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".

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.

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.

• No more than 50% of your account can be withdrawn and the maximum loan is $50,000 regardless of the account's balance.

• The loan must be repaid within 5 years.

• If your employment ends the loan must be repaid immediately or the IRS will treat the outstanding loan balance as a distribution from the 401(k). Distributed funds will be taxed as regular income and investors under age 59 1/2 will be subject to a 10% early withdrawal penalty.

• The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) has changed some of the rules related to 401(k) loans so do your due diligence and find out if the changes affect you. Ask your HR department or the 401(k) Plan administrator for the current rules on loans.

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.

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.

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.

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:

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.

• A 401(k) at your current place of employment is "active". A 401(k) from a prior employer is "eligible".

• The best way to move an active 401(k) into Gold is to take a loan against the account.

• An eligible 401(k) can be rolled into a Precious metals IRA without taxes or penalties.

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.