How And Why You Should Rollover Your 401k Into Precious Metals

Share on LinkedIn
Share on reddit
Share on StumbleUpon

Recently Gold has become a popular investment decision for people holding retirement accounts. Although the price of gold tends to fluctuate a lot, in the long run it continually increases in value. Here is a guide on how to roll 401K into gold.

Why Choose Gold?

Like many other physical commodities, investing in gold can be risky. However, gold also has real purchasing value, so if the dollar collapse occurs, you won’t have to worry about your investments having zero value. You can either invest in gold in an account or buy physical gold. If you have a retirement account that owns precious metals, you won’t be subject to any income transfer taxes, provided you don’t take actual possession of it.

Rollover vs. Transfer

Transfer – A custodian is in charge of dealing with your holdings, turning them into cash, and then transferring them into gold. Unless you know a lot about retirement investing, having a custodian is the best option.

Rollover – You are responsible for receiving the funds and putting them into your new plan. If the funds are slow to deposit the funds, you may receive a penalty.

Find A Custodian

A custodian is typically found at an IRA brokerage firm that can handle gold investing. The firm should help walk you through the transfer and notify you of any deadlines and paperwork. Look for a firm that is large, well known, and has a good reputation in the industry.

Rollover Instructions

The custodian will be taking care of the rollover for you, so you need to send over your instructions. Usually the 401K custodian will ask for a fee for doing the rollover, but in some cases your IRA broker will cover this for you. Remember to carefully detail your instructions and talk to your IRA broker if you are unsure of anything.

Fund Allocation

When your 401K gets transferred, you may get the option of deciding how much of your funds are allocated to each commodity. For example, if you have a silver and gold IRA you could choose 60% silver and 40% gold. Since gold is quite a volatile metal, you shouldn’t put all of your investments in it.

If you are buying through a broker you don’t physically have to find gold to buy, but your broker will need to. For precious metal accounts, the broker can only buy the highest quality gold, so it may take some time if you are buying a large amount. During that time, the prices may have already fluctuated greatly and you’ll find yourself paying more or less than you originally planned to.

Investment Options

Before opening an account, it is important to learn about all the investment options available to you. Even if you are primarily interested in precious metals, you may also want to diversify your wealth into a small amount of real estate and cash. There are also many different types of gold you can invest in, including physical gold, gold stocks, and gold ETFs, though it is not recommended because it is unclear whether these stocks actually represent real ounces of precious metals.

Consider Keeping Some Cash

Cash is the most liquid type of asset you can own. Although it is constantly fluctuating in value and vulnerable to inflation, the nice thing about cash is that you can use it immediately. If you have all of your wealth tied up in commodities, it will be very difficult to convert it to immediate cash. Always keep some cash in your account that you can use in the event of an emergency or if you want to make a quick purchase. After you pass a certain age (depending on the type of account you have), you will be able to convert some of your 401K into cash. For the time being we recommend not devoting more than 35% of your wealth in cash.

Leave a Reply