401(k) to gold IRA rollover guide (2024)

You can diversify your retirement savings through precious metals

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With recent high inflation and a bumpy ride in the stock market, many investors are looking to alternative investments. One of the most popular right now is gold.

Gold IRAs are retirement accounts that allow you to purchase physical gold and other precious metals to be held inside the IRA. This gives you the tax advantages of an IRA while holding a tangible asset for retirement. And while you can simply fund a gold IRA with cash, you can also roll over your old 401(k) account into a gold IRA directly.

Key insights

  • You can roll over your 401(k) account into a gold IRA.
  • Gold IRAs allow you to invest in gold and other precious metals inside a retirement account.
  • Gold IRA rollovers can be done directly, or you can have your old account send you a check to deposit within 60 days.
  • Gold IRAs are self-directed IRAs that may allow investing in other assets such as precious metals, real estate and crypto.

Gold and other precious metal IRAs are an investment and carry risk. Consumers should be alert to claims that customers can make a lot of money in these or any investment with little risk. As with any investment, you can lose money and past performance is not a guarantee of future performance results. Consumers should also obtain a clear understanding of the fees associated with any investment before agreeing to invest.

What is a gold IRA rollover?

A gold IRA rollover is the process of rolling over funds from a standard IRA or 401(k) account into a gold IRA. This allows you to take existing retirement savings and move them into a self-directed IRA, giving you access to alternative investments such as gold.

In a standard IRA or 401(k) account you can invest only in traditional assets such as stocks, bonds and certificates of deposit (CDs). But with a self-directed IRA you can invest in alternative assets like gold, real estate and even crypto. This can add diversification to your retirement savings with the tax advantages of a retirement account.

“Some folks have a general distrust for traditional market investing and prefer more tangible assets — the most popular being real estate,” said Francisco Murillo, financial planner and managing director at Snowden Lane Partners. “However, in recent years more and more custodians are allowing investors to also hold precious metals within their retirement accounts, and gold has been a huge benefactor of this trend.”

How to do a gold rollover

To perform a gold IRA rollover for a 401(k) account, you’ll need to take the following steps:

  1. Make sure it’s eligible. You can’t roll over a 401(k) account if you’re still working at the job that provides it. You’ll need to be separated from employment, or check to see whether your 401(k) account allows “in-service rollovers.”
  2. Find a gold IRA provider. Choose a gold IRA provider that allows rollovers and can help with the process. Reputable gold IRAs are regulated and work with an IRS-approved custodian to store your assets.
  3. Sell current investments. Before rolling over funds from your 401(k) account, you’ll need to sell your current investments. Gold IRAs don’t allow “in-kind” transfers in most cases — you can transfer over cash funds only.
  4. Initiate rollover. You can do a direct rollover from your 401(k) provider to avoid any possible penalties or taxes, or you can have your 401(k) provider send you a check from the account. You’ll have 60 days to deposit those funds into your new IRA to avoid a 10% penalty and taxes.
  5. Purchase gold (or other assets). Once the rollover is completed, you can use the funds to purchase gold or other assets within your account.

Performing a standard IRA to gold IRA rollover follows a similar process, though you can skip step 1 because all IRAs can be rolled over to another one.

» MORE: Is gold a good investment?

What to consider before you do a gold rollover

Rolling over funds to a gold IRA can be a good way to diversify your retirement portfolio while also scoring tax advantages.

Physical gold is considered a collectible by the IRS and taxed at a 28% capital gains rate. But using a gold IRA avoids those taxes and instead only requires paying income taxes, depending on the type of gold IRA chosen (traditional or Roth). This can save you a boatload of money.

However, there are a few things you should consider before doing a gold rollover:

  • Fees: A gold IRA is a special kind of retirement account; you may pay high fees to get one set up. Many gold IRA companies charge high transaction fees and monthly maintenance fees to keep your account open.
  • Limitations: Gold IRAs have a few limitations, including the inability to store your own gold, annual contribution limits and penalties for withdrawing funds early.
  • Performance: Gold has underperformed the stock market over the last 50 years, and it is more seen as a way to preserve purchasing power. Before dumping your entire retirement savings into gold or other precious metals, look at historical performance.
  • Volatility: Investing in gold and precious metals can bring a lot of volatility. If you’re not used to this level of volatility, you might want to reconsider opening a gold IRA.
  • Retirement plan: While gold can be great for diversification purposes, rolling over traditional investments into a gold IRA may not help you achieve your retirement goals. It’s important to understand your retirement plan, risk tolerance and time horizon before choosing a gold IRA rollover.

Murillo said it’s also worth considering alternative ways to hold gold within your retirement account: “All else being equal, if you deem it prudent to have physical gold in your portfolio, a less expensive method could be to leverage a gold ETF (exchange-traded fund) or mutual fund, which may carry less expenses than housing the physical metal.”

» MORE: Physical gold vs. ETFs

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    Is a rollover the same as a transfer?

    A rollover is moving investments from one account to another, while a transfer is simply transferring funds. Rollovers can be done “in-kind,” transferring the actual assets from one account to another, while a transfer is typically a cash transfer. For gold IRAs, “in-kind” transfers are not allowed.

    Can you convert your gold IRA to a regular IRA?

    Yes, you can roll over a gold IRA into a regular IRA. You will need to sell any gold or other assets held in your gold IRA and perform an IRA rollover. This process can be done with your new IRA provider. It’s ideal to do a direct transfer as you risk penalties and taxes if your gold IRA provider sends you the check. You have only 60 days to deposit a check sent from your old IRA or you will be penalized by the IRS.

    Can you convert your gold IRA to a 401(k)?

    Yes, you may be able to roll over your gold IRA into your employer’s 401(k) account. This is known as a “reverse rollover” and is not common. If your employer’s 401(k) provider allows IRA rollovers, you can request one and follow the process outlined. You will need to sell any gold or other assets in your gold IRA first, as only cash can be transferred to your 401(k) account from a gold IRA.

    How safe are gold-backed IRAs?

    Gold IRAs are regulated retirement accounts and are required to hold your gold with an approved and insured custodian. Gold IRAs are as safe as any other retirement account for investing. But it’s important to do your due diligence before investing in a gold IRA to ensure it is reputable and insured.

    Bottom line

    Rolling over your 401(k) account into a gold IRA is fairly similar to any other IRA rollover, though it may take a bit longer to set up your gold IRA account versus a regular IRA. You can do a direct transfer or have your 401(k) account send you a check to deposit within 60 days to the new gold IRA. But make sure to consider the limitations and risks of using a gold IRA before transferring your retirement funds into one.

    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. IRS, "Topic No. 409, Capital Gains and Losses." Accessed Dec. 18, 2023.
    2. IRS, "401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000." Accessed Dec. 18, 2023.
    3. IRS, "Publication 590-B (2022), Distributions from Individual Retirement Arrangements (IRAs)." Accessed Dec. 18, 2023.
    4. Statista, "Average annual return of gold and other assets worldwide from 1971 to 2022." Accessed Dec. 18, 2023.
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