How To Move A 401K To Gold Without A Penalty

How To Move A 401K To Gold Without A Penalty

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Through a 401(k) plan or an independent retirement account (IRA), you can save money for your retirement. In addition, 401(k) plans and traditional IRAs allow you to avoid paying taxes on your contributions. If you want to diversify your account, you can invest some of your 401(k) funds in gold.

People turn to gold for a variety of reasons. Some people buy gold to protect their portfolio from inflation. Because people have prized gold for thousands of years, gold investments should retain their value. Many people also invest in gold because they are worried about market volatility. Unlike a corporation, gold cannot go bankrupt. No matter what happens to the economy, your tangible coins and bullion will still be sitting in your vault.

Once you decide to invest in gold, the next step is figuring out the best way to get started. While you can buy gold coins and bullion outright, there are no tax advantages to just purchasing gold. If you buy gold through your 401(k), you can deduct your 401(k) contributions from your annual tax return. Until you eventually sell the gold and withdraw your earnings, you will not have to pay taxes on your investment.

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How Do You Move a 401(k) Into Gold?

How To Move A 401K To Gold Without A Penalty

Now that you have made the exciting decision to buy gold, the next step is figuring out how to actually carry out your plan. Most likely, your current 401(k) plan does not offer gold investment options. Many 401(k) plans offer limited investment options, so you need to find a new plan that allows you to invest directly in gold.

To avoid paying taxes on this transition, you will have to do a 401(k) rollover. A 401(k) rollover is when you transfer funds from your old 401(k) plan to a new one. You can transfer money to a new 401(k) or IRA.

According to the Internal Revenue Service (IRS), you must complete this transfer within 60 days. If you do not finish it in time, your transaction is treated like a 401(k) withdrawal. Unless you want to pay taxes and penalties on your withdrawal, you must follow the IRS rules.

When you convert to a new 401(k) or IRA, you can enjoy new perks. Employer plans generally have limited options and high fees. An employer typically offers the plan as a benefit to their employees, but they do not have an incentive to shop around for a great plan. Because of this, you may need to get a new 401(k) if you want cheaper investments, lower account fees and more gold investment options.

In order to convert your 401(k) plan to a gold IRA or 401(k), you have to do the following steps.

  • Pick the account you want.
  • Open your new account.
  • Talk to your previous 401(k) plan about doing a direct rollover.
  • Decide on your new investments.

1. Pick the Account You Want

By doing a 401(k) rollover, you can get more investment options. Often, you can save on fees as well. Employer plans often have high fees, so switching plans can save you a lot of money.

  • Roth IRA: If you do a rollover to a Roth IRA, you have to pay taxes on the funds you transfer. Roth IRAs allow you to make tax-free withdrawals, but your contributions are taxed.
  • Traditional 401(k): When you do a rollover to a traditional 401(k), you do not have to pay taxes on your rollover as long as you complete the transfer within 60 days.
  • Traditional IRA: Like a traditional 401(k), traditional IRAs are a tax-deferred retirement plan.

The government allows you to own multiple 401(k) plans and IRAs. This is important because it means you are able to create a solo 401(k) or self-directed IRA for precious metals. The trustee will be the custodian of the physical metals and your broker.

When you use a gold IRA or 401(k), you can buy and sell gold. To do this, you must follow certain government standards. Self-directed 401(k) plans and gold IRAs do not allow you to physically hold the gold yourself.

For the most part, a self-directed IRA and solo 401(k) are essentially the same thing. The main difference is that 401(k) plans allow you to contribute more money each year. Other than this, they have fairly similar rules and benefits.

2. Open Your New Account

The easiest way to set up your account is by going online. Many people set up an IRA using a robo-advisor or an online broker. If you do not want to deal with the hassle of picking your investments, you can use a robo-advisor to automatically invest in a balanced portfolio.

With an online broker, you can get more control over your investments. You can choose which investments you buy, and you can divest whenever you want. Because fees and commission costs can quickly add up, you should find a provider that charges low fees. You also need to pick a provider that specializes in precious metals.

3. Talk to Your Previous 401(k) Plan About Doing a Direct Rollover

How To Move A 401K To Gold Without A Penalty

You will also need to talk to your old provider about transferring your funds. It is important to begin this step early because your provider might slow the process down because they do not want to lose you as a client. You should always ask your provider to do a direct rollover because the check needs to go directly to your new account instead of going to you.

The next step is incredibly important. Once the funds leave your old account, they must arrive in your new account within 60 days. Otherwise, you will have to pay taxes and penalties on your withdrawal. If you want to avoid a penalty, you need to complete your rollover as quickly as possible.

While the process can vary, most providers will require you to send in a few forms if you want to carry out a direct rollover. To find out how to do this, you should contact the administrator of your former employer's plan. After you send in the paperwork, they can send a check or wire transfer to your new account.

Technically, you can also do an indirect rollover, but this option is significantly harder to do. With an indirect rollover, the money is sent to your account. Then, you send the money to your IRA within 60 days.

An indirect rollover can end up complicating your taxes. If you do not complete it in time, then you may end up paying income taxes and penalties on the rollover. Many providers will withhold 20 percent of your withdrawal automatically as a tax payment. Because you must transfer the entire amount to your new account, you would have to furnish the difference from your personal account.

4. Decide on Your New Investments

Once you have completed your direct or indirect rollover, you can determine how you want to use your money. You can invest in physical gold, or you can look at index mutual funds. Diversifying your portfolio can protect it from market fluctuations.

Many people buy gold coins and bullion, but there are some drawbacks to these investments. You may have to pay broker commissions and fees for storing the gold. If you want to diversify your gold portfolio, you can invest in gold using other techniques as well.

  • Gold futures and options: These contracts are essentially agreements to buy or sell gold at a set price in the future. Because these contracts are traded on commodity exchanges, they are tightly regulated by the federal government.
  • Stocks in gold mining: If you want to invest in gold mining and refining businesses, you can buy stock in a mining company. You should always research the company beforehand to see if they are financially stable. To reduce your risk, you can also buy shares in a mutual fund that invests in gold mining.
  • Gold exchange-traded funds (ETFs): An ETF is a basket of other assets. A gold ETF may own gold options, futures and physical gold. While mutual funds can only be exchanged after the market closes for the day, an ETF can be traded when the market is open.

When Does the IRS Charge a Penalty on 401(k) Rollovers?

According to the IRS, you must complete your 401(k) rollover within 60 days. If you withdraw money from your previous 401(k) and do not deposit it in your new account within 60 days, you will be required to pay a penalty on those funds. The best way to avoid this is by doing a direct rollover, so your funds are instantly transferred from one account to the other.

If you withdraw your funds before you are 59.5 years old, you will have to pay a 10 percent penalty. You will also be required to pay your normal income tax rate on early withdrawals. If you have to pay state income tax as well, you could easily spend 45 percent of your withdrawal on taxes and penalties.

How Can You Turn Your 401(k) Into Gold Without a Penalty?

How To Move A 401K To Gold Without A Penalty

Fortunately, you can easily avoid paying penalties and taxes on your 401(k) rollover. You just have to do a direct rollover. With this option, your provider handles the transfer so that your funds automatically show up in the new account.

If you have to handle the transfer yourself, you can do an indirect rollover. You just have to make sure that the rollover is completed within 60 days. If your previous provider held back 20 percent of the funds for taxes, you will have to replace these funds when you finish the indirect rollover.

For this plan to work, the new account must be a tax-deferred plan. You cannot deposit these funds in your bank account unless you are at least 59.5 years old. Otherwise, you will be forced to pay a penalty and taxes on your withdrawal.

Which Companies Can Help Me Convert My 401(k) Into Gold?

If you are trying to invest in a gold 401(k) or IRA, there are a few companies that can help you get started. Many companies do not allow you to invest in precious metals. Because of this, it is important to check with your new provider before you open a new account. With a little research, you can successfully begin investing in precious metals.


#1. Goldco


  • It has an A+ rating from the Better Businesses Bureau.
  • Over $1 Billion dollars in retirement savings protected.
  • Over 1,000 5 star ratings.
  • Goldco's IRAs can invest in precious metals.
  • The company has worked with gold IRAs for more than a decade.
  • Goldco provides top-notch customer service.


  • The annual fee is $175 for accounts that are worth less than $100,000.

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Goldco serves as a brokerage for gold IRAs. This organization is ranked highly for its customer service. Unlike some organizations, Goldco does an excellent job of managing paperwork with IRA custodians, storage facilities and other retirement account providers.

Because Goldco is a broker, they only handle buying and selling your precious metals. They do not store the gold at their company. While Goldco cannot serve as the custodian, they can help you fill out the paperwork for a different custodian company. Afterward, Goldco will help you buy coins and bullion that have already been approved by the IRS.

If you are trying to do a 401(k) rollover, Goldco can help. They can handle all of the paperwork involved in the transfer of your account. This company can also help you with buying silver and other precious metals.

Birch Gold Group


  • They offer an excellent level of service.
  • Birch Gold Group has great reviews from professionals in the industry and consumer organizations.
  • The company provides educational materials to clients.
  • You do not have to pay any fees during your first year as long as you transfer at least $50,000 to your new account.


  • The setup costs and annual fees are not clearly discussed on the firm's website.

Based in California, Birch Gold Group was started in 2003. This experienced company serves as a brokerage for precious metals. Other than gold, they can also help you purchase platinum, silver and palladium.

Birch Gold Group can help you buy gold for an IRA or personal ownership. Thanks to their dedication to client education, you can learn about how to invest in gold and the risks involved. Any investment carries some degree of risk, so it is important to know how you could lose money before you invest your money.

With this company, you can get help buying gold through your retirement account. All of the investments are approved by the IRS for IRAs. Other than buying physical gold, you can also purchase stocks, mutual funds, real estate, raw land, bonds, private loans and other investments.

After you choose Birch Gold Group as a broker, they will help you find a custodian. If you already have a custodian, Birch Gold Group can work with them to buy and store your gold. The company can ship your gold to approved depositories. For example, you can store your gold with Brink's Global Service or Delaware Depository.

Augusta Precious Metals


  • Augusta Precious Metals has a fast, easy setup process.
  • They offer competitive pricing.
  • You can enjoy having lifetime customer support.


  • You are required to put at least $50,000 into your new account.

Augusta Precious Metals helps investors open tax-advantaged retirement accounts. Through these accounts, you can invest in precious metals. Goldstar Trust, Equity Trust and Kingdom Trust are the custodians that Augusta Precious Metals recommends, but they can also work with other account custodians as well.

After you set up your self-directed IRA, you can use Augusta Precious Metals and your custodian to buy gold. Augusta Precious Metals can help you buy premium coins, bullion, bars and rounds. In addition, the company sells collector sets and commemorative coins.

As an added level of protection, Augusta Precious Metals offers a price protection program. If the price of your precious metals changes within the first seven days after you confirm your order, Augusta Precious Metals will still honor the rate they initially gave you. Plus, Augusta Precious Metals will often give customers a quantity discount on large bullion orders.

Augusta Precious Metals also offers a variety of promotions. For example, they will give you up to $2,000 in silver after you make a qualifying investment in your new account. Plus, you can cancel any order within the first seven days for any reason.

Frequently Asked Questions

Changing your retirement plan is a big decision. Thankfully, converting to a gold IRA is fairly straightforward. The following are some of the most common questions about moving a 401(k) plan into gold.

Can I Invest My 401(k) in Gold?

Your current 401(k) plan may not let you invest in gold, but there are different plans that allow gold investments. You should keep in mind that there are specific IRS rules about how the gold must be bought and stored. Because of this, it is important to find a reputable company to work with.

Do I Have to Pay Taxes When Rolling Over a 401(k) to an IRA?

You are legally allowed to do a 401(k) rollover without paying any taxes or penalties. To avoid taxes, you will need to do the 401(k) rollover correctly. You should start by contacting your current 401(k) plan so that you can get started on the process. This process can take several weeks or months to complete, so you should begin it as soon as possible.

Can I Buy Gold Without Paying Any Taxes?

Traditional IRAs and 401(k) plans are tax-deferred savings accounts. This means that you do not pay any taxes on your contributions. When you eventually withdraw your funds after you retire, you will pay taxes on those withdrawals. If you buy gold for personal ownership, you do not get any tax breaks. The only way to escape from paying taxes right now is by buying gold through your 401(k) plan or IRA.

Can I Buy Physical Gold in My 401(k)?

You can absolutely buy physical gold in your 401(k) plan, but this process can be a little tricky. Technically, your IRA cannot be the seller and holder of the gold. They have to store physical gold with a third party. You are not personally allowed to hold the gold. According to the IRS, your 401(k) plan can only contain physical gold if someone else is in charge of storing the gold. While you may be allowed to access the storage facility, you will not be allowed to have physical control of the gold.

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