may own gold options, futures, and physical gold. An ETF-style investment can be traded when the market is open, while mutual funds can only be exchanged after the market closes for the day.

Get Your FREE Gold IRA Guide Here!

Why the IRS charges penalties on 401(k) rollovers

The IRS rules that you must complete your 401(k) rollover within 60 days. If you do not deposit your money from your previous 401(k) into your new account within those 60 days, you will be required to pay a penalty on those funds. Doing a direct rollover is the best way to avoid this. A direct rollover will ensure that your funds are instantly transferred from one account to another.

A 10 percent penalty will apply if you withdraw your funds before you are 59.5 years of age. You will also be required to pay your regular income tax rate on your early withdrawals. If you have to pay state income tax as well, you could easily spend 45 percent of your withdrawal on penalties and taxes.

International Revenue Agency

How to turn your 401(k) into gold without a penalty

Fortunately, if you’re doing a direct rollover, you can readily avoid anteing up penalties and taxes. This option allows your provider to handle transfers so that your funds will automatically show up in your new account.

By doing an indirect rollover, you handle the transfer yourself and ensure the rollover is completed within 60 days. If your previous provider automatically held back 20 percent of your funds for tax purposes, you will need to replace these funds once you have finished the indirect rollover.

In order for this plan to succeed, your new account must be a tax-deferred plan. You will not be able to deposit these funds in your bank account unless you are at least 59.5 years old. Otherwise, you will be required to pay a penalty as well as taxes on your withdrawal.

Companies that help convert your 401(k) into gold

If you’re trying to invest in a gold 401(k) or IRA, There are a handful of companies that can help you get started. When it comes to investing in precious metals, many companies will not allow that as an option. That is why it is important to check with your new provider which services they offer before opening an account. Once you’ve done your research, you’ll then be able to begin investing in precious metals.
Augusta Precious Metals

This company helps investors open tax-advantaged retirement accounts, and within these accounts, you may invest in precious metals. Augusta Precious Metals recommends Goldstar Trust, Equity Trust, and Kingdom Trust as custodians, they can also work with other custodians as well.

Once you’ve finished setting up your self-directed IRA, you may use your custodian and Augusta Precious Metals to purchase gold. They can also assist you in buying other premium coins, bars, bullion, and rounds. You will find that Augusta sells collector sets and commemorative coins as well.

To add another layer of protection, Augusta offers a price protection program where if the price of your precious metals changes within seven days of your confirmed order, they will still honor the rate at which they initially gave you at the time of purchase. They will also frequently give their clients a quantity discount based on big bullion orders.

Augusta Precious Metals provides a plethora of promotions. After you’ve made an investment that qualifies in your new account, they will award you up to $2K in silver. Another bonus is that within up to seven days of your order, you can cancel for any reason.

  • Fast and easy setup process
  • Competitive pricing compared to other industry organizations
  • Lifetime customer support
  • You are required to invest a minimum of $50,000 into your new account

This organization operates as a brokerage for gold IRAs and is ranked very highly for its customer service. Goldco does a great job of handling paperwork regarding IRA custodians, storage facilities, and other retirement account providers, unlike other companies.

Since Goldco is a broker, they will only handle the buying and selling of your gold. They also do not store any precious metals at their company. Although Goldco cannot serve as the custodian, they can assist you in filling out the paperwork for another custodian company. After this process, they will also help you purchase gold coins and bullion that have been approved by the IRS.

Goldco can also assist you in performing a 401(k) rollover. They can handle the paperwork involved in transferring your funds to your account. They will also assist you in buying other precious such as silver.

  • The Better Businesses Bureau gave them a rating of A+
  • Goldco’s IRA’s have the ability to invest in precious metals
  • Over a decade of experience with gold IRA’s
  • Excellent customer service
  • Does not offer storage of custodian services
Birch Gold Group

The Birch Group began in 2003 and is based in California. This organization serves as an experienced brokerage for precious metals. They can also help you with the purchase of precious metals other than gold such as silver, platinum, or palladium

They can also help you in buying gold for an IRA or for personal ownership. You can also learn about how to invest in gold and the risks involved, thanks to the Birch Gold Groups’ dedication to client education.

All investments carry out some degree of risk, and that is why it is important to know which ways you could lose money before you invest.

The Birch Group also assists you in buying gold through your retirement account. All of the investments for IRA’s are approved by the IRS. Other than purchasing physical gold, you can also buy real estate, raw land, mutual funds, stock, private loans, bonds, and other investments. 

After you decide to go with this organization as a broker, they will assist you in finding a custodian. In the case that you already have a custodian, Birch Gold Group can work with them to purchase and store your gold. They will also ship your gold to approved repositories. For example, you may store your gold with Brink’s Global Service Delaware Deposito

  • Offers a great level of service
  • Excellent reviews from consumer organizations and professionals in the industry
  • Provides good education to clients
  • You are not required to pay fees during your first year, as long as you transfer $50,000 minimum to your new account
  • Annual fees and setup costs are not clearly laid out on the firm’s website
American Hartford Gold

When it comes to precious metals IRA investments, American Hartford Gold Group is a retailer that you can trust. This family-owned business is operated in Los Angeles, California, and has made it their mission to educate, protect, and empower customers in their goal to save for retirement.

American Hartford Gold has decades of experience when it comes to helping investors choose the right gold bullion for their retirement portfolios. They offer an array of products – including physical goldsilver, and platinum, as well as personalized customer service to help you understand the process of investing in precious metals.

Whether you are a beginner or a seasoned investor, American Hartford Gold Group has the expertise and resources to help you achieve your retirement goals.

Plus, with an A+ rating from the Better Business Bureau, a 5-star rating on review platforms like Google and Trustpilot, recommended by Bill O’Reilly, Rick Harrison, and Lou Dobbs, and having been ranked the #1 Gold Company by Inc. 5000’s 2021 list of America’s fastest-growing private companies, you can be sure that you’re in good hands with American Hartford Gold Group.

  • Secure storage; all investments are securely stored in IRA-approved vaults across the country
  • Low costs and no hidden fees, making it an attractive option for those looking to maximize their retirement savings
  • Expert guidance; provides investors with expert guidance throughout the entire process
  • Pricing on the website is not transparent
  • No platinum or palladium products are offered

Our Gold IRA Company Recommendation

We recommend Augusta Precious Metals as the top Gold IRA company to work with. 

Augusta Precious Metals has a highly trusted name in the gold investment industry, with an A+ rating from the Better Business Bureau, as well as a AAA rating from the Business Consumer Alliance, and loads of reviews from satisfied customers.

They can help you move an existing registered plan into an IRA, as well as set up a new one. Augusta Precious Metals team members are always there to answer your questions and concerns, and to help you pick the right precious metals that will suit your needs. With your personal financial goals in mind, the Augusta Precious Metals team ensures a smooth and clear transfer process with no additional IRS fees.

Augusta Precious Metals offers a wide variety of precious metals so that you can diversify your portfolio with a selection of gold and silver bars and coins. As you work your way towards retirement, continue to add to your IRA each year to grow your wealth.

We are confident that you’ll choose Augusta Precious Metals as your top pick as well. Visit the Augusta Precious Metals website today and fill out their application form to begin the process in setting up your IRA. You’ll be happy you did!

Augusta Precious Metals

Frequently Asked Questions (FAQ)

When it comes to changing your retirement plan, it is a big decision. Luckily, converting to a gold IRA is fairly simple and straightforward. That being said, here are some common questions about moving a 401(k) plan into gold.

A Gold IRA is an example of a Self-Directed IRA. Self-Directed IRA’s were designed to give individuals more freedom in the selection of investments that they could hold in their retirement account. A Gold IRA is unique to precious metals, where the investor/individual has the ability to hold gold, silver, and other precious metals such a platinum and palladium in their account rather than being limited to traditional stocks and bonds.

By holding precious metal investments in a Gold IRA, this gives the ability for individuals to make their portfolio more diverse and prepare themselves for future financial success. Having a diversified portfolio makes for a better chance to survive a stock market crash and still have some of your funds held in other categories, such as gold.

There are various options when it comes to investing in gold. One option is to purchase gold coins or bars from a local retail shop or gold investment company. You may then hold the metals until you are satisfied with their growth, ready for retirement, or need them for another expense. 

Another option to invest in gold is by setting up a Gold IRA. These are a form of a Self-Directed IRA, only your funds can be held in gold rather than stocks and bonds. This is a good way to invest in precious metals without worrying as much about taxes.

The value of a gold coin increases as the value of spot gold increases. The number that is printed on each gold coin (known as the face-value) is not an accurate reflection of its true valuation. In fact, its value is likely much higher than the face-value based on the current price of gold today.

Depending on your age, current financial position, and personal preferences, the answer to this question will vary per person. If you are coming up on retirement, you’ll want to take fewer investment risks and may not want a large portion of your money in gold. If you’re still young and have more time to take greater investment risks, you may want a larger percentage of your portfolio invested into gold. 

Like many investments, it is optimal to buy at a low value. Generally speaking, when the stock market is over-performing, the value of gold is at a much lower amount. Gold also follows some trends such as a decrease in certain months of the year, including January, March, and April.

It is always a good idea to seek out a financial advisor to help discuss the best options for your current situation. This way you can shift your investments based on what makes the most sense for your financial goals, and the current economy.

Your current plan may not give you the option to invest in gold, but there are numerous other plans that allow gold investments. Keep in mind that there are specific rules set out by the IRS regarding how gold can be bought and stored. Because of these rules, it’s important to find a reputable company to work with.

You are legally allowed to do a 401(k) rollover and avoid paying taxes and penalties, but to do this you must follow the correct process. Start by contacting your current 401(k) plan and explain your situation. The rollover may take several weeks or months to complete, so it’s best to begin as soon as possible.

Traditional 401(k) plans and IRA’s are tax-deferred savings accounts, meaning you do not need to pay any taxes on your contributions. Once you retire and eventually withdraw your funds, you will pay taxes on those withdrawals. You will not get any tax breaks if you purchase gold for personal ownership. Right now, the only way to avoid paying taxes on gold is by purchasing it through your 401(k) plan or IRA.

Although this process is a bit tricky, you absolutely can purchase physical gold in your 401(k) plan. Since your IRA cannot be the seller and holder of the gold, they will need to store the physical gold with a third party. You are also not personally allowed to hold the gold. You may only keep gold and silver in a plan of this type if someone else is storing it, according to the IRS. While you will not be allowed to have physical control over the gold, you may still be allowed to access the storage facility.

Yes, any gains made on the gold held in a Gold IRA are subject to capital gains taxes. Additionally, if you take a distribution from the Gold IRA before you reach the age of 59 and a half, you may be subject to income taxes and a 10% early withdrawal penalty. Things may differ depending on whether you have a traditional IRA or Roth IRA.

No. You are not allowed to take physical possession of the gold or other precious metals held in an IRA account. 

No. Home storage is not allowed and could have serious tax implications if you are found to be taking physical possession of the gold held in your IRA. You must store the gold with an IRS-approved custodian. Any company that promotes home storage is not providing sound advice and should be avoided. 

No. The IRS does not allow precious metals to be stored in a safe deposit box. The custodian/depository must always maintain possession of the gold.

This is a tricky question. 

Mostly, no. For most folks, it’s impossible to take physical possession of their gold without paying severe fees.

There is however a workaround for very (VERY) few individuals. 

A “Checkbook IRA” allows the IRA owner to have more control over their investments. They can use an LLC to make investment decisions and hold assets on behalf of the IRA. The LLC is owned by the IRA and managed by the IRA owner or someone else. The assets, including precious metals, can be stored in a place chosen by the LLC, like a storage facility or the IRA owner’s home as long as it’s secure and insured. Though, the IRS has strict rules for using a Checkbook IRA and storing IRA-owned assets. 

Some of these rules include:

  • A minimum net worth of $250,000.
  • Must have a corporate legal counsel.
  • Ownership must be shared among multiple individuals.
  • And much more

Keep in mind that this loophole is not recommended. There is a possibility that you will be penalized and even possibly disallowed from future investments. It’s not worth the risk, even if you do meet all these requirements. 

Remember that your specific situation and goals should always be discussed with your tax advisor. 

Get Your FREE Gold IRA Guide Here!