What is a 401k to gold IRA rollover? How does it work?
“Gold IRA rollover” has been one of the most commonly searched phrases in the recent past. The sudden and immense interest developed by people warrants a closer look at what this term is all about, and why it is that important after all.
If you have attempted to shift from one employer to another, you may already have gone through the process of rolling over your retirement funds into an IRA.
This is a common practice amongst those who want to consolidate their retirement or pension funds.
As opposed to simply channeling the retirement funds into investments that are very dependent on the nature of the global economy, people are beginning to open up to the diversification of their portfolios. The most common approach to this diversification has been the execution of a 401(k) to gold IRA rollover. Let us proceed to define what a gold IRA is.
The Definition of a Gold IRAs
A gold IRA is perceived as a long-term retirement account in which the appointed custodian holds precious metals such as gold, platinum, silver, and palladium for the owner of the account. Despite this account being called a gold IRA, this does not mean that its owner cannot have other precious metals and hold them in it. An investor can as such buy a large amount of silver and hold it in their gold IRA, without the name of that account being affected. The same stands for platinum and palladium.Most Gold IRAs exist as self-directed plans. This means that the holder of the account has the power to decide the quantity and quality of the assets held in their gold IRA. This, however, does not imply that a gold IRA account holder should proceed to collect ornaments or objects made of the listed precious metals. The IRS actually demands that one meets the fineness requirements that are set for precious metals that make it to gold IRAs.
Steps to Open a Gold IRA
Opening a gold IRA will most likely come up as one of the most straightforward processes that will encounter in as far as the opening of accounts is concerned. How exactly do you go about that? Let me outline it for you:
1. Find a Custodian
A significant number of people are usually tempted to hold the precious metals they purchase in their safes at home. I wouldn’t recommend that. Besides the restlessness that will come from knowing that robbers can attack you at any time of the day as they try to locate your precious metals, you will actually face the law in most states for doing this.
One of the main things that you should look for when searching for a custodian is an impressive record of accomplishment. A company that has not been delivering in the past will not probably begin doing that now.
2. Find a precious metal dealer
Upon finding the right custodian, you should then proceed to search for a reliable precious metal dealer. Owing to the high value of the precious metals involved, it is very easy to be conned. This means that you should be very keen on the company that you settle on eventually. More often than not, the custodian you find will recommend a reliable precious metal dealer, but this does not mean that you should do your background checks.
3. Open your gold IRA and buy the precious metals
Finally, you can reach out to a company that provides gold IRA services and open an account with them. That company will facilitate the purchase of the precious metals, in what is known as a rollover process (I will explain that in a moment).
Upon getting to your retirement age, you can simply collect the precious metals, or you can cash them out to fund your new lifestyle.
How the 401(k) to Gold IRA Rollover process happens
Upon opening a gold IRA, you should reach out to the company that is currently managing your 401(k) account. Some of the companies that offer gold IRAs take it upon themselves to do this on your behalf. Either way, the result is that the rollover process should begin as soon as you reach out to the firm in charge of your 401(k) account.
You have the freedom to choose between a direct or indirect rollover of the funds in your 401(k). With a direct rollover, the funds are transferred directly into your gold IRA account. The indirect rollovers, however, demand that you first withdraw all the funds in your 401(k) account, and then you deposit them into the gold IRA. The direct options bear fewer risks and attract fewer penalties from the IRS.
If you settle on the indirect rollover approach, the IRS gives you only 2 months (60 days) from the day you withdrawal the funds from your 401(k), to make the transfer to your gold IRA. If you do not deposit the funds into your gold IRA within this period, they are usually classified as taxable withdrawals. Not forgetting that for those who 59.5 years are can attract a 10% penalty for making an early withdrawal.
Is it the right time for you to execute a 401(k) to Gold IRA Rollover?
The current global political scene is a clear reminder that we could wake up to business “unusual”. Those who managed to ride on the bullish market trend in the post-recession period have managed to stabilize their assets, some 9 years after the economic downturn. That may come up as a positive statement but it simply implies that these investors lost 9 years of investment. People who invested in gold were able to pick up very soon and far ahead of those who held the paper assets.
Nobody knows which superpower will make a move that will cause the entire economy to slow down. Did you know that the entire market saw a steep 7.1% drop after 9/11?
Economists who follow up on the economic outlook of the USA and the entire world have observed that there is very slow growth of the USA GDP, the weakening of the global market growth, an increase in the USA national debt at a rate of $50000 per second, as well as the rise of over-valued stocks. Such are just but clear examples of factors that could gradually lead to an economic crisis. The best approach to shield your assets is through diversification.
Financial experts have identified gold as a very suitable asset owing to its stability. During the times in which the entire economy is crashing and paper assets diminishing in value, gold has been discovered to remain quite stable and has in most cases actually experienced an increase in its price.
The prices of gold are bound to rise and fall, but they are certainly not as volatile as paper assets. Currently, the price of gold per ounce is a few dollars above the $1400 mark. In a few years to come, owing to the economic upheavals, this price is set to rise significantly, even as stock prices continue to fall.
You should, therefore, consider taking prompt action to ensure that you include gold in your portfolio of investments, which is possible through the rollover of the funds in your 401(k) to Gold IRA.
My recommendation (Top 5 list)
There is a jungle of services out there where you can turn for help with the process, however, just like with anything else, there are both good ones and bad ones. I can tell you, as we have reviewed over 80+ companies on this website that it is very important to compare different alternatives against eachother, to get the best deal possible.
Below you got a link to my top 5 list of the top 5 rated and top 5 recommended gold providers:
Rating: (4.9 / 5) Learn more about Augusta on this page
Rating: (4.7 / 5) Learn more about Gc on this page
3: Hartford Gold
Rating: (4.6 / 5) Learn more about HG on this page
4: Advantage Gold
Rating: (4.5 / 5) Learn more about AG on this page
5: Birch Gold Group
Rating: (4.5 / 5) Learn more about BGG on this page
Why should I roll my 401(k) to an IRA?
First of all, it is not recommended for everyone, however, it is the best chooice for many people to actually do a 401(k) to IRA rollover. There are more than just a few reasons also, the most common reason is (most likely) due to the fact that it will give you more investing chooices and much greater control over your assets. Not to mention, you will avoid immediate taxes and your retirement savings will continue to grow tax-deferred.
Does a gold IRA provide the same tax advantages as other IRAs?
Short answer, yes, a gold IRA comes with the same rules and tax benefits as any other IRA would.
How do i convert my 401(k) to gold?
If you want to do this in the most easy way possible it can actually be done in simply 3 steps: 1: Contact a gold IRA custodian advisor (see top-5 recommended ones above) by filling out an interest for information + you will get a free brochure. Step 2: Ask them about gold (or silver) in your IRA and any other questions regarding your account setup. 3: Once your gold (or silver) is placed in your account, you will also have your Harvard trained economist (atleast if you go with my #1 recommended provider) every step of the way, that you can contact (by phone or e-mail) at anytime you want to discuss further diversification.
Is it difficult to liquidate a gold IRA?
No, this is not difficult at all. You can very easily arrange both a full or partial distribution of either gold or cash from your IRA.
- You can request a shipment of the gold (or silver) directly to you through your custodian.
- You can cordinate with your custodian to pick up the gold (or silver) at the storage facility for distribution.
- You can also tell your IRA service provider to withdraw both gold & silver on your behalf and wire the cash to your custodian and they will transfer it to you
Just keep in mind that an early IRA distribution could lead to taxes and penalties, atleast if you do not rollover to another qualified account. So make sure to consult with your economic advisor before you make any withdrawals from your gold (or silver) IRA
Where can I get a physical 401k to gold ira rollover guide?
All of the companies on my top-5 list above will provide you with a guide for free, with no obligations. I would recommend that you get one from both the #1 recommended company aswell as one from the #2 recommended company as they both offer great additional info that you might want to learn aswell for maximum success.
I hope you found this article on What a 401k to gold IRA rollover is and how it works to be helpful, and that you now got a better understanding on the subject. Please share your own experience and/or questions below as I would be more than happy to answer them!
I wish you success!
Michael, founder of Gold Retired
Have been thinking to do a rollover for a while now and think im finally ready! Probably a wise move to do it now before shit hits the fan, right?
First of all, thank you for your comment!
Happy to hear you are ready and yes it might be wise to do it, especially in these times… However, keep in mind that it is not something that is right for everyone, so make sure to do your research and also to talk to a financial advisor before you move ahead.
Thank you again!