Learning how to roll your 401(k) into gold is a powerful way to diversify your retirement savings and to protect yourself against market volatility. When money based assets decline in value, the value of gold and other precious metals climbs. This historically inverse relationship is highly dependable and has been documented countless times. An investment in gold will protect the value of your retirement from any major drops in the market.
Gold can also significantly increase the value of your savings account. In 2001, an ounce of gold was valued at $271. Today an ounce of gold is worth just over $1,300. Gold has steadily risen in value for nearly 20 years, and is likely to continue rising.
Investment Options With a 401(k)
There are two primary ways to roll your 401(k) into a gold account. The easiest way is to convert your 401(k) into an IRA when you and your employer part ways, though if you are 59 ½ and still working, there may still be options for converting your 401(k) even while you continue at your place of employment. You may also be able to utilize options to incorporate a gold investment into your 401(k) without converting your account into an IRA.
How to Roll Your 401(k) into an IRA
Transitioning out of your place of employment is the perfect time to convert your 401(k) or even your 403(b) into a self-directed gold IRA. After your employment contract is complete, you can transition your retirement savings into an IRA without taxes or penalties, while still maintaining your tax deferred benefits. A well-established gold IRA brokerage will be able to assist you in completing any paperwork necessary to transfer over funds, and will oversee all aspects of account maintenance once your gold IRA account is established. This process can be completed in a matter of weeks.
However, if you have any loans taken out against your retirement account, you will need to repay them in full before you are able to roll a 401(k) into an IRA. If you miss this step, not only will the loan amount become taxable income, if you are under retirement age you will also pay a 10 percent penalty fee.
If you are still employed and over the age of 59 1/2, you may be able to use an in service rollover to transition your 401(k) savings into an IRA. Approximately 70 percent of company plans will have provisions for in service rollovers.
With a traditional employer matching savings model, you have the flexibility to roll your 401(k) into an IRA with a traditional or Roth based taxation method. or a Roth IRA. since traditional IRA capital is not taxed until the funds are withdrawn, this conversion can take place tax free. However, Roth IRAs are taxed as funds are deposited. If you choose to go this route, any taxes owed must be paid during conversion. Since you will already have paid taxes on a Roth 401(k), it can only be rolled over into a Roth IRA.
Incorporating Gold Into Your IRA
The legalities behind purchasing gold with your self-directed IRA can be complex. You must find IRS approved gold bullion retailers as well as an IRS approved depository which is held by an IRA trustee. Locating and coordinating the proper venders while navigating the ongoing paperwork that goes along with gold storage and maintenance is overwhelming for many individuals. This is why the majority of those who choose to roll their 401(k) into gold work with a gold IRA brokerage company. Gold IRA brokerages specialize in gold investments. The most established firms will have connections to the best gold wholesalers and storage facilities, which means that utilizing a gold IRA brokerage will not only simplify the entire process, but will more than likely reward you with a significant increase in the return of your investment.
Incorporating Gold Into Your 401(k)
If you cannot or do not wish to roll your 401(k) into an IRA, it may be possible to convert your 401(k) into a physical gold or silver 401(k). If there is already a precious metals option in your company’s plan the next steps will be fairly simple.
If there is no precious metals option, you may still be able to incorporate gold into your 401(k) with a brokerage option, also known as a self-directed brokerage account. This account style will allow you the freedom to invest your funds outside of the narrow selection mutual funds and annuity contracts which are most traditionally offered, including rolling over your 401(k) to gold. Approximately 29 percent of all 401(k) plans come with a brokerage option, though the range of possible investments and the proportion of your contributions you are able to invest is up to your employer.
If do not have a precious metals or a brokerage option, you may be able to request an inclusion through your Human Resources Department.
Using A Gold Brokerage Firm
Because of the incredible growth in the popularity of gold as an investment strategy, many less than reliable brokerages have been quickly thrown together to take advantage of this upswing. These firms should be avoided at all costs.
Finding the Right Gold IRA Brokerage
When you choose to roll your 401(k) to gold, it is critical that you choose a gold IRA custodian who specializes specifically in gold and precious metals investment with a solid history in working with gold investments. This will help ensure the safety and continued growth of your investment. Research any potential gold IRA company thoroughly. Begin by looking for online reviews and any complaints and low scores with the Better Business Bureau or other high quality sources of verified independent reviews such as the Business Consumer Alliance.
While a poorly run brokerage should be avoided, a well-established, well-reviewed gold brokerage firm can help you tap into the incredible financial opportunities presented by the gold investment industry. Partnering with a firm such as Regal Assets will allow you to ensure that you are able to comfortably retire with your 401(k) and IRA based retirement funds.