Protect Against Inflation

Rollover 401k to Gold 

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Why would you choose to invest in gold? Because you don’t have to be constrained by the limitations imposed by your financial institution. You can take a more centralized, active role in your investments by opting for a self-directed IRA. You don’t have to move all of your existing assets into a self-directed IRA. It’s possible to move a portion into precious metals while leaving some funds in your traditional IRA.

Gold investing is a popular option because it can offer a lucrative ROI. Gold has been a store of value accepted by the masses for at least 5,000 years. Historically, gold has held its worth. Most financial experts agree that gold will never completely lose its value. 

There are gold IRAs that allow you to purchase precious metals to build your wealth for retirement. A gold IRA allows you more options to invest than a traditional IRA. A gold IRA is a long-term account that allows you to access precious metals. The custodian stores the gold for the owner of the account. To obtain a gold IRA, you’ll need to choose the custodian of your precious metals.

Protection against inflation

Precious metals protect against inflation. The cost of gold increases as the value of the dollar decreases. This makes it a great hedge against inflation, which will inevitably occur. Investors look to gold to maintain value during times of political disruption. 

The value of precious metals is not confined within a nation or language. Platinum also maintains its value because it is more limited in availability than gold and is worth more per troy ounce. Precious metals are integral to numerous industries. Platinum is used for jewelry, vehicle catalysts, petroleum, and technology among other uses. 

Unlike paper money, you can’t exactly print out more precious metals. Therefore, the supply is limited making the demand likely to increase. Banks and financial institutions also invest in gold, purchasing tons. With precious metals, there is virtually no risk that you will be unable to sell your supply if and when the time comes.

Precious metals are highly liquid assets that can be converted into currency quite easily. Investors need a haven to protect their wealth against unforeseen catastrophes. A gold or silver IRA provides financial security during times of economic turmoil. 

Bear in mind that storing precious metals does not produce dividends or interest. However, the purpose of holding metals is to store wealth rather than to payout interest.

Why invest in precious metals?

One notorious fact about gold and silver investing is that it offers stable storage of wealth because of its ability to retain long-term value. Many investors choose gold assets because gold prices tend to increase as the value of paper money decreases. The value of gold tends to move in the opposite direction of stocks and bonds.

Investors choose to have a gold IRA as a part of their portfolio because it’s an investment option that doesn’t match the volatile nature of fiat money. Gold has endured throughout the years because it’s one of the oldest precious metals in use. It has a variety of useful applications including jewelry and technology. Precious metals are an excellent way to diversify if any one of your assets is not performing up to par.

Portfolio Diversification

Precious metals are tangible assets that cannot be destroyed by time or physical elements like water and fire. Gold and silver benefit from physical care, but they don't require much maintenance. You don’t have to worry about losing your wealth through robbery or natural disasters. Today, a great deal of wealth is digital. 

Precious metals cannot be digitally hacked or affected in this way. It doesn’t rely on cybersecurity, the internet, or the blockchain to verify its value. An important benefit of an IRA rollover is that you can avoid the penalty of early withdrawal. Asset diversity is paramount and most investors don’t put all of their eggs in one basket. 

It’s not likely that an investor will place all of their funds in a single asset class. Fortunately, you can use the IRA to access a wider variety of investments. This class of asset is reliable regardless of the current condition of fiat money. Precious metals are not centrally controlled by one entity and can be exchanged internationally. Plus, you can pass on your precious metals to your loved ones.

Benefits of retirement account rollover into precious metals

To start investing in physical precious metals using an existing account, choose between a direct rollover and an indirect rollover.

Direct rollover

Gold IRAs were made available by the Taxpayer Relief Act of 1997. You can take the funds that already exist in your 401k and roll them over into a precious metals IRA. For a direct rollover, start the transfer process by contacting the company that manages your 401k. The simplest way to avoid a penalty is the direct rollover option. Your retirement account provider will send your funds in check form to your custodian to open the account.

Indirect rollover

An indirect rollover involves withdrawing the funds so that they can be deposited into another account. Once you’ve chosen direct or indirect rollover, a check is issued to the IRA custodian or you. The indirect rollover needs to be completed within 60 days. Per the IRS, if you roll over your payment it’s not taxable. 

An exception may be made if you fail to complete an indirect rollover within 60 days. You are entitled to an automatic waiver of the 60-day rollover by the IRS. The IRS waiver request fee is $10,000. There is a viable way to avoid this fee. 

Alternatively, you can self-certify to make a late rollover outside the 60-day window. You can self-certify by completing the Model Letter in Revenue Procedure 2016-47. Submit the Model Letter to the financial institution handling your rollover for approval. 

Refer to the IRS website for the full list of requirements entitling you to a waiver. When the IRS audits your income tax, at this time it will be determined that you qualified for the waiver.

You can only make one rollover every 12 months. For a SIMPLE IRA, you may be only allowed to transfer money after two years. If you have a SIMPLE IRA, review your specific plan to determine the required waiting period for a rollover.

To execute rollover properly without penalty:

  • Ensure your new 401k account waiting period is over
  • Convert the 401k into a gold IRA with a direct IRA rollover (not indirect)
  • Do not take any withdrawals or distributions until 59 ½ years of age

Importance of selecting a custodian

What is a custodian? It’s a term that refers to the financial institution that handles paperwork regarding your gold or silver whether coins or bullion. The depository is responsible for the physical storage of your gold. Many custodians work with Delaware Depository which ensures your assets up to $1 billion.

To keep a tax-deferred status, your retirement plan must be managed by a custodian. Keeping gold in your home doesn't include safety benefits. Once you are age-eligible, you can take physical possession of the assets in the account. The metals are shipped from the custodian to you.

Why a custodian is necessary

While you may want to have your gold close to you, it’s wise to select a custodian for this purpose. Having a custodian or trustee eliminates the risk and security issues of storing gold at home. Storing gold or silver in a safe deposit box subjects your assets to the rules of the banking system. Meaning, you won’t be able to access your metals on the weekend, holidays, or during banking emergencies.

Purchasing gold is a confidential transaction. Reporting to the IRS is required when both the transaction is greater than $10,000 and the purchase is made with a bank check, certified check, money order, or cash. You will likely be charged a one-time fee to set up your account. Note, that the custodian will allow you to see the gold.

Custodians have state or federal approval to offer asset custody services. It’s up to the individual investor to research and select a custodian. The broker is needed to purchase the gold and the custodian holds your coins or bullion. So how do you select your custodian? 

When you invest in gold via a custodian, you’re getting the best precious metals the world has to offer. You can start by looking for a company with a positive track record. Review the company’s reputation from the Business Consumer Alliance. Ask for license verification, insurance, and registration to ensure the protection of your investment. 

IRA gold must be .995 minimum fineness and IRA silver must be .999. IRA palladium and platinum required pureness is .9995. Therefore, the Gold American Eagle coin is not eligible for placement in your account because it is 91.67% gold. IRA approved gold coins include but are not limited to:

  • Australian Nugget / Kangaroo Coins
  • Gold Polar Bear and Cub coins
  • Gold Gyrfalcon Coins
  • American Eagle Coins
  • American Buffalo Uncirculated Coins
  • Canadian Maple Leaf Coins
  • Austrian Philharmonic Coins
  • Pure Gold Twin Maples Coins
  • Valcambi CombiBars
  • Gold bars and rounds from approved mints & refiners

In-service withdrawal and penalty

If you take a distribution of your precious metals, you’ll be subject to paying tax. If your 401k does not offer precious metals investing, you can opt-out of the 401k and into a self-directed IRA. A self-directed or precious metals IRA will allow you to purchase gold and silver investments. 

If at your current position you have a 401k, you can request an in-service withdrawal to access the funds. An in-service withdrawal is defined as a distribution from a retirement plan sponsored by your employer. Roughly 70% of United States retirement plans allow in-service withdrawals. 

Check your specific plan to see if distributions are allowed without hardship. You can undertake an in-service withdrawal simply because you want to pursue a different investment. Withdrawal occurs under the following circumstances.

There is no penalty for an employee who: 

  • Proves an extreme financial need
  • Declares hardship
  • Reaches 59 ½ years of age

A traditional IRA doesn’t allow you to directly invest in physical precious metals, this is why the rollover is necessary. If you want more tangible assets than a gold ETF, you’ll need to open a self-directed IRA. A self-directed IRA is also referred to as an SDIRA.

By selecting one of the companies below, you will have a specialist who can review the pros and cons of investing in this asset class. Browse through the different custodial options to find the company that’s best for your plans.

Precious metals IRA limitations

It’s not possible to add silver you already possess into your IRA. The gold or silver is added to your retirement fund after being purchased new. The exception to this is if you already own gold or silver in a retirement account, you can transfer it to a new account. The precious metals will meet the purity standard of 99.9%. 

The precious metals company you choose will help you choose from bullion and coins approved for your account. There are rules to purchasing and storing precious metals. Your specialist can help you understand which accounts are rollover eligible, relocation, and storage of your metals.

Accounts eligible for precious metals rollover include but may not be limited to:

  • Annuities
  • IRA
  • Roth IRA
  • 401k
  • TSP
  • SEP
  • 403b
  • 457

A self-directed IRA is much more hands-on than a traditional IRA. With a self-directed account, you are the investment manager. The terms gold IRA and silver IRA are nearly interchangeable. The difference depends largely upon whether there is more gold, silver, palladium, or platinum held in the account.

There is a limit to how much you can contribute to your precious metals IRA. The threshold is $6,500 if you’re over 50 and $5,500 if you’re under the age of 50. Your account is funded with pre-tax funds and you pay tax when you decide to cash out the gains from the account. Early withdrawal before 60 years old means you’ll pay a 10% penalty. 

At the age of 72, you will be required to receive RMDs or required minimum distributions. Receiving RMDs from your gold IRA means selling some of your gold. You can choose to take the RMD from your traditional IRA rather than the gold IRA.

Top Companies for 401k to Gold IRA Rollover


Goldco Precious Metals

The company offers a variety of IRA-approved coins as well as gold and silver. You can choose between a self-directed gold IRA and a self-directed silver IRA. Goldco provides some guidance regarding investing in gold and silver in a retirement account. 

They offer a precious metals guide to help acclimate you to precious metals investing. Gold is not your only option for a precious metals account. Within these accounts, you can store palladium, platinum, gold, and silver. You can choose to store your precious metals in the form of coins or bars. 

The account is usually called a gold IRA because gold is the most commonly purchased metal. Investing in a gold IRA is one of the simpler ways of investing in gold. The process involves selling the existing assets and rolling the funds over into a gold IRA.

The main aim of the broker Goldco is to help you select a custodian for your gold IRA:

Pros and Cons

Pros
  • Goldco breaks down the process of precious metals investing via tutorials
  • The company provides video illustrations to help investors understand a gold-based IRA
  • The custodians that Goldco works with have years of experience
  • Follow-up after your gold IRA is successfully established
  • You can convert more than one retirement account into a precious metals IRA
Cons
  • The minimum investment amount is $25,000
  • Customer service does not disclose account set up fee
Augusta Precious Metals IRA

Established in 2012. Augusta Precious Metals has a host of accolades including an A+ from the BBB. Acknowledgments include the TrustLink of Honor for the 5th consecutive year, and a AAA report from the Business Consumer Alliance, among others. Education from Augusta Precious Metals is disseminated from a member of Harvard Business School, Devlyn Steele.

The company has five specific departments to help smooth the process of gold and silver investing; customer success, economic education, IRA processing, order desk, and purchase confirmation. You are assigned an agent, so you get the benefit of familiarity with your account. 

Your agent acts as a point of contact between you and the other departments. With this company, you’ll be kept up to date with economic news regarding the gold and silver markets. These educational sessions are held via chat and by phone. The IRA processing department at Augusta Precious Metals communicates with your custodian on your behalf.

Delaware Depository is the preferred depository of Augusta Precious Metals. The application fee is $25 online, $60 for PDF or paper, a $250 attorney fee, a $125 custodian fee, and a $35 transaction fee.

Pros and Cons

Pros
  • An ideal choice for an investor who is looking to gain further market knowledge
  • The importance of education is emphasized since a custodian isn’t responsible for this
  • Finalize your gold order easily by phone
  • Voted the most trusted gold IRA company in the US by the IRA Gold Advisor
  • Complete transparency on asking and bidding differential
  • No commission added to prices listed
Cons
  • Requires a minimum of $100,000 to set up an IRA
  • Most fees are disclosed upfront, not all
Birch Gold IRA

The minimum amount to establish your precious metals account at Birch Gold is $10,000. Birch Gold is partnered with the Delaware Depository for storage and Brinks Global Services for tracking and monitoring. The company was established in 2003 and has served at least 10,000 customers.

Birch Gold has annual and one-time fees to set up your account-a $50 setup fee, $30 wire transfer fee, $100 annual insurance/storage fee, and an $80 annual management fee. The first year’s fees are waived on accounts established at the $50,000 level.

Pros and Cons

Pros
  • Annual fees are limited to $180 no matter your account size
  • Account opening minimum is $10,000 (as opposed to $25,000-$100,000)
  • Has an IRA department in-house
  • Many positive reviews regarding support and customer service
Cons
  • It can take two weeks to a month to rollover your funds
  • No live chat via the website