401K To Gold Rollover Guide

401K To Gold Rollover Guide

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If you currently have a 401(k) account, you may believe that this is the ideal account for your retirement savings. However, a 401(k) is tied to the stock market in a way that other retirement accounts are able to avoid. While a strong market means that your 401(k) will likely be in great shape, any dips in the market could place your savings in jeopardy and make it less likely that you'll be able to comfortably retire when you want to.

It's possible to significantly mitigate these issues by investing your money in a gold IRA. To that end, the 401(k) to gold rollover process is a simple and straightforward solution when you want to start a gold IRA.

While there are several methods you can use to get your money into a gold IRA, the rollover process has some tax advantages that you can't find with anything else. This guide provides you with an in-depth look at the 401(k) to gold rollover process and which companies can help facilitate this process.

What Is a 401(k) Account?

401K To Gold Rollover Guide

A 401(k) plan is a kind of retirement account that allows you to make regular contributions into an employer-sponsored account. The main benefit of investing in a 401(k) account is that some or all of your contributions will be matched by your employer. Another great benefit of placing your money in a 401(k) account is that your income taxes will be reduced during any year that you make contributions.

Drawbacks of a 401(k)

Despite the benefits that come with opening a 401(k) account, there are also some drawbacks that you should be aware of, the primary of which is that the amount of savings in your account can depend somewhat on the health of the stock market. If you've invested heavily into assets that are tied directly to the market's performance, you could lose a large amount of your savings if the market starts to perform poorly.

Even if you don't have a 401(k) account that's dependent on the market, you will only have this account as long as you are employed with your current employer. While it's not too difficult to switch your 401(k) to another IRA account if you lose your job, you may want to be proactive by switching to a gold IRA ahead of time.

What You Should Know About a Gold IRA

401K To Gold Rollover Guide

A gold IRA is a special kind of individual retirement account that gives you the ability to invest in gold, which will be considered a qualified retirement investment. Many gold IRA accounts also accommodate a range of additional precious metals, which include silver, platinum, and palladium. If you're thinking about investing in a gold IRA, keep in mind that it's possible to invest in stocks that are related to precious metals as well as physical metals like coin and bullion.

If you opt for the 401(k) to gold rollover, the gold IRA will need to be held separately from a standard retirement account. Unless you invest in stock that's related to precious metals, the physical gold you purchase will need to be stored, which is the primary difference between a gold IRA and other IRA accounts. If you invest in precious metals mutual funds or exchange-traded funds, your fees will be higher when compared to what you will pay when investing in physical gold.

IRS Guidelines for Gold IRA Accounts

Before you complete a 401(k) to gold rollover, you should know more about the special considerations that the IRS has for gold IRA accounts. For one, gold IRA accounts can't be created with the help of a broker or traditional custodian. Instead, it's recommended that you shift your 401(k) to a gold IRA via a company like Goldco or Augusta Precious Metals, both of which have the necessary documentation that allows them to maintain gold IRA accounts.

Even though the assets you hold in a gold IRA will differ from those you held in a standard 401(k), the rules of a gold IRA are similar to what you'd find with any other IRA account. For 2021, the contribution limits are set at $6,000. If you're at least 50 years old, you can invest an additional $1,000 into your gold IRA account each year.

Once you reach the age of 59.5, you can withdraw money from your account without needing to worry about penalties. Before that age, any withdrawals you make will come with an additional tax of 10 percent. While the physical gold you invest in must be held at an IRS-approved facility, this facility can't be your home, which would result in a withdrawal that you would need to pay taxes on.

Why You Should Invest in Gold

401K To Gold Rollover Guide

There are many reasons you should consider investing in a gold IRA, the primary of which is because of the tax benefits that come with this account. For instance, the contributions you make to the account occur on a pre-tax basis, which means that taxes aren't taken until you make withdrawals.

It's also important to note that the gold that's held in a gold IRA can typically be passed to a beneficiary without needing to worry about inheritance taxes. Investing in gold also has greater freedom when compared to other investment types.

Depending on the company that assists you with a 401(k) to gold rollover, there are a range of different coins and bars that you'll have the opportunity to invest in. When you invest in a gold IRA, it's easier to buy low and sell high. In the event that gold prices are expected to dip, it's possible to sell your bars and coins to mitigate your losses.

Yet another benefit of investing in gold is that gold is a proven investment that can help you diversify your portfolio. By placing gold into your retirement portfolio, you can reduce the risk of market fluctuations caused by inflation or an economic crisis.

What a 401(k) to Gold Rollover Entails

401K To Gold Rollover Guide

In the event that you're about to lose your job or change employers, there are numerous options at your disposal in regards to what you do with your current 401(k) account. Many employees choose to cash out even if they are required to pay extra withdrawal fees to obtain their money. While this might seem like a logical option, it's important to note that taxes can become very high if you're in a tax bracket that's more than 12 percent.

You could also keep your 401(k) account intact even after you leave your current employer. The downside to this option is that you would be tasked with paying maintenance fees on two accounts if you open another 401(k) account at your new job. In some situations, it's possible to merge your old 401(k) account with one you open with your new employer.

The fourth and potentially best option for you to consider is to complete a 401(k) to gold rollover, which allows you to move all of the money in your 401(k) into an IRA account. Your investment options will be significantly better with less fees. This option is also ideal if you have a knowledgeable trustee managing your account.

Before you begin this process, keep in mind that there are two distinct rollover types that you can select from, which include a direct rollover and an indirect rollover. If you opt for an indirect rollover, you can expect your 401(k) provider to send a check with your proceeds, which you can deposit directly into your bank account. From here, you will have 60 days to place your retirement funds into a new IRA, which can be a gold IRA.

If you miss the 60-day deadline that comes with an indirect rollover, the rollover will count as a withdrawal, which means that you would be taxed. As such, it's highly recommended that you consider using the direct rollover process. A company that specializes in gold IRA accounts can assist you with this process.

No matter which company you partner with, sending your current 401(k) funds into a gold IRA with a direct rollover involves a check being issued to a new custodian. This check can either be sent to you to pay to the custodian or sent directly to the custodian. The majority of companies that assist with a 401(k) to gold rollover are able to initiate the process via the phone.

If your 401(k) is sponsored by the government, you will be tasked with completing additional paperwork, after which the rollover process can take anywhere from 2-6 weeks to be finalized. Keep in mind that only one rollover is permitted for a 401(k) account holder in a 12-month period. On the other hand, custodian-to-custodian transfers can take place on an unlimited basis.

Differences Between a Transfer and Rollover

When you make the decision to complete a 401(k) to gold rollover, it's important that you know the difference between a transfer and a rollover. While these terms are oftentimes used interchangeably, there are some key differences between the two.

For instance, a rollover involves your 401(k) funds being paid to you before they are sent into another IRA account. When funds are being transferred, the custodian of your 401(k) account will be able to send money to the custodian of your new IRA account. As mentioned previously, the rollover process requires you to deposit your 401(k) funds into a gold IRA account within 60 days if you want to avoid withdrawal fees.

While there are some strict rules that you must adhere to during a rollover, a transfer is a much simpler process that doesn't come with any notable fees or penalties. Once you've set up a gold IRA, the custodian of your 401(k) can send money to your new custodian through a basic wire transfer, which means that the 60-day limitation is avoided. Many gold IRA companies refer to transfers as direct rollovers, which is definitely the route to take.

Benefits of Moving to a Gold IRA

401K To Gold Rollover Guide

If you're thinking about keeping your 401(k) account, there are many tangible benefits that come with moving your funds to a gold IRA. These benefits include:

  • Allows you to make your own investment decisions - As mentioned previously, a 401(k) account doesn't provide you with numerous investment opportunities. In comparison, you can invest in precious metals, bonds, stocks, and real estate when you move your money to an IRA.
  • Gives you control over fees - While many people who consider a gold IRA fear that the fees will be high, this doesn't have to be the case. If you use a robo-advisor, your gold IRA account can be managed at a sensible rate.
  • Better access to funds - Even though you shouldn't withdraw funds from any retirement account until you've retired, the fees for doing so are much less when you withdraw from a gold IRA in comparison to a 401(k).
  • Ability to choose trustee - When you invest your money in a gold IRA, you can choose which platform you'd like to use. The best platforms offer 24/7 customer support, low fees, and robust investment tools that can help you make smart investment decisions.
  • Includes a Roth IRA option - If you want to convert your 401(k) account into physical gold, some investment platforms offer the opportunity to create a partial or complete Roth IRA. A Roth IRA allows you to make tax-free withdrawals during your retirement. Unlike some IRA accounts, there are no minimum withdrawals once you reach a certain age.

Understanding Gold IRA Fees

As with all IRA accounts, you will need to pay certain fees when completing the rollover process. In general, your fees should be lower than what they were when you had a 401(k) account. The most common fees include:

  • Annual fees - A gold IRA doesn't come with annual fees, which should keep your costs low.
  • Load fees - While some mutual funds have load fees of up to three percent, it's possible to avoid these fees by simply keeping the funds.
  • Management fees - If your gold IRA is managed by a robo-advisor, your yearly management fees may be as low as .25 percent.

Companies That Can Help with the Rollover Process

While there are plenty of different companies that can assist you in completing the 401(k) to gold rollover process, the top three companies that you should consider include:

  • Goldco
  • Birch Gold Group
  • Augusta Precious Metals

#1. Goldco


Goldco is considered to be the leader in the gold IRA industry. They have more than a decade of experience in handling precious metals IRA accounts, which should make you confident that your money is being invested wisely. Goldco offers excellent customer service and is known for providing customers with helpful resources in the form of eBooks, videos, and up-to-date gold prices.

When you create a gold IRA account with Goldco, you will have low yearly fees and will be provided with a free rollover kit for your gold IRA. Keep in mind that Goldco has a Better Business Bureau rating of A+.

Birch Gold Group

Birch Gold Group is a reputable dealer in various precious metals that's known for their premium gold IRA accounts. They have been in business for nearly 20 years and have some of the most satisfied customers around. In fact, they've provided their services to more than 10,000 customers over the years.

When you complete the rollover process, the Birch Gold Group will help you determine which bars and coins to invest in. They also provide extensive educational materials that you can peruse when you want to enhance your investment knowledge. They release a free information kit every year.

Augusta Precious Metals

Augusta Precious Metals is an award-winning seller of precious metals that offers a great gold IRA account. Keep in mind that the minimum investment for a gold IRA at Augusta Precious Metals is $100,000. However, you'll find that their annual fees are low and that their customer support is on hand whenever you need to ask a question.

It's very easy to start a gold IRA with Augusta Precious Metals. One notable benefit of investing in this gold IRA is that they will price-match the competition for gold coins and bullion.

As you can see, the 401(k) to gold rollover process is simple and straightforward as long as you partner with an investment company that offers a direct rollover. From here, you'll be able to invest in gold to continue building your retirement savings. By choosing to partner with one of the companies mentioned above, you can be confident that your 401(k) funds will be transferred to your new gold IRA account without issue or delay.

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