More and more Americans are moving their savings to gold IRAs (individual retirement accounts). And there are good reasons for that — economic uncertainty, fluctuating stock values, and old-fashioned common sense make gold IRAs or precious metal acquisition safe choices.

Of course, you might already have substantial savings in your employer match 401(k) plan. So, you may be wondering how to convert a 401(k) to gold without incurring any fees or penalties. Fortunately, there’s a way to do just that, so read on.

What Is a Gold IRA?

A gold IRA is an individual retirement account that lets purchasers hold gold (and, sometimes, other precious metals like silver) as qualified retirement assets. You can hold gold as bars, bullion, or coins.

A gold IRA is a separate retirement instrument from a traditional retirement account. For example, you can’t have a blended traditional 401(k) or IRA and a gold IRA. You can have these separately if you like.

Notably, many of the same rules, such as contribution limits and distributions, apply to gold IRAs the same way they apply to other retirement accounts. You can set up a gold IRA using pre-tax or after-tax dollars, depending on who you work with. If you are a self-directed IRA holder, you can personally purchase gold, silver, platinum, and other precious metal bars when you like.

Your annual contributions are capped by the IRS, too. You should also remember that many gold IRAs have slightly higher fees than normal IRAs, though they can still be worthwhile in the long run when you compare them to other retirement accounts.

What Are the Benefits of a Gold IRA?

There are plenty of benefits to having a gold IRA, the first of which is peace of mind. Economic uncertainty is a fact of life these days, and having your retirement funds placed in an economy of ups and downs can be worrying. Depending on your stage of life, you may no longer want your retirement savings to be attached to the decisions of companies or stock market assets you can’t control.

Precious metals like gold, on the other hand, are always valuable. While the exact price of a gold bar can vary from year to year, it’s always valuable because of its chemical and aesthetic properties. If you have savings in gold and other precious metals, you can be sure they will stay solvent for the rest of your life.

With a gold IRA, you can continually take an interest in your retirement just as you have been — with additional peace of mind and greater purchasing flexibility. On top of that, gold IRAs allow you to control your money rather than you having to go with the decisions of your employer.

Your 401(k)’s value is contingent on the decisions made by your provider above all else. If they make a poor decision, your retirement money could be at risk!

Are All Gold IRAs Eligible for 401(k) Rollovers?

No. Only some gold IRAs are eligible for 401(k) rollovers. With a 401(k) rollover, you take the money you’ve built up in your 401(k) account and transfer it to a gold IRA without any additional purchases. This is similar to how you might transfer your 401(k) balance from one employer’s 401(k) plan to another if you change companies.

Whether or not a gold IRA is eligible for 401(k) rollover depends on factors like employment status, your age, and the kind of gold IRA you wish to move your money to.

401(k) retirement accounts for people who are employed aren’t automatically eligible for gold IRA rollovers. However, if you still have a 401(k) account from a previous employer, you should be able to transfer the money from that account to a gold IRA without incurring any penalties.

How Can You Move a 401(k) to a Gold IRA?

There are two ways to move your 401(k) to a gold IRA. Let’s take a closer look.

Direct Trustee-to-Trustee Rollover

With a direct trustee-to-trustee rollover, you transfer your funds straight from your current 401(k) account to a new gold IRA without withdrawing money. After all, if your retirement funds stay within a retirement account, you shouldn’t be penalized for withdrawing those funds.

Using a direct trustee-to-trustee rollover allows you to avoid penalties, early withdrawal fees, and other negatives.

Indirect Rollover

Indirect rollovers are the opposite. With an indirect rollover, you withdraw your retirement funds from your 401(k), then redeposit them into a gold IRA within 60 days.

If you don’t do so within 60 days, your funds must be treated as taxable distributions. This could take a big bite out of your retirement savings, particularly if you are under the age of 59 and a half. What’s more, taking your money out of your 401(k) before you turn 59 and a half under any circumstances might result in an unavoidable 10% early withdrawal penalty.

For these reasons, a direct trustee-to-trustee rollover is a better choice. Not only is it quicker and risk-free, but it also helps preserve all of your retirement funds as you move them.

How To Execute a 401(k) to Gold IRA Rollover Without Penalties

Now that you know the different kinds of rollovers, let’s break down the step-by-step process you should use to move your money into your gold IRA without incurring penalties.

Open a Self-Directed Gold IRA

Your first step is to actually open a self-directed gold IRA by contacting a gold IRA provider like American Hartford Gold.

If you choose American Hartford Gold’s gold IRA services, we offer ample assistance throughout the rollover process, giving you all the information and support you need to transition your 401(k) into a gold IRA. We also offer a variety of other services — with our help, you can get gold IRA storage, find the right gold products to buy, and much more.

Our knowledgeable staff and customer service provide you with a stellar experience from start to finish. When you work with American Hartford Gold, you’ll find that moving your 401(k) to a gold IRA is easier than you expect.

Choose Your Rollover Type

Your next step is to choose the rollover. As noted, a trustee-to-trustee rollover is superior to an indirect rollover. The latter will almost certainly incur extra fees and penalties, which you want to avoid.

To complete a direct rollover, you’ll need to speak to your gold IRA account administrator (who you will be connected to or meet after you set up a new gold IRA). They’ll give you the initial details to start the process, plus help break down other steps you need to take to make it happen.

Contact Your 401(k) Account Administrator

At this stage, it’s time to contact the 401(k) account administrator. Don’t listen to them if they try to get you to stay — you know what’s best for your retirement savings.

When you tell your 401(k) account administrator that you want to move your 401(k) funds to a self-directed gold IRA, they will ask for documentation. They’ll tell you everything you need to prepare, like account records, proof of identity, and account information.

Submit the Necessary Documents

You’ll have a few days or weeks to gather the necessary documents. Once you have them, submit them to your 401(k) account administrator and your gold IRA company representative. Both parties need to receive the same documents to ensure a smooth transition.

If all goes as planned, the funds in your 401(k) account will go to your IRA in a matter of days at most (accounting for federal holidays and weekends). In most cases, your self-directed gold IRA will have a website or a mobile app with which you can monitor the process. That way, you can always double-check to see when your account funds have arrived.

Buy Gold Products With Your 401(k) Funds

Putting your account funds into your gold IRA is just the start. You’ll next need to purchase different gold products to see them appreciate and to ensure your retirement account funds continue to grow. Remember you won’t be able to rely on employer matching anymore.

Fortunately, your gold IRA account representative or administrator should provide you with ample advice and assistance in this regard. Your gold IRA company can recommend different products depending on your needs, your long-term goals, how much money you have, and a variety of other factors.

In most cases, purchasing gold IRA products takes a handful of days as you iron out details and make important decisions. Most purchases are relatively instantaneous, too, although if you purchase physical gold assets, you’ll need to wait for them to be delivered to your gold storage facility or your home (depending on what you choose).

Monitor Your Gold IRA

Any good retirement plan requires monitoring. To that end, you should consider maintaining a gold IRA to be an ongoing process.

It’s crucial that you monitor your gold IRA going forward. If your account doesn’t grow or develop according to your plans, you can speak to the account administrator to make some course corrections. You can also always purchase more gold assets, change where your assets are stored, and so on.

With a gold IRA, you are in charge of your retirement account and its future. This is a kind of freedom and control that many Americans appreciate compared to the hands-off approach of many 401(k) retirement accounts.

Wrap Up

Ultimately, moving your 401(k) to a gold IRA is one of the best things you can do for your retirement fund and your peace of mind. That’s why American Hartford Gold offers gold IRAs for our customers and makes it easy for you to expand your access to precious metals.

Want to know more? Get in touch with us today and ask about setting up a gold IRA for your retirement future.

Sources:

Gold IRA Definition | Investopedia

Retirement Topics – IRA Contribution Limits | Internal Revenue Service

Traditional and Roth 401(k) Plans | Investor.gov

What if I withdraw money from my IRA? | Internal Revenue Service