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How To Move a 401K to Gold IRA

How To Move a 401K to Gold IRA | Five Easy Steps

Interest in the gold and silver markets has been steadily rising over the past few years as a full-blown global economic crisis looms closer and closer.

People are now seeking the relative safety of investing in precious metals, and as a result, new gold IRA companies have blossomed across the country.

However, what most investors do not know is that there is a much simpler way to initiate gold IRA investments without the need to seek out shady gold dealers and risk being scammed of all your money.

If you already have retirement savings accounts and want to diversify your retirement portfolio to physical precious metals, this gold IRA rollover guide could be the key to unlocking your potential.

Read on to find out how you too can invest in gold bullion and other precious metals, or, if you are ready to get a free precious metals investing guide, courtesy of our top recommendation, click below.  They are even offering up to $10,000 in free silver for a limited time.

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If you have never considered gold investments before, you may be wondering what is so special about buying gold coins and leaving them with a gold IRA custodian.

Well, there are lots of reasons why you might decide to invest in gold IRAs, such as:

  • Hedge against inflation

  • The same great tax benefits as a traditional or Roth IRA

  • Safety net during currency devaluations and fluctuations

  • Protection against government intervention

  • Risk management through using a diversified portfolio

Gold IRA Rollover: What Is It Exactly?

When you decide to open a precious metals IRA, the funds you need to run your gold IRA and purchase precious metals have to come from somewhere.

Since this is going to form part of your retirement savings account portfolio, there are a lot of IRS rules that govern the source of the funds as well as the various limitations placed on your contributions.

This is where a gold IRA rollover comes into play. A gold IRA rollover is a method available to help retirement savings account owners easily fund their precious metal IRA accounts.

It is an IRS-regulated process that allows a gold IRA custodian to access their client’s retirement savings to open, manage, and maintain a gold IRA on their behalf.

There are three important aspects regarding a gold IRA rollover that you need to completely understand, and these are as follows:

Direct Rollover

A 401(k) direct rollover to a gold IRA is the simplest way to fund your precious metals IRA. All you need to do is set up your gold IRA account and then contact the trustee for your 401(k).

You will instruct them to transfer funds from your 401(k) to the account of your self-directed IRA custodian.

When this happens, you may face some resistance from your 401(k) trustees as they try to convince you to keep your money with them.

However, you must remind yourself of the benefits of opening a new gold IRA account and stick to your original plan.

This is where the best gold IRA rollover companies will come into play, helping you make the process of transferring your retirement funds much easier.

You will need to sign some IRS documents to approve the withdrawal. Make sure that when you give authorization, the withdrawal is listed as a non-taxable event. This means you will not incur any withdrawal penalty for the rollover.

If your gold IRA company handles the gold IRA rollover correctly, no charges, taxes, or fees will be deducted from the funds you are transferring.

Indirect Rollover

Indirect rollovers are similar to direct rollovers in many ways except, instead of the funds being transferred directly from your 401(k) to the accounts of your gold IRA companies, they will be sent to your bank account.

It will be up to you to decide when and how much of the rollover funds you will transfer to your custodian.

However, you have to make sure that all the rollover funds have been transferred out of your account within 60 days or risk stiff IRS penalties that can be as high as 20% of the transferred funds.

Another complication is that when your 401(k) administrator approves the transfer, they will only give you 80% of the requested funds. The remaining 20% will be diverted to the IRS to cover the taxes to will have to pay.

This means, after you have decided how much money you want to invest in physical gold, you will also have to factor in the 20% IRS taxes before you request your funds. Reputable gold IRA companies will assist you with this process.

Rollover Eligibility

Looking at the above options, it is quite clear that a direct rollover to a gold IRA is the preferred method for funding gold IRAs.

However, this is not always possible because your retirement account may be ineligible for a direct rollover due to many reasons, such as:

  • You have not yet reached the age of retirement, which is 59, or you are still working for the same employer that contributed towards your 401(k)

  • You already did a 401(k) rollover within the last 12 months. The IRS only allows one rollover per year

The Rollover Process: 401K to Gold IRA Account

Gold Rollover Process

If you plan on investing in physical precious metals, the rollover process is something you need to be very knowledgeable about.

In most cases, all you need to do is make sure you open your gold IRA with the right custodian and the rest of the process will be taken can of.

However, that is not always the case, so you need to familiarize yourself with the following five simple steps to conducting an IRA rollover:

Step 1: Find a Gold IRA Company

The success or failure of your gold and silver investments relies very heavily on your ability to choose the right custodian.  Here’s our top 5 company list.

This is not always an easy thing to do when faced with a lot of potential precious metal IRA companies.

Before you open your self-directed IRA, do your research and consider the following:

  • The level of experience the custodian has in dealing with 401(k) to gold IRA rollovers

  • Look into the company’s reputation in terms of customer service and trustworthiness

  • Consider how much you would be expected to pay in terms of custodial fees

  • Does it have a diverse selection of precious metals worth the rollover of funds

  • Is it affiliated with any IRS-approved depository

  • Look for perks and other benefits, such as a buy-back option for physical gold and other precious metals

Step 2: Approach your 401(k) custodian

When approaching your 401(k) trust company, you should have a clear picture in your mind regarding how you intend to do the rollover and the amount of money you need to take out of your retirement account.

There will be a lot of paperwork for you to sign so that the rollover can be approved. After that, your current precious metals custodian will link up with your 401(k) custodian to finalize the transfer of funds.

If you are doing an indirect transfer, there will be more to do than just signing paperwork. You will have to shoulder the burden of transferring the funds from your bank account within 60 days.

Step 3: Open Your Precious Metals IRAs

Once your funds have been confirmed by your precious metals IRA provider, you will need to open the account.

Different self-directed IRA companies have different fee structures, so you will need to carefully look at how much will be needed for, say, account set-up fees and custodial fees.

Also, make sure you trace the movement of all your money because some unreliable gold IRA companies are in the habit of having some hidden costs that you will only realize when it comes to making the payment.

Step 4: Initiate 401k to Gold IRA Rollover

Initiating 401(k) to gold IRA rollovers will require a lot more paperwork and other is not much you can do about this.

Once you submit your paperwork, the rollover will commence. How long it takes will depend on several things, such as the rollover process you choose (direct rollovers are the quickest), your 401(k) trustee, your precious metal IRA custodian, and whether or not you managed to fill in the forms correctly.

Again, you must keep an eye on the movement of funds from one account to another and make sure you are receiving the right amount of money. Any discrepancies must be reported to your custodian immediately.

Step 5: Buy Physical Gold

Once your account is ready and funded, it will be time to buy your precious metals from the custodian. Here we use the word “buy” very loosely because you will not be allowed to keep your precious metals.

What will happen is you will choose which metals, such as gold and silver, you want to invest in.

These will be available on your IRA company’s website. Once you have what you need, simply confirm the purchase and the precious metals are yours.

Your custodian will then send them to an IRS-approved depository where they will be kept safe in return for a certain amount of storage fees.

IRS-approved Precious Metals

Consider the following IRS requirements on the gold, silver, platinum, and palladium you intend to hold:

  • You cannot add any physical gold or precious metals that you already own to your gold IRA

  • Only coins from approved mints can be held in your gold IRA, such as the Royal Canadian Mint

  • Silver bullion coins and bars are required to be of 99.9% purity

  • Platinum, palladium, and gold bullion coins and bars must be of 99.5% purity or more

The following are the IRS-approved precious metals that you can have as part of your IRA:

  • American Eagle and American Eagle Proof coins

  • American Eagle platinum coins

  • Credit Suisse bars and other bars and rounds produced by an NYMEX or COMEX-approved refinery

  • Canadian Maple Leaf coins in either platinum or palladium

  • Platinum and Palladium bars and rounds produced by an NYMEX or COMEX-approved refinery

  • Canadian Maple Leaf coins

  • Canadian Polar Bear & Cub

  • Austrian Philharmonic coins

  • Australian Kookaburra coins

  • British Britannia (2013 and newer)

  • Chinese Panda coins

  • Australian Kangaroo coins

Gold IRA Rollover Pros and Cons

If you are on the fence about investing in the precious metals market by rolling over your 401k to a gold IRA, here are some advantages and disadvantages to consider:

Pros

  • Tax advantages similar to a Roth IRA

  • Gold and silver assets have a high demand and will increase in value

  • Hedge against inflation

  • Capital gains are not classified as collectible, meaning they are taxed as regular income

  • A diversified portfolio will spread out your risk

Cons

  • You cannot keep your precious metals

  • There are storage fees to be paid

  • Custodial fees can be high

The Best Gold IRA Companies

When you invest in gold stocks and silver coins through a reputable precious metal custodian, you will avoid a lot of the downsides of diversifying your investment portfolio to precious metals.

The following is a list of some of the best gold IRA company options for you to consider in 2023:

Who Should Do a 401K to Gold IRA Rollover?

Just like a Roth IRA, anyone who wishes to, and has the required funds, can open a gold IRA.

However, you need to make sure that it is the right move for you to make and that this is the right time to do so.

Open a gold IRA if:

  • You have a huge chunk of your retirement savings locked away in your 401(k) and you wish to diversify your portfolio

  • The limited investment choices offered by a 401(k) are not to your liking

  • You want to provide a hedge for your funds against the threat of inflation

Start Your Gold IRA Rollover Today

From the day you start working on your first job, the issue of investing in your retirement account is one that you need to seriously consider.

When the time comes that you have a sizeable amount of funds set aside, retirement account diversification should be your new agenda.

Rolling over funds from your 401(k) to purchase physical precious metals through a gold IRA is easy as long as you apply all the things you have learned here.

Arthur Karter

About 

Hi, I’m Arthur, and nobody wants to wake up in their 50s like me that they are in serious debt with minimal assets. This wake-up call forced me to reevaluate everything. After going through the school of Hard Knocks, I’m ready to help you by sharing the best retirement choices and how they differ from all the same-old, same-old options that financial advisors sell. These alternatives will help you build and protect your wealth.

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