How to Invest Your 401k in Gold

Last Updated on 2nd June 2022 by Jeffrey Camerda

401k Gold IRA Rollover

Investing your 401k in Gold is easy. First, you need to set up a new self-directed Gold IRA account. You will need to employ a trusted gold IRA custodian manage the account. They will help you set up the account, rollover your existing 401k funds, and purchase gold. Investing a 401k retirement fund in gold makes a lot of sense in these times of economic uncertainty.

us dollarsBenefits of Gold IRA Investment

Given the uncertain economic times we live in many people are wary about investing their retirement funds entirely in the traditional banking system. Conventional assets such as bonds, real estate, currency, and shares are particularly vulnerable to economic shocks and can see their value devastated overnight. Investing in gold and other precious metals could well be the best bet for insuring against troubled economic times. Gold has historically held its value as the market price of traditional assets have collapsed. It is the trusted investment option for hedging your bets.

Gold is an excellent long-term investment option for people who want to protect the value of their retirement portfolio for decades ahead. It will always hold intrinsic value, regardless of the peaks and troughs of the global economy, and can be viewed as a low-risk secure asset. Financial experts advise that at least 10% of any portfolio should be invested in gold. Those who are more concerned about the next financial crisis are investing at levels of 60-100%. Although the value of gold tends to rise during an economic crisis it should be seen as a non-speculative long term option. The primary goal of investing in gold should be the safeguarding of wealth.

investing in physical goldHow to Roll Over a 401k to a Gold IRA

Rolling over a 401k retirement fund to a gold IRA is easy. First, you need to set up a new Self Directed Gold IRA account. Then it is a matter of rolling over the funds from your existing IRA into your new one. The purpose of the ‘rollover’ is to maintain the tax-deferred status of your assets as they are transferred from one account to another. 401K, 403b, 457b and Thrift Savings Plans, where eligible, can be used to roll over funds into a new IRA account.

Once the funds are in place you can begin purchasing gold. You will be legally obliged to use an approved custodian to manage the account for you and ensure all the legal and technical requirements are duly taken care of. There are many custodians out there so it’s a good idea to do some research and pick one that works best for you. Later in this post, we will take a look at some of the best options out there and examine the potential benefits of each.

adding gold to an ira

Once your account is set up and your 401k rollover is complete, you are free to begin purchasing gold. This can be done in a number of ways and will depend on the custodian company you are using to manage your account. In some cases, you may have the ability to contact a gold broker directly and negotiate a suitable deal. Other custodians will do this part for you. Acting on your behalf they can go ahead and purchase gold once you’ve instructed them exactly what you want to do. In the latter case, you will need to complete a direction of investment’ form to document your request, and your custodian will take it from there. Whichever method you choose the broker will complete the transaction. The agreed quantity of funds will leave your account and the broker will physically ship the gold to a secure depository store under the management of your custodian. 

investing on smart phoneApproved Gold & Silver IRA Rollover Custodians

When it comes to gold / precious metal IRA custodians there are a lot of players out there in the market today. Legally you will be obliged to hire one so it’s important you get a good one and one that works best for your IRA retirement fund. I’ve done some research and read through the reviews and among the best companies are Regal Assets, Goldco, Noble Gold, Lear Capital, American Hartford Gold Group, Orion Metal Exchange, Patriot Gold Group and Birch Gold Group. It’s just a matter of assessing which one can do the best job for you. Below I will take a look at each one and discuss some of the points to consider when weighing up your options. There’s a lot of competition out there. We need some way of assessing them and narrowing down the options. Among the points to consider when choosing a custodian are:

  • Precious Metal Experience: you want to go with a company that has a wealth of experience in the gold and precious metal IRA industry. There are a lot of companies out there that offer gold as an investment option as part of a much wider business. However, it might be best to go with a company that specializes in managing gold and precious metal accounts.
  • Services Provided: when it comes to services provided by the company – what’s on the table. Will they assist with account set up and rolling over of funds. Will they provide financial advice when it comes to managing your account and investments. Will they liaise with gold brokers and process the transactions from beginning to end. 
  • Feedback – Ratings & Reviews: it’s worth spending some time looking at what others are saying about them online. Check their industry ratings and look for feedback from existing customers. This will give you a good feel for how the company has been performing.
  • Fee Structure: you may need to contact the companies directly to get a clear understanding of their fee structure. Transparency is not great when it comes to custodian fees and published data is limited. Some companies charge a fixed fee to manage accounts while others use a percentage based fee. 
  • Security: you need to know that your gold will be stored in a secure location and will still be there when you need it in your retirement years.

mobile phone on a deskBest Gold IRA Companies

Having done the research on the Gold IRA custodians we’ve narrowed it down to eight companies. Here are some of the key features of each:

1: Regal Assets

  • Excellent Ratings: Business Consumer Alliance AAA, Better Business Bureau A+, TrustLink 5-star rating based on over one thousand reviews.
  • Segregated Storage: highly competitive fees for secure segregated asset storage.
  • Fast Gold Shipping: gold can be delivered to a customer within 7 days when they wish to cash in on their investment.
  • Precious Metals: Gold, Silver, Platinum, and Palladium.
  • Minimum Investment: $5,000
  • Based: Beverly Hills, CA
  • Fees: waived 1st year, otherwise a flat fee is applied, (source: consumeraffairs).

2: Goldco

  • Good Ratings: Better Business Bureau A+, Consumer Affairs 5-star rating based on over 200 reviews.
  • Precious Metals: Gold and Silver
  • Minimum Investment: $25,000, (source: consumeraffairs).
  • Based: Woodland Hills, CA 

3: Noble Gold

  • Precious Metals: Gold, Silver, Platinum, and Palladium.
  • Minimum Investment: $2,000
  • Based: Pasadena CA 
  • Secure Storage: Segregated storage available. Assets held at the International Depository Services, (source: consumeraffairs).

4: Lear Capital

  • Good Feedback: Reputation for good customer service.
  • Precious Metal IRAs: Gold and Silver. 
  • Minimum investment: $10,000
  • Based: Los Angeles, CA 
  • Secure Storage: Assets stored at Delaware Depository, (source: consumeraffairs).

5: American Hartford Gold Group

  • Precious Metals: Gold, Silver, and Platinum. 
  • Minimum Investment: No minimum for a gold IRA
  • Based: Los Angeles, CA 
  • Storage: Brinks and Delaware Depository, (source: consumeraffairs).

6: Orion Metal Exchange

  • Precious Metals: Gold and Silver. 
  • Minimum Investment: $2,000
  • Based: Los Angeles, CA 
  • Secure Storage: International Depository Services, (source: consumeraffairs).

7: Patriot Gold Group

  • Precious Metals: Gold and Silver. 
  • Based: Los Angeles, CA 
  • Fast Account Setup: 24-hour account turnaround
  • Minimum Investment: $15,000, (source: consumeraffairs).

8: Birch Gold Group

  • Good Rating: Better Business Bureau A+
  • Based: Burbank, CA 
  • Precious Metals: Gold, Silver, Platinum, and Palladium, (source: consumeraffairs).

For more information on choosing the right custodian for your IRA, read our guide: Best Gold IRA Companies 2020.

green shoot in a glass of coinsDirect & Indirect IRA Rollover – Tax Implications:

There are two ways to perform your 401k to gold IRA rollover. You can choose between a direct or an indirect rollover of your 401k. A direct rollover is the most straight forward and the safest when it comes to avoiding tax penalties. A direct rollover means you never lay your hands on your funds. They move directly from your existing 401k, (or 403b, 457b or TSP ), into your new self directed gold IRA. 

The indirect rollover involves you cashing in your existing account and receiving a check in the post. It is then up to you to deposit these funds into your new self directed gold IRA. The catch here is that you have a time limit to complete the transaction – 60 days. If for any reason you do not get the funds lodged into the new IRA within this time frame you will be subject to some pretty strict tax penalties. Once the 60 day period has elapsed you are no longer entitled to any tax exemptions and the IRS will class the withdrawal as taxable. Additionally, a 10% early withdrawal penalty will be applied if you are aged 59.5 years or younger.

For more information on rolling over to a precious metal self-directed IRA read – Regal Assets Gold IRA Rollover.

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Dr. Jeffery Camerda, PhD, is a financial planner who specializes in wealth management and retirement planning.

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