Gold 401k Rollover – The Definitive Guide

Posted By Ziga Breznik, Last updated: April 30, 2020

planning a rollover

What is a 401k gold IRA rollover?

A gold IRA (Individual Retirement Account) allows investors to buy and hold physical precious metals in a retirement portfolio. The Taxpayer Relief Act of 1997 made it possible for investors to hold certain eligible precious metals. A self-directed IRA or alternative-assets IRA can only hold approved precious metals, limited to gold, silver, platinum and palladium. Certain purity standards have to be met (i.e. the American Gold Eagle Coin is an approved asset). Usually both traditional and Roth IRAs can only hold stocks, cash and bonds.

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The difference between a transfer and a rollover

The IRS has a very clear distinction between a transfer and a rollover despite many people thinking that any movement of funds is a rollover. With a rollover, the funds first move to you and you then deposit into the other account. When you do a transfer the funds move from one custodian to the other without you seeing the money.

Gold IRA Rollover Rules

With a rollover you have 60 days from the date that you receive the funds to transfer the money to a custodian or a gold company. The funds become a taxable withdrawal if you don’t complete the transfer in the 60 day period and if you are aged under 59 1/2 a 10% early withdrawal penalty is applicable.

Gold IRA Transfer Rules

With a IRA transfer between custodian to custodian, the 60 day rule does not apply. It can usually be done by wire transfer between IRA custodians. Another option is to issue a check to the custodian and mailing it. The process is simple and one of the best ways to invest in physical gold, since everything happens in the background between custodians.

Check your 401k with your employer

401k retirement plans have different rules for transfers and rollovers. Fact is, some employers don’t allow precious metals investments in a 401k. There are workarounds these restrictions, make sure to check with your employer before starting a gold IRA rollover.

Why should you consider a gold or silver rollover?

In the current volatile economic landscape, more and more people are searching for different investment instruments, like a gold rollover to protect their retirement savings. The Center for Retirement Research at Boston College reported in 2017 that 52 percent of working-age households in the USA will be unable to maintain their standard of living once they retire, as measured by The National Retirement Risk Index (Figure 1). Comparison with previous years shows that the situation is gradually becoming worse over time and it is leaving Americans concerned. Gallup poll conducted in 2018 revealed that nearly six out of ten adults are moderately or very worried about not having enough money for retirement.

national retirement risk index 1983-2013
Figure 1

It is evident that retirees face numerous financial risks, including investment losses, inflation, interest rates, potential large expenses for medical care, premature retirement and living longer than expected. The situation is not to be taken lightly as less and less households seem to be sufficiently prepared for retirement and it is hard to imagine anything as grim as struggling with finances in the autumn years of your life. You should be able to retire with dignity and independence and not seeing your plans and dreams shattered, your home sold to keep up with the bills because of market volatility, crashes or other things beyond your control.

With the pension coverage shifting from defined benefit plans to 401 k plans and IRAs, the responsibility falls on the individual and it has become increasingly important to inform yourself, plan ahead and take positive steps to avoid financial uncertainty in the later years. Creating a retirement account, raising contribution rates, investment education and diversification with different investment options should go a long way towards securing your stability.

Precious metals like gold and silver have long been a safe haven investment in times of economical and political uncertainty and if you want to protect your savings against financial crises and volatile situations, creating gold IRAs is an excellent choice. Precious metals have held their value throughout the ages and have been a tried and tested method to preserve wealth for much longer than fiat currencies and other forms of monetary assets. They are also an excellent hedge against inflation since their price rises alongside the increased cost of living.

Adding gold investments to your IRA diversifies your overall portfolio, reduces the portfolio volatility and risks and helps to protect against downturns in the stock market. Not only is it a safe haven against crashes in any particular market, it is  an insurance against broader systemic risks and geopolitical uncertainty. When world tension rises, people turn away from paper money and back to the safety of gold and other precious metals. Finally, they present a tremendous opportunity to increase the value of your assets. The growing demand, due to increased use in electronic devices, and dwindling supplies inevitably lead to rising prices.

How to rollover your 401k to gold IRA?

The process of opening these type of retirement accounts is simple. First of, you will need to find a reputable company to handle your 401 k rollover. You cannot physically hold any gold, a custodian will hold the gold and silver you purchase through your IRA. Make sure you do you research and find a company with a strong record of their business practices, positive customer reviews and ratings. We listed the top 10 companies here.

  • Make sure the company you choose is certified and trustworthy. Stay away from companies trying to sell you numismatic gold coins (higher margins and lower purity levels) Check out our gold IRA rules and regulations article here.
  • You are only allowed 1 (one) tax-free rollover each year. The funds must be transferred within 60 days of withdrawal from your current IRA custodian to avoid penalties. You will have to wait 12 months to change a custodian or face the tax penalties.

The IRS lists three ways to do a rollover:

  • Direct: A check is directly issued by your account administrator to the IRA or retirement plan. This assures no taxes will be paid.
  • 60-Day: A check is issued directly to you. No taxes are paid if you invest it within 60 days to another IRA or retirement plan.
  • Truestee to Trustee: There are no taxes witheld as long as the trustee of the self-directed IRA rolls over to the trustee of the new IRA.

IRS Rules and Restrictions

There are strict rules the IRS laid out about the types of physical gold bullion bars and bullion coins you can hold in gold IRAs. The purity level needs to be 99.9% or better.

These include (but not limited to):

  • Austrian Philharmonic
  • American gold & silver eagle
  • American gold & silver buffalo
  • Canadian Gold Maple Leaf
  • Certain Gold Bars such as Credit Suisse

How rollover my 401k to gold without tax penalties?

Investing in gold IRA is similar to other individual retirement account vehicles. The key difference lying in the actual physical metals held by the account rather than paper currency. You need to transfer your current 401k or IRA via an Internal Revenue Service approved rollover procedure. It is tax-free. Your metals will be stored in a secure location until you choose to act upon it by either selling it for cash or having it shipped to you.

Your funds will be in custody of the company you choose and it will offer you different asset plans to choose from. All you need to do is fill out the required paperwork to open your personal self-directed IRA with your custodian of choice.

Rolling over your existing account can be a daunting task, but when done correctly, it is cost and tax effective. If you decide to do business with GoldCo (rated best of the best in our analysis), here is the process:

  1. First, visit their website here – Opening a Gold IRA acount or give them a call  (877) 385-0495
  2. Fill out the form
  3. Let the experts help you along the way
  4. After receiving your signed paperwork your account will be opened in as little as 24 business hours

It’s important to do your due diligence and research the top rated companies, before making your final decision – you can read more in our review of the best companies and learn more.

After you’ve reviewed the companies, it’s important to ensure that they are reliable when protecting your assets. Our team picked GoldCo because of their customer service, storage fees, reliability, transparency, flawless run-rate for years and their ability to protect assets.

GoldCo pride themselves on delivering on their promises, making sure their customers are satisfied with their end-product and operating a first-class business. Right now, they also have a special promotion where you can get 10% back in free silver.

Is a gold IRA rollover a good investment?

If you are looking for additional justification to buy gold and silver as part of your retirement account, look no further than the stock market. When considering the security that a  provide, consider the already seen trend of the New York Stock Exchange. In October 2007, the Dow Jones Industrial Average, reached its peak and closed at 14,164. Quickly after, the Great Recession of 2008-2009 followed causing it to drop to 11,000 in April 2008. The Dow Jones continued plummeting finally reaching a low of 7,552 in November 2008.

This was obviously horrifyingly  painful for many investors whose retirement funds depended on those stocks. Shareholders started rushing to exit the market. Many stockholders experienced total loss in the value of their investment. In contrast, the decline of the Dow never affected investors that opted for physical gold retirement savings.

Experts are still predicting another crash in the offing thus making a gold IRA plan increasingly attractive. Continued warnings regarding the recent bullish markets point towards an end in the offing and that investors should start seeking other investment options, such as a precious metals IRA. This is especially relevant to the people near retirement who would be devastated by a large drop in the value of their portfolio.

Closing Thoughts

By relocating investing a portion through a 401k to gold IRA rollover, you get to protect your portfolio’s value against any devastating drops. The price of gold is know to have a negative correlation to the stock market. So when the markets go down, precious metals like gold and silver, have a tendency to rise in value. It makes sense to invest in gold in these times since it involves minimal risk and is largely unaffected by such factors.

In 2011, the price of gold rose 32.8, which was preceded by 2-digit increases in all previous years starting 2008. The increase is primarily a consequence of investor activity in the precious metal market in form of precious metals IRA along with other vehicles that retain value regardless of the general currency supply. The sustained investment of this type eventually drove up the price of gold by over 50 percent in September of 2011.

Gold exposes its real significance as a protection against devaluation in case of high inflation offering returns of over 130 percent. Compare this to the 12-percent return, which is the average stock market gain. In times of inflation over the last decade, gold more than doubled in terms of value.



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