How to Roll Over a 401(k) to Gold Without a Penalty

Retirement: the reward of freedom after a life in the workforce. When relaxation and making the most of the sunset years is the only thing to think about. That is, of course, if there is a retirement fund substantial enough to support such freedom.

Saving for the day they leave work for the final time is many people’s primary concern after turning 50, and questions start being asked about how best to do it. The earlier someone starts asking this, the more chance they can set themselves up for a long, happy retirement.

A 401(k) fund is set up by employers to set aside funds for retirement. Used to make safe, conservative investments, it is likely to bring small returns and keep everything balanced out. The person whose future is tied to said funds has no say in what those investments are and has no access to the fund until they retire unless they want to pay a heavy tax.

Why a Gold IRA?

Gold IRA accounts, also called a Gold 401k, open up a lot of options. Not only are they controlled entirely by the account holder whose money is at stake, but they also provide an opportunity to secure money creatively and more stably: buying gold bullion and other precious metals.

It may seem strange; the idea of storing away gold coins and bars like a savvy pirate, but it is potentially a wise decision. World currencies, including the dollar, are subject to extreme market volatility. Inflation can leave the value of a person’s life savings looking far less substantial than they were and make a timely retirement impossible.

Gold is essentially an insurance policy. Exchanging part of a fund for tangible precious metal acts as a way of diversifying an investment portfolio. Like with any investment, diversifying reduces the overall risk factor. It is also exempt from the inheritance tax laws applied to beneficiaries of a fund. That is not to say people should be putting their entire retirement plans onto golden shoulders, but a small percentage is advisable for smart investors.

Aside from the possibility of diversifying by purchasing gold, the general investment options are more open, as is the account holder’s access to their money. Unlike a 401(k), IRAs have ways to access money early without paying a hefty tax. Loopholes can be found if access to funds becomes necessary before retirement.

How to Execute a 401(k) Gold Rollover

There are certain rules in place when investing in or buying gold due to IRS restrictions, but the process is still relatively simple. Before opening a gold IRA, there must be a self-directed IRA account opened. The account holder must also appoint an IRS-approved custodian to the accounts. Research before settling on what platform to use is essential, as fees vary greatly, and services offered are not always the same.

The account must then be credited-this is the rollover part. If a person opts for a transfer or direct rollover, the funds from their 401(k) are sent straight from one account to the other. In some cases, funds must be sent to the account holder, who then has 60 days to make the deposit.

A selected and approved precious metals dealer (often found through the custodian platform) can then make transactions for the account holder to finalize the transition. The holder can also begin directing investments as they wish to.

Final Thoughts

Gold is a long-term investment. It is not liquid, nor is an account holder likely to do anything with it for many years after their purchase. It is not subject to the same type of volatility and inflation risk as the dollar and is an intelligent way to branch out and diversify a portfolio.

The nature of any IRA account is to store long-term hold investments penalty free and provide some tax benefits, making it the ideal home for gold. Keeping options open and maintaining a little insurance on a retirement fund is essential, and gold is one of the ways to do it.

Someone who wants to be more hands-on and involved in what steps are taken to secure their future and wants to rely on a long, pleasant, and freedom-filled retirement can benefit from a 401(k) gold rollover.