How To Move A 401K To A Gold IRA

How To Move A 401K To A Gold IRA

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If you have a 401(k) account with your employer, you may be thinking about converting this account into a gold IRA. This type of IRA offers numerous advantages that aren't available with other retirement accounts, the primary of which is that you'll be investing in physical gold that more effectively retains its value.

Over the past decade, these IRAs have become increasingly popular. The physical assets from a gold IRA can add a considerable amount of diversification to a portfolio that's mainly focused on stocks, bonds, and other paper assets.

If you want to add gold to your investment portfolio, the simplest method for doing so is to roll over assets from one of your retirement accounts to a gold IRA. While there are some IRS guidelines that you'll need to take into account, it's possible to transfer funds from a 401(k) account to a gold IRA without taxes being applied.

Once you've made the decision to move your 401(k) to a gold IRA, you should consider which company you'll partner with to assist you in opening the account. All three of the gold IRA firms discussed below make investing in gold a breeze. This article offers a comprehensive guide on how to move your 401(k) to a gold IRA.

See Our Top Recommended Companies For Making The Move From 401k To Gold IRA

What Is a Gold IRA?

How To Move A 401K To A Gold IRA

Before transferring your money to a gold IRA, you should have a better idea of what this account is. This is the term regularly used to describe an IRA that invests in physical precious metals. While gold is the main investment for this account, you can also use it to invest in other precious metals like palladium, platinum, or silver.

A gold IRA is a kind of self-directed IRA, which means that you'll need to select and manage your investments. These IRAs provide an ample amount of freedom with investments. Self-directed IRA accounts can invest in assets like:

  • Gold and similar precious metals
  • Promissory notes
  • Real estate
  • Venture capital investments
  • Private equity investments
  • Raw land
  • Joint ventures

In comparison, 401(k) accounts are much more limited and tend to focus primarily on a single type of investment.

Why You Should Invest in Gold

How To Move A 401K To A Gold IRA

An increasing number of investors are looking to silver and gold as relatively safe investments while inflation is increasing and the economy is ever-changing. Gold has a history of being a stable investment that doesn't rapidly drop in value. In fact, the value of gold oftentimes increases in pace with inflation.

Over the past few decades, numerous paper currencies have become worthless. On the other hand, gold usually increases in value as the economy worsens, which is why many investors use it as a hedge against inflation. Even though gold does drop in value from time to time, there's never been a moment when it holds no value.

If you want to make sure that your retirement assets are protected, a gold IRA may be the ideal investment vehicle for your situation. In the event that you hold riskier investments that tend to move with the flow of the economy, it's highly recommended that you pair these investments with something that could retain its value when a market downturn occurs.

Benefits of Owning Physical Gold

How To Move A 401K To A Gold IRA

There are several methods you can use to invest in gold and any other precious metal, which include collectible coins, mutual funds, ETFs, and mining stocks. There are many benefits associated with owning physical gold, the primary of which is that the asset can't be stolen online, which gives you an ample amount of financial security.

It's possible to hold these investments anonymously. While a government can easily seize funds that have been placed in your bank account, this isn't the case with physical gold depending on where it's stored. It's also much more difficult for creditors to gain access to physical gold assets in comparison to paper or digital assets.

Another benefit of investing in physical gold is that there's no risk of a counterparty issue. When you invest in company stocks, the performance of these investments partially depends on third parties, which can include the company's board of directors. Gold has intrinsic value that stocks do not, which means that your investment will never correlate with a fund manager or other third party.

The physical gold you hold in an IRA still provides you with the same tax benefits that come with every type of IRA account. When you make a contribution to your IRA, your taxable income is reduced and your profits are tax-deferred. The same is true with the gold you invest in.

Why You Should Use a Roth IRA Account

How To Move A 401K To A Gold IRA

A gold IRA can be structured just like any type of IRA, which includes traditional IRAs, spousal, IRAs, or Roth IRAs. The type of structure you choose depends on your financial situation and what you believe your financials will be like once you retire.

If you expect that you'll be in a much lower tax bracket once you retire, you might want to consider a traditional IRA structure. If, on the other hand, you believe that your tax bracket will be higher than what it currently is, a Roth IRA structure might be preferable. The main benefit of a Roth IRA is that your capital gains won't be taxed.

Keep in mind that your contributions into a Roth IRA account aren't tax-deductible. Before selecting an IRA structure that's right for you, weigh the tax-free benefits of a Roth IRA against the downsides. While Roth IRA withdrawals are tax-free, you must wait a period of five years or more before you make withdrawals.

How to Perform a 401(k) to Gold IRA Rollover

How To Move A 401K To A Gold IRA

Once your gold IRA has been opened, you're able to get in touch with the company that manages your 401(k) to start the rollover process. The primary decision you'll need to make is whether your account will be a direct rollover or an indirect rollover.

Direct Rollover

The simplest method you can use is to roll your funds directly from your 401(k) account to a gold IRA account. Once you've created your gold IRA, all that's required of you is to get in touch with your 401(k) administrator. Tell them to move some or all of your 401(k) funds to your new gold IRA account.

If you opt for a direct rollover, your assets should be transferred to the custodian trustee for your gold IRA. This trustee will be given to you when you initially create your account and should provide you with all of the details required to complete the funds transfer.

Once the direct rollover account has been formed, you'll be sent IRS Form 1099-R, which highlights the 401(k) transferal you've made. Make note of the "H" code that's been placed in box seven of this form.

This code tells the IRS that your transfer isn't taxable. Since you won't be taxed for this withdrawal, you don't need to worry about the 20% tax withholding stipulation that usually occurs with withdrawals.

Indirect Rollover

An indirect rollover involves a withdrawal from your 401(k) account and a separate deposit into a gold IRA. Your 401(k) trustee will send you a check once you initiate a withdrawal. You'll then have a period of 60 days to deposit these funds into your new IRA account.

In the event that you keep this money beyond the 60-day timeline, you'll likely be required to pay taxes and other penalties, which will eat into the savings you've accumulated. Another issue with an indirect rollover is that 20% of the amount you request from your 401(k) plan will automatically be sent to the IRS to take potential tax liabilities into account.

You'll notice the 80% that you received and the 20% that's been withheld on IRS Form 1099-R, which you should receive before the end of the current tax year. If you want to avoid tax liability, 100% of your withdrawal amount must be deposited into the Gold IRA, which could be an issue when the IRS already has 20% of your funds.

To account for this problem, you'll need to pay the remaining 20% of the total deposit out of your pocket. If you make this payment before the 60 days are over, the 20% that the IRS took will be given back to you after your taxes are filed.

Even though you eventually get this money back, being tasked with covering such a large portion of the deposit can be a temporary hit to your financial situation. Many investors choose to use the direct rollover method when they create a gold IRA to avoid the 80/20 rule.

Are You Eligible?

The majority of 401(k) accounts accommodate IRA rollovers. Keep in mind, however, that rollover eligibility and requirements can differ from plan to plan. Speak with your 401(k) plan's administrator to determine if your plan is eligible.

Transferring assets from a 401(k) to a gold IRA is likely possible for you if you're at least 59.5 years old. The age requirement for people who have a 401(k) but are no longer employed with the employer that's tied to the plan is 55 or older. If you don't meet the age requirements but want to perform a rollover, you're able to do so but can incur a tax liability.

The majority of 401(k) plans come with an exception for a hardship withdrawal, which means that you could transfer funds even when you don't meet the age requirements. However, you must have an immediate financial need for this money.

Reputable Companies to Obtain Assistance From

While there are dozens of gold IRA firms that advertise their services, only a small selection of these companies are worth your time and money, the primary of which are reviewed below.

#1. Goldco


Goldco began in 2006 and has since become widely known for the excellent customer service that each client benefits from. Their account representatives make sure that all new and existing customers are given the information they require to make the best decision about their next gold investment.

Along with comprehensive educational resources, you can also take advantage of competitive pricing as well as a promotion of 10% in silver coins for any new accounts. Keep in mind that a minimum investment of $25,000 is required when you create a gold IRA with Goldco.

When you first make an account with Goldco, you'll be paired with a specialist who will assist you in every step of the process. You should also gain access to videos and eBooks about an array of topics that can help you become a more knowledgeable investor. If you want to know about fees, custodians, storage, and account minimums, you should get in touch with Goldco.

#2. Augusta Precious Metals

Augusta Precious Metals

Augusta Precious Metals has been around for more than a decade and focuses on helping clients obtain diversity with their investments. Their website offers a considerable amount of education content and videos about gold investments. You may qualify for fee waivers for as much as 10 years.

The main downside of creating a gold IRA with Augusta Precious Metals is that a minimum investment of $50,000 is required. They support gold and silver investments and have garnered a BBB grade of A+. You'll discover that they partner with Delaware Depository for the storage of customer assets.

#3. American Hartford Gold

American Hartford Gold

American Hartford Gold is based in Los Angeles, CA and has been in business since 2016. If you're looking forward to actively managing your gold IRA account, American Hartford Gold offers an area on their website that helps customers keep track of price charts and market news for gold, platinum, and silver.

Once you've opened an account, you'll be tasked with paying an annual fee that amounts to $180. Keep in mind that American Hartford Gold has a sterling reputation among customers and is able to deliver metals directly to customer homes.

We understand how stressful it can be to make decisions about the money you've built up for your eventual retirement. The stability of investments into gold and other investments means that you don't need to worry as much about your retirement accounts experiencing a sharp drop in value. If you're ready to move your 401(k) assets over to a gold IRA, the three companies mentioned above will guide you through the account-making process.

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