401K to Gold IRA Rollover Guide

Rolling over a 401k to an IRA is a common practice. People are always leaving their jobs or life changes and therefore your retirement account needs to change, this is normal, but it’s good to know how to do this correctly so you don’t pay any extra taxes.

Another reason that rollovers are used is to diversify the assets in your portfolio. If you want to add some precious metals to balance your portfolio with something that is not correlated to traditional stocks and bonds, you’ll have to set up a special type of IRA that allows this.

This is why it’s a good idea to consider a 401k to gold IRA rollover.

What is a Gold IRA?

That’s a great question. In 1997 Congress passed the Taxpayer Relief Act. Among other things this allowed savers to hold precious metals in a special IRA account that is handled by a custodian. This is commonly known as a gold IRA, but you are not limited to holding just gold. You are also allowed to hold silver, platinum, and palladium.

A feature of Gold IRAs is that they are self-directed. You are allowed to have gold (and other precious metals) in the form of bullion, bars, and coins, as long as the coins meet a strict purity standard.

These accounts are similar to other accounts in that there are contribution limits, and required minimum disbursements, just like traditional IRAs.

Are All Precious Metals Allowed in a Gold IRA?

No, there are strict requirements you must follow, otherwise, you can be hit with onerous tax penalties. The IRS mandates purity standards that must be met. Here are the purity requirements for eligible metals:

  • Gold has to be .9950 pure
  • Silver hast to be .9990 pure
  • Both Platinum and Palladium must be .9995

You are not allowed to hold collectible coins in your account, and the coins you do hold must meet the purity standards above because the IRS wants the metals to be as close in value to the spot price of the metal as possible. This is because it is easier to assign a market value and also assign proper tax value as well.

How To Create A Gold IRA

First off, we will outline the steps to set up a gold IRA and the rollover process, but it is important to know, you are best off if you partner with a reputable precious metals company that has expertise with these types of accounts.


First, you need to create a self-directed IRA. A self-directed IRA is an individual retirement account that gives you more control over what assets you invest in. This is why you can invest in precious metals with a self-directed account.

Next, you will need to find a custodian for your IRA. If you have partnered with a reputable gold company to create your account they will be able to recommend custodians that they have worked within the past, and are known to be safe and secure.

The reason you need a custodian is that you, as the investor, are not allowed to hold or take custody, of your precious metals. That is why there are companies designed specifically to do this.

Now that you have a self-directed account, and a proper custodian, now you’ll need to collaborate with a reputable precious metals dealer. Ideally, you start this process by connecting with a reputable precious metals dealer, because they can walk you through this process making it much easier.

Next, you instruct your precious metals dealer as to which metals you want to purchase. Once the purchases have been made the metals are transferred to your custodian.

When you reach your retirement, or by the time you turn 72 years old, whichever comes first, per IRS regulations, you have to start taking your required minimum distributions. You can either sell the metals on the open market, or you can take physical possession of them. In either case, the IRS treats both as a distribution and therefore a taxable event.

Why Should You Rollover a 401k to a Gold IRA?

When Congress first created these tax-advantaged individual retirement accounts, they thought they had done what the constituents wanted. While IRAs were a step in the right direction, they were incomplete.

The IRS would not allow you to hold physical precious metals. This was a huge mistake because the precious metals markets are some of the oldest markets in the world.

People have been using gold and other precious metals as a store of value for as long as we have recorded history. There needed to be a way to invest in physical gold in an IRA account because so many savers and investors demanded it.

Congress fixed this error in 1997 by allowing investors to add physical gold to specialized IRA accounts.

While traditional investments like stocks are popular to fill a 401k with, they are very volatile and a 401k does have a significant amount of risk that comes with it.

You flatten out your risk exposure, creating an IRA that can hold gold. Gold does not have the violent moves that equities do, and gold never goes to zero, it always has value.

Humans throughout history have admired and valued when they have held a gold bar or coin that is at least .9950 pure in their hands. The same cannot be said for holding a stock certificate or a bond from a company that no longer exists.

The 401k to Gold IRA Rollover Process

Now that you created a gold IRA it is time to fund it by rolling overall or a portion of your existing 401k. There are two steps to choose from when rolling over your 401k, an indirect rollover, or a direct rollover.

Indirect Rollover:

For an indirect rollover, you are responsible for removing the funds from your 401k account and then depositing them into your new IRA account. Indirect rollovers are more complicated. You also have a time constraint.

Once you receive your funds the clock starts ticking, you only have 60 days to get your money into the possession of either your IRA company or your custodian. If you do not move the money in the 60 days, the IRS considers the funds you withdrew to be a taxable event.

To make matter worse, if you are under the age of 59.5 years old, the IRS will add a 10% early withdrawal fee. The IRS is also notoriously unforgiving to errors or accidents or really anything that falls outside of these strict rules.

Direct Rollover:

With a direct rollover, you instruct your 401k to send the money directly to your new IRA account. In a direct rollover, you do not handle your funds at all.

Which is better Indirect or Direct Rollover:

For most investors, the most popular choice is a direct rollover. There are fewer moving parts and fewer things that can go wrong. With indirect rollovers, the chance of the investor making an error that causes the IRS to hand out a penalty is much greater.

Unless you have talked with a tax professional and have very specific well-defined reasons for doing an indirect rollover, avoid it and go with the nearly fool-proof direct method. If you are unsure which method is best for your situation, consult a tax specialist, or just don’t risk it and use the direct rollover.

Is a 401k to Gold IRA Rollover Right For You?

How diversified is your current portfolio? If it’s not diversified, would you like to fix that problem? Do you want to add some assets that are non-correlated, meaning their prices don’t move up and down in tandem with traditional investments like stocks and bonds? If you answered Yes, to one or both of these questions, then you should consider converting a 401k to gold IRA rollover.  

If you speak to a smart investment advisor, they will tell you that the advantage of precious metals is that they behave differently than all other asset classes. When stocks and bonds are shooting up in price because of low interests rates, precious metals often do not rise. Conversely, when the financial world is collapsing, precious metals often do not fall as far as stocks, bonds, and real estate.

You want a retirement portfolio to be well balanced. If everything in your portfolio goes up at the same time, then it is likely to all drop at the same time. This is not the way to have a relaxing retirement. By the time you have earned your retirement, you want your portfolio to be in the “Goldilocks zone”, not too hot, not too cold, but just right. Precious metals are great for providing this balance.

Of course, the price of gold and other precious metals does rise and fall like every other asset. Gold in particular just does not seem to fall as far once it has gone on a bull run. As of this writing, the all-time high gold price is $1,930 an ounce. For it to fall to $800 an ounce, and 50 percent decline, would be highly unlikely. Also, no matter what, the price of an ounce of gold will never go to $0 an ounce. There are many stocks and bonds that go to zero.

This is the power of precious metals, they are not exciting until the financial markets go haywire, then investors love them for their non-excitement and stability.

Making Your Rollover Decision

If you have decided that you would like more control over your investment options, and are tired of those same old high fee mutual funds that you are restricted to putting the money in your 401k into, then your next step is to find a reputable precious metals company to work with to get your 401k to gold IRA rollover process started.

We have researched nearly all the companies in the precious metals investing business and there are two that stand far above all the others.

Our top recommendation to help you with your rollover is Augusta Precious Metals. Some features of Augusta Precious Metals that make them our top recommendation are:

– $50,000 Minimum Investment

– Complimentary portfolio reviews for all clients

– Unique, free one-on-one educational web conference

– No management fees; up to 10 years of custodial/storage fees paid by Augusta for you

– Admits gold and silver are not for everyone and performance cannot be guaranteed

Our #2 recommendation to help you with your rollover is Goldco. Some benefits of choosing Goldco that make them our second highest recommendation are:

– Low minimum starting investment of just $25,000

– Full transparency

– Low transaction fees

– Great customer services

– Client reviews are the best in the business


There are many benefits of diversifying your retirement savings by rolling over all or a portion of your 401k into a Gold IRA. We recommend both Augusta Precious Metals and Goldco, both companies operate to the highest ethical standards and have the best reviews from their investors compared to all the other competitors.

If you want control over your investment options, protection from stock market volatility, and a trusted partner to help you reach your retirement goals, contact Augusta Precious Metals or Goldco today.


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