401k to Gold Ira Rollovers26 min read

A gold IRA rollover lets you convert some of your current retirement account or investment portfolio into bullion bars and coins. That way, you can hedge against inflation and other economic uncertainties.

Many times, you can move funds from your 403(b) or 401(k). A 403(b) is a tax-sheltered annuity plan. It is often used by ministers, tax-exempt organization employees, and those working in public schools. If you have a 403(b), you can still use the gold IRA rollover, but you should discuss your options with a financial advisor first.

Sometimes, the movement of funds from a retirement account to another one is called a rollover. However, the Internal Revenue Service does have clear rules as to what dictates and transfer or a rollover.

With a rollover, the money to be moved is first paid to you. Then, you must deposit those funds into the other account. During a transfer, the original custodian of your IRA transfers the funds to the new IRA custodian directly. In a sense, you personally don’t see the money at all.

Typically, the custodian-to-custodian transfer is a common way to establish self-directed IRAs like the gold IRA with your existing and qualified funds. You establish a new account with your IRS-approved custodian. With your consent, he or she requests the transfer of your IRA assets from the existing retirement account. That way, the custodian can accept the money from your 401(k) and invest your assets according to your needs and preferences.

Often, the self-directed IRA is the best way to go. However, if you choose a rollover, you should consider the direct rollover because it’s seen as the best choice. An indirect rollover usually has withholding requirements, and you could incur penalties for early distribution. Ultimately, the choice is yours, and it’s a good idea to talk with your financial advisor before making any decisions.

The IRS has very strict regulations and rules for gold IRA accounts. The most important of them pertain to the self-directed IRA, such as a gold IRA, which is often different from a 401(k). Federal law states that you require an approved IRA custodian for this type of retirement fund. Though it gives you more purchasing power, it can be slightly riskier than other options.

It’s crucial to note that you don’t personally buy precious metals like gold with your IRA account. The IRS requires that the IRA account administrator handles the transactions for you. In a sense, you just tell the custodian what to do, and they can start buying precious metals. They make the arrangements for insurance and shipping at the conclusion of the transaction. While you have purchasing power, it’s not like you go to the pawn shop and choose the precious metals for yourself.

Once the gold is purchased, the custodian must store it according to the IRS rules for the precious metals IRA, such as Gold IRAs. The custodian of the new IRA receives the precious metals and immediately hands them to a third-party, IRS-sanctioned, off-site depository. You can choose the depository it uses or can use one that the account administrator is already familiar with.

It safeguards and inventories your precious metals holdings until you tell the account administrator to sell or distribute the gold for you. There are often no required minimum distributions for your IRA account. However, you can make them if you want for your retirement.

Since it is usually self-directed, you can get distributions sent to your address with insured delivery. These can be used for whatever you want, and some people put them in a savings account to bulk up their retirement funds even more.

Again, the IRS has strict rules that pertain to an IRA rollover. If you chose to do a gold IRA rollover, you have 60 days from the day you get the funds to deposit that money into your account from the gold IRA company or the custodian you choose. If you don’t get the transaction completed during that time frame, the money is now a taxable withdrawal. You also face a 10 percent early withdrawal penalty as you do with a regular 401(k) if you are less than 59.5 years old. Those who withdraw from a personal IRA to roll over to another don’t have to deal with tax withholding issues. Just remember that you’re only allowed on rollover each year.

With a direct custodian-to-custodian transfer, you don’t have to deal with the 60-day transfer rule because you don’t actually receive any money. The transfer is done through a wire transfer directly between the custodians. The original custodian can also issue a check to the new custodian and mail it to them. These are the easiest ways to invest in gold and other precious metals because it’s all done by someone else. With that, the self-directed IRA is often the best choice. Though you can have that with Roth IRAs and traditional IRAs, your Roth IRA or your 401(K) doesn’t allow gold to be used.

There aren’t any government-sanctioned transfer or rollover fees to move an existing traditional IRA or 401(k) into a precious metals IRA account. With that said, though, there could be some account application fees to contend with. Sanctioned administrators and custodians of the precious metals IRA usually charge a processing fee to open the account for self-directed IRA options. Therefore, different administrators can charge different amounts, but the average is roughly $50. There could be fees involved for moving money from a 401(k) to a gold IRA.

If you’ve got a 401(k) account, you may roll it into an Individual Retirement Account (IRA) or other qualified plans without facing any income tax penalties. Here is a basic overview of some of the 401(k) rollover rules:

• When you receive the funds from the 401(k) for the rollover, you only have 60 days to complete this process. If you don’t do it within that time frame, the IRS treats the money as a taxable distribution. With that, if you’re not 59.5 years old yet, the IRS imposes a 10 percent penalty from the withdrawal along with normal income tax concerns.
• You can only perform one 401(k) rollover each year from a 401(k) to the IRA. That one-year period starts on the date when you receive the 401(k) distribution. This applies to each IRA you own separately.
• You can’t use the money from the distribution to buy investments in that period between receiving the 401(k) distribution and establishing the IRA.

It is best to choose the option to do the direct rollover for your 401(k) to gold IRA. With this option, you don’t get a check for the 401(k) funds. Instead, the 401(k) plan provider transfers the money into the new plan directly.

Since you are on a time crunch (60 days) and can’t buy any other assets with that money, it’s often best not to tempt yourself. Though some people choose to pay off debt or buy assets and replace the money spent, this is a very risky thing to do. If you don’t get all the funds back into the account in two months, you risk severe penalties and must pay taxes on it the following year. Yes, it is lucrative, but the risks far outweigh the benefits.

The IRS has very strict regulations about the types of precious metals and gold allowed in a self-directed IRA. The investor may hold gold bullion, bars, and gold coins as long as the assets meet two standards.

The gold has to be an official currency of any recognized public entity. With that, it has to meet the purity standard. For the United States, the purity level of physical gold must be 0.995. That standard varies for different countries. Therefore, research is required to find out the exact purity level that’s needed.

The types of physical gold you may hold in your self-directed IRA (gold IRA) can include:

• Swiss PAMP Gold Bars
• Credit Suisse Gold Bars
• Certain Gold Bullion Bars
• Gold Kilo Bars
• American Gold Buffalo Coin
• Canadian Gold Maple Leaf Coin
• American Gold Eagle Coin
• Austrian Philharmonic Gold Coin

A gold IRA company specializes in setting up gold IRAs from start to finish. This includes the rollover or transfer. Other components that such companies can handle include account setup, purchasing IRS-approved precious metals, storing them through an accredited and IRS-approved depository, and more.

Typically, reputable gold IRA companies should handle the full process for you. However, you are bound to have questions, and a representative should be available to answer questions during any part of the situation. Typically, these companies form alliances with accredited depositors, traditional IRA custodians, and metal dealers (wholesale).

It’s important to choose the best gold IRA company, which depends on the factors that are significant to you. It could be customer support, ratings, physical location, storage options, and the availability of other asset options. Once you know what is essential for you, make a list of a couple of companies that meet those criteria. Request a free gold kit from the website or call them to learn about the products and company.

Usually, gold IRAs are not handled by the same people who offer a 401(k). However, some specialize in both. It might be wise to contact your financial advisor and tell them what you want to achieve, which is to take some funds from your current 401(k) and create a gold IRA.

Likewise, you must do your research by calling a few gold IRA companies before making the decision to invest with one of them. Each one has different fees and options, so you be thoroughly educated about what you need before you do anything else.

Through the Taxpayer Relief Act in 1997, some gold, silver, platinum, and palladium bars and coins are permitted in traditional 401(k) retirement accounts. This includes 1/2 ounce, 1 ounce, 1/10 ounce, and 1/4 ounce coins that are minted by the United States Treasury Department. Likewise, select rounds, bars, and foreign coins of the right purity are allowed.

• Palladium and platinum must be 99.95 percent pure, silver must be 99.9 percent, and gold has to be 99.5 percent pure.
• Proof coins need to be in their original Mint packaging, have a Certificate of Authenticity, and be in flawless condition.
• Bullion coins need to be in Brilliant Uncirculated condition.
• Bars, rounds, and coins not made by the US Mint have to be accredited by an assayer, manufacturer, or refiner and meet appropriate purity requirements.

Here is a list of some of the palladium, platinum, and silver coins allowed:

• American Eagle Palladium Coins
• Canadian Palladium Maple Leaf
• Australian Platinum Koala Coins
• American Eagle Platinum Proof/Bullion Coins
• Canadian Silver Orca
• Canadian Silver Snow Falcon
• Canadian Silver Polar Bear
• Chinese Silver Panda
• British Silver Britannia
• Australian Silver Kookaburra
• Austrian Silver Vienna Philharmonic
• Many others