How to move 401k to Gold without penalty
Protecting your retirement savings with Gold is particularly important today for a number of reasons:
- Inflation is rapidly eroding the Purchasing power of the US Dollar
- rising interest rates are causing Bond prices to fall
- geopolitical tension is mounting with hot spots or outright conflict currently in Ukraine, Taiwan, and Iran
With these economic factors as a backdrop it isn't surprising that you would be asking this question:
Can I transfer my 401k to Gold
?
Unfortunately, the best answer is,
Maybe
It depends on whether your 401(k) is "active" or "eligible".
Active 401(k)
The 401(k) you have at your current employer is considered "active" and it is not eligible for a Gold IRA rollover. In fact, the IRS is very restrictive about what you can do with your 401k money. In essence, this money is stuck in your active 401k as long as you remain with your current employer.
To use the funds in your active 401(k) account for a penalty-free purchase of physical Gold you would have to change employers, thereby making the currently active 401(k) eligible for a Gold IRA rollover.
In the current economic environment changing employers is not recommended unless you have a solid position lined-up. America appears to be headed into a recession and it is likely that employers will be laying off workers in 2023. If you have a good job, hang on to it for now.
Your best option for moving active 401(k) money into Gold is to take a loan against the account. Refer to the 401(k) loan to buy Gold section below.
Eligible 401(k)
Any 401(k) account from a previous employer is considered "eligible" and the money from these accounts can be moved to a Gold IRA without taxes or penalties.
If you elected to roll your eligible 401(k) into your active 401(k), however, the funds from the eligible account are now active and cannot be moved into a Gold IRA.
In the sections below we will cover exactly how to move your eligible 401(k) to Gold and we will also provide tips on how to make the best Gold IRA Investment possible.
401(k) loan
As an alternative to changing jobs, you may be able to take a loan against your active 401(k). This will depend on your employer and how they have structured the 401(k) plan.
What you do with the proceeds of a 401(k) loan is nobody's business except yours, but your employer will have guidelines about the acceptable uses for the borrowed funds. If you tell them you are going to purchase physical Precious metals with the money, they will most likely say, "No". As an alternative, you can simply say that you have other Investment opportunities to pursue.
Before going down the 401(k) loan path consult with your Financial planner, Investment advisor, and tax accountant. These professionals will be able to make recommendations based on your unique circumstances and tolerance for risk.
Here are some key points to understand about 401(k) loans:
401k to Gold IRA rollover
If you have an eligible 401k and you are ready to perform a 401k rollover to Precious metals, you have two options. You can either do a rollover or a transfer.
Account transfer
In an account transfer you take a distribution from the eligible 401(k) and the funds are provided to you. You then deposit some or all of the money into a Precious metals IRA account.
You have 60 days to complete the transfer or the IRS will treat the distribution as regular income. You will have to pay taxes on the distribution and the IRS will assess a 10% early withdrawal penalty if you are under age 59 1/2.
Account rollover
In an account rollover the distributed funds are wired directly from the eligible 401(k) account Trustee to the Gold IRA Trustee without you acting as a middle-man.
Because you never take possession of the money from your 401(k), the 60-day rule never comes into play and you have zero risk of being taxed or penalized.
Investors tend to use the term ‘rollover’ interchangeably for both rollovers and transfers.
The key distinction between the two events is whether or not you take personal possession of your retirement funds.
Convert 401k to Gold and Silver
The Taxpayer Relief Act of 1997 added Silver and Gold to the list of assets that can be held in self-directed IRAs. In 1998 Platinum and Palladium were added.
Any of the four Precious metals, or a mix of the metals, can be held in a self-directed Gold IRA. There is no difference between a “Silver IRA”, “Gold IRA”, or "Precious metals IRA".
To convert your eligible 401k to Gold and Silver follow the simple five-step process below.
It really is as simple as that. And all of the Gold IRA companies have knowledgeable representatives to help you with the process.
If you are investing $50,000 or more, Augusta Precious Metals is the best Gold IRA company overall. Goldco is the best company for Investments between $25,000 and $50,000. For Investments of $10,000 to $25,000 go with Birch Gold Group.
The IRS only allows certain forms of Silver and Gold to be held in a self-directed IRA as specified in U.S. Code 408 (Individual Retirement Accounts).
Here are some general guidelines on the permitted forms of metal:
The IRS requires that a third-party Custodian hold the Precious metals in a self-directed IRA.
Each investor’s metal is held in the investor's name by the Custodian, in the same manner that a Broker-Dealer holds an investor’s Stock shares or Mutual fund Investments.
Your Custodian will store your metal in an IRS-approved Depository and all of the Gold IRA companies have established relationships with appropriate Depository facilities.
After you setup a Gold IRA account you will choose one of these Depositories and your Custodian will store your metal there.
Most metal for the least amount of money
Never purchase proof Coins, limited edition Coins, boxed Coins, or Coins with Certificates of Authenticity as an Investment. These Coins carry a large premium over the price of the metal they contain. Although they are beautiful, they are not a good Investment.
Some Gold IRA companies will encourage you to buy these overpriced Coins by telling you that they have greater demand from investors when it is time to sell. This is a sales pitch - don't fall for it.
Gold is Gold whether it is a proof American Eagle Coin or a beat up Krugerrand from the scratch-and-dent bin. The same thing goes for Silver, Platinum, and Palladium.
Buy physical Gold that has the lowest premium over the price of Gold Bullion. Likewise for Silver and the other metals.
The objective is to obtain the maximum number of ounces possible for a given amount of money.
For example, if the premium on Gold Maple Leaf Coins is lower than the premium on Gold Eagles, buy Maple Leafs. If a 100 gram (3.5 ounces) Gold bar has a lower premium than three Gold Maple Leaf Coins, get the Gold bar.
When you are ready to purchase metal for your Gold IRA, ask the company representative which products have the lowest premium over the spot price of the metal they contain. Stick with those products and stay away from the fancy Coins.
Gold IRA pros and cons
Like all Investments, Gold IRAs have their pluses and minuses.
A Gold IRA is not the ideal way to own physical Precious metals but it is the only way to purchase and hold those metals using tax-advantaged retirement savings.
Here are a few Gold IRA pros and cons to consider:
Pro | Con |
|---|---|
You are able to purchase physical Precious metals with tax-advantaged retirement savings. | Metal must be newly purchased inside the IRA account. Already owned metal cannot be moved into the IRA. |
You gain diversification for a traditional Portfolio of Stocks, Bonds, and Mutual funds. | There are fees for buying and selling Precious metals. |
You create an Inflation hedge. | There are fees for storing Precious metals. |
Distributions can be made in physical metal or in cash. | |
Capital gains are taxed as regular income instead of the 28% rate for Collectibles. In a Roth Gold IRA capital gains are tax exempt. |
Best Gold IRA
To find the best Gold IRA companies in 2023 we first need to define the criteria for being ‘best’. What are the factors that make a Gold IRA best?
Is it lowest transaction and management fees? The number of years the company has been in business?
The most important factor to consider when selecting a Gold IRA company is their commitment to educating their clients. Most investors are unfamiliar with self-directed IRAs and Precious metals so they need education in order to make an informed decision about investing in a Gold IRA.
To determine whether a company is serious about educating their clients you can visit their website and see what kind of resources they provide online. You can also read customer reviews and see if the company's customers talk about education.
When you go to a company's website you should find some kind of Gold IRA guide that covers the basics - that's a minimum requirement. Ideally, you will also find videos to watch and articles to read.
The best Gold IRA companies will provide regularly updated videos and articles that cover current economic events. These resources cover Precious metals IRAs and topics that affect our retirement savings.
Out of all the Gold IRA companies that Satori Traders has investigated, Augusta Precious Metals has the strongest commitment to customer education.
Augusta provides a library of videos that cover current topics and basic economics. Two of their videos teach you about the high pressure tactics that shady Gold IRA companies use. The company also publishes regular blog articles that cover the latest topics relevant to your finances and Investments.
The most impressive aspect of Augusta's education program is their Harvard-trained director of education, Devlyn Steele. He ensures that all of the educational resources are top-notch and he also provides 1-on-1 teleconferences with investors to personally teach them about Gold IRA Investments.
Precious metals IRA company
Fidelity
- Founded: 1946
- BBB rating: C-
- Proof Coins: No
- Minimum Investment: $1,000
Patriot Gold Group
- Founded: 1990
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $15,000
- Founded: 2003
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $10,000
- Founded: 2006
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $25,000
- Founded: 2010
- BBB rating: unrated
- Proof Coins: Yes
- Minimum Investment: $10,000
Noble Gold
- Founded: 2017
- BBB rating: A-
- Proof Coins: Yes
- Minimum Investment: $2,000
In the mini-reviews below you will find some of the most reputable Gold IRA companies. All of these firms offer free information and most of them have IRA specialists available to answer your questions.
Fidelity
No proof or special edition Coins offered
BBB rating:
Years in business:
Minimum Investment:
C-
76
$1,000
Although Fidelity has a low BBB rating, the company has a very low minimum Investment level which makes it easy to start and add to a Gold IRA. Fidelity is also very conservative in its approach to Precious metals, warning investors about the volatility and risk of this asset class. What we like best about Fidelity is that the company does not sell proof or special edition Coins so there is zero risk of investors purchasing these overpriced products.
Birch Gold Group
Extensive educational resources
BBB rating:
Years in business:
Minimum Investment:
A+
19
$10,000
Birch Gold Group has extensive educational resources on their website which indicates that the company is serious about educating Precious metals investors, not just pushing them into a Gold IRA. One of the unique resources is a Portfolio calculator that shows you how the traditional 60/40 Portfolio of Stocks and Bonds performs when it has a small allocation towards Gold. Birch waives first year fees for investors depositing $50,000 or more.
Goldco
Excellent Customer Support
BBB rating:
Years in business:
Minimum Investment:
A+
16
$25,000
Goldco has been helping investors move their tax-advantaged retirement savings into the security of Precious metals for 16 years. More than 1,000 of those customers have given the company 5-star reviews and Goldco is also highly rated by BBB, Business Consumer Alliance, and TrustPilot. Goldco provides educational resources on their website and has more in-depth materials available via email after you speak with one of their Precious metals specialists. When new clients invest $100,000 or more with Goldco they will receive $10,00 or more in free Silver.
Augusta Precious Metals
Exceptional focus on education
BBB rating:
Years in business:
Minimum Investment:
A+
10
$50,000
Augusta Precious Metals offers more educational resources on their website than any other Gold IRA company. Current topics affecting your retirement savings are covered in the regularly updated video library and you will also find a series of videos on basic economics. Augusta's blog regularly publishes articles addressing current economic matters. The Inflation and Retirement calculator shows you how Inflation will affect your retirement lifestyle. Investors with $100,000 or more to invest can schedule a 15-minute 1-on-1 teleconference with Devlyn Steele, Augusta's director of education. Augusta Precious Metals is clearly committed to helping you understand Precious metals and how you can benefit from a Gold IRA Investment.
Patriot Gold Group
Fast IRA setup
BBB rating:
Years in business:
Minimum Investment:
A+
6
$15,000
Patriot Gold Group is one of the newer Gold IRA companies but they are highly rated by BBB and TrustPilot. Patriot Gold differentiates itself from other Gold IRA companies in two ways. First, they will setup your Gold IRA within 24 hours so you can quickly initiate the rollover or transfer process with your existing Retirement account. Second, they offer a 'no fees for life' IRA for investors with $250,000 or more to invest.
Noble Gold
Excellent educational materials
BBB rating:
Years in business:
Minimum Investment:
A+
5
$2,000
Noble Gold is a relatively new Gold IRA company but they offer a wealth of educational material on their website and they are highly rated by BBB, Business Consumer Alliance, and Trustlink. With a low minimum Investment level Noble Gold makes it easy for anyone to add Precious metals to their retirement savings plan. Texans will appreciate the Noble Gold IRA because they can store their Precious metals in either Dallas or Delaware.
Summary
We've covered a lot of territory in this article about how to move a 401k to Gold without penalty. Here's a quick recap of the main ideas:
If you have questions about Precious metals or self-directed IRAs, use the Contact form. We can't give you financial advice but we'll do our best to answer your questions. You can also reach out to the Gold IRA companies listed above. They have knowledgeable representatives available who can also answer your questions.
About Satori Traders
Hi, my name is Bryan Post and I love the shiny stuff - Silver and Gold.
I've been investing in the Precious metals and mining stocks since 2002 when I realized that Gold is the only real money on the planet.
Here on SatoriTraders.com I share everything I've learned about the metals, Financials markets, trading, Technical analysis, and the numerous games that central banks play with fiat currencies.
Precious metals IRA company
Fidelity
- Founded: 1946
- BBB rating: C-
- Proof Coins: No
- Minimum Investment: $1,000
Patriot Gold Group
- Founded: 1990
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $15,000
- Founded: 2003
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $10,000
- Founded: 2006
- BBB rating: A+
- Proof Coins: Yes
- Minimum Investment: $25,000
- Founded: 2010
- BBB rating: unrated
- Proof Coins: Yes
- Minimum Investment: $10,000
Noble Gold
- Founded: 2017
- BBB rating: A-
- Proof Coins: Yes
- Minimum Investment: $2,000
