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April 26, 2021

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Overview of 401k Transfers To Gold

As the years bring you closer to retirement, you may start looking into the many ways in which you can put money aside. If you have a 401(k) from an employer that is idling, rolling over all or some of your 401(k) into a gold IRA may be a favorable option for reaching your financial goals.

To do this, you need to start by opening and funding up a self-directed gold IRA. Moving your retirement funds into a self-directed IRA gives you the potential for more investment options like real estate, private bonds, private equity, and precious metals like gold and silver.

Investing in precious metals is a popular choice because they have been used as a stable solution of storing wealth that can weather numerous economic fluctuations. The price of precious metals often increases through tough economic time blocks, meaning that your portfolio has extra insurance against the negative impacts of a financial crisis.

There are rules and regulations to be aware of. The last thing you want to do is decide to roll over your 401(k) and be hit with penalties because you didn’t do things correctly. For further information on Gold IRA rules and regulations you can visit our page by clicking here.

How does one move a 401(k) to gold without taking penalties? This guide will help you understand what a 401(k) is, how it works, its benefits, and how to effectively roll over your 401(k) to gold without incurring penalties.

What is is a 401k Plan?

Section 401(k) of the Internal Revenue Code enables individuals to make contributions to a retirement account in a tax-deferred strategy.. This means that they will not be taxed on that contribution until they take a distribution when they retire (at age 59 1/2 and beyond). The following guidelines about 401(k)s are outlined by the IRS:

  • Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals).
  • Employers can contribute to employees’ accounts through direct matching schemes.
  • Distributions, including earnings, are includible in taxable income at retirement (except for qualified distributions of designated Roth accounts).

Employer matching is a valuable way for individuals to distribute more money for retirement if an employer offers this plan, and some even refer to it as “free money.”

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If you are contributing to a 401(k) fund, remember that the company managing the fund takes fees from your 401(k) even when you pause contributions. These fees can add up to a significant amount if you’re not continually contributing money. One way to help avoid those fees is through a 401(k) rollover, which transfers assets to an IRA and in turn, deepens your investment choice arsenal.

Like IRAs, 401(k)s are subject to required minimum distributions (RMDs), which require investors aged 72 and older to take an allocated amount in distributions each fiscal year. 

Benefits of a 401K plan

WHAT ARE THE BENEFITS OF A 401(K) PLAN?

There are many more benefits to a 401(k) plan that include:
  • Allows employees to save money faster by automatically withdrawing from their paychecks into their retirement accounts.
  • Employer matching contributions to aid employees in building their wealth for retirement.
  • Tax-deferred contributions, meaning that the money they contribute to their 401(k) will not be taxed immediately. If you are making $45,000 a year in personal income and you contribute $5,000, you will be taxed on $40,000 of rather than the full $45,000, meaning you pay lower taxes on your income. You will, however, need to pay the taxes when you take the withdrawal in retirement.

To add to these benefits, you can consider a gold IRA rollover with a trusted company. Knowing how to roll over your 401(k) into a gold IRA means keeping all the great benefits of a tax-advantaged retirement account, plus the ease of stress  knowing that your finances can be secured in precious metals.

You may be interested in our Beginners guide to Precious Metals IRA if you do not have a retirement account eligible for a rollover.

free IRA guide book

Gold IRA Rollover Guide

The main difference between a 401(k) and an IRA is that an IRA is normally opened by the individual rather than being offered by an employer. A rollover IRA is a term for an individual retirement account (IRA) that is funded by moving funds from a 401(k), 403(b), TSP, or similar retirement account into an IRA. 

With a rollover IRA, investors can use existing retirement funds to diversify to a broader range of investments than are available through 401(k) investments. And by investing in a self-directed IRA, you have even more options for investments, such as a gold IRA rollover.


Rollover IRAs are most often created when changing jobs or retiring, as they allow employees to move their current 401(k) or other retirement account balances into an IRA account that will offer a better array of investments and superior performance.

When transitioning to an IRA rollover, funds from existing tax-advantaged accounts can be rolled over into a new IRA tax-free and usually management fees are waived. You can even roll over funds from multiple retirement accounts into a single self-directed IRA, making it easier for you to corral and manage your retirement assets.

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With a gold IRA rollover, investors can maximize tax savings and deduction costs since distributions are normally subject to ordinary income tax rates. Particularly for those whom fall under lower-income tax brackets, this can result in gold held in an IRA being taxed at a lower rate than if it were not in an IRA.

CAN YOU ROLL A TRADITIONAL IRA INTO A GOLD IRA?

It can be simple to roll Traditional IRA funds into a gold IRA, but there are guidelines laid out when investing in precious metals. These can include include:

  • The gold must have a fineness of .995, or 99.5% purity. ( Visit the IRS website for more on this )
  • Gold has to be held by a custodian.
  • IRA Contribution Limits apply (see below)
  • Pre-owned gold cannot be added to a gold IRA. ( You can still open a new IRA and purchase new gold)

WHAT ARE THE BENEFITS OF A GOLD 401(K) ROLLOVER?

When you contribute to a gold IRA as part of your retirement portfolio, you’re purchasing actual physical gold as opposed to a gold ETF, which only certifies that you have a vested interest in gold, but not actual ownership. The benefits of investing in gold as part of your IRA include:

  • Defense against currency volatility
  • Protection against inflation
  • Less likely to be seized by the government
  • Diversification to help manage risks
  • Same tax benefits as conventional IRA

What Are IRS Penalties for Retirement Accounts?

The IRS sets forth penalties for not following regulations on different types of retirement savings. The following are a few IRA investing rules  to be mindful of so you know how to move a 401(k) to a gold IRA without any penalties:

  • If you exceed the contribution limits, you may incur a penalty of 6%Example: if you exceed the contribution limit by $500, you would be penalized $30 every year until the mistake is corrected
  • If you have an IRA, you are not allowed to invest in collectibles, which includes artwork, rugs, antiques, stamps, and other items as defined by IRS Section 408(m)(2). Tax penalties may result. This does not include qualified precious metals.
  • Withdrawing any distributions before reaching the age of 59 1/2 incurs a 10% penalty plus income tax. Exceptions include death or disability of the IRA owner, withdrawals to pay certain medical bills, first time home purchases, and higher education expenses.
  •  Additionally, the CARES Act allows for early withdrawal in 2020 for up to $100,000 if you are a “qualified individual”: you, a spouse, or dependent are diagnosed with COVID-19, you experience financial difficulties due to job loss, furlough, reduction in hours, or lack of childcare.

Easy Steps on How to Transfer an IRA Into a Gold IRA

If you’re a beginner transferring an IRA or rolling over a 401(k), and more specifically, transferring or rolling over into a gold IRA,

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There is a simple 4-step process to get you started. Of course, always keep in mind the rules and regulations to ensure that you are complying with the IRS.

4 steps to rollover retirement assets to a gold ira

  • Review investment options, as well as more information about investing in gold and other precious metals, to make sure you’re choosing the best option for your financial goals, and that you are eligible for the specific program you choose.
  • Work with your gold IRA specialist team to fill out the necessary forms to open and fund your account.
  • Partner with your precious metals investment expert to help you allocate a portion of your retirement account into a self-directed IRA. This is an important step to help you avoid IRS penalties.
  • Decide which type of metals are best suited for yo9ur investment. After purchase, they will be sent to a secure storage facility. ( Depends on the investing firm)

As you start the process, remember that only IRA-approved gold is eligible. It may be beneficial to contact a qualified gold IRA specialist.

We are recommending Augusta Precious Metals or  Goldco for opening or rolling over your accounts.

WHAT ARE CONTRIBUTION LIMITS FOR AN IRA?

Once you’ve established a rollover IRA, you can contribute to it just like a conventional Individual retirement account.

If you establish a rollover IRA and begin making contributions to it, you may inhibit your ability to do a reverse rollover IRA (back to a 401(k)), so examine all your options before invoking any changes.

The IRS has contribution limits for IRAs, which must be followed in order to avoid penalties and taxation. The following guidelines will help you understand the contribution limits for gold IRAs:

  • As with a traditional IRA, you’re limited to $6,000 in contributions per year ($7,000 if you’re over 50).
  • Contributions are across all IRAs, so if you have multiple IRA accounts, you are limited to that $6,000 total across all your accounts.
  • Contributions are per person, not per account, so you can potentially contribute to multiple IRAs in the same year.
  • If you are over 50 years old, you are allowed to make additional contributions to a 401(k). The catch-up contribution limit for 2020 is $6,500.

Get Started With Your Gold IRA Rollover

Large numbers of investors ask if they can roll over a 401(k) into a gold IRA without penalty–and it’s a worthwhile question to ask to protect your investments. The surest way to conduct a gold IRA transfer is to work closely with precious metals investing specialists.

To get started, you may already have a company in mind. However, We have extensively reviewed these 5 companies below and have discerned they are the leading IRA companies to invest in.

Good luck in your continued investing success.

Don't forget to check out - The Top 5 Gold IRA Companies we have reviewed.

For more questions on gold IRA investing please visit our FAQ Page.

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Nathan Rosevear

Nathan offers insights and reviews around the highest rated precious metal IRA specialists. He is an investor in gold and silver industry.
His passion is helping Americans secure their finances through stable investing and provides such help by blogging valuable information for investors to make sound financial decisions.
Do you want some help figuring out your precious metals Investment? Feel free to give me a call at 604 603 7953.
Let me connect you with the best in the business based on your financial situation and help you save some time and maybe save you some hard earned money.
Nathan Rosevear is not a financial advisor. No financial advise will be given on phone calls. Investors are urged to seek professional advice when necessary.
Gold Investment review is paid to recommend some of the services listed on this website by referring you to the right companies. No additional cost is attributed to the investor.