Gold 401k Options

Gold 401k Options

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As retirement approaches, many of us think about how to secure our financial future. One popular way to save for retirement is through a 401(k) plan, which allows us to contribute pre-tax dollars and invest them in a variety of assets. However, traditional 401(k) plans limit asset options to stocks, bonds, and mutual funds, leaving out alternative assets like gold.

Gold is a precious metal that has been valued for its rarity and beauty for centuries as well as because its value has often remained stable during times of economic turmoil. As the popularity of this asset has grown, many are wondering if they can use their 401(k) plans to invest in this timeless asset.

In this article, we will explore the various ways you can use your 401(k) to invest in gold and the benefits of including the precious metal in your retirement portfolio. Read on to learn more about what options you have and how you can get started.

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Gold 401k Options

What Is a 401(k)?

A 401(k) is a retirement savings plan that is sponsored by an employer. It allows employees to contribute a portion of their pre-tax income to the plan, which can then be invested in a variety of assets, such as stocks, bonds, and mutual funds. The contributions are deducted from the employee's paycheck, which can help to reduce their taxable income.

How Does It Work?

Once the contributions are made, the funds are used to hold assets, and the account grows over time through investment returns. The money in the account is not taxed until it is withdrawn, which can be advantageous for individuals who are in a lower tax bracket in retirement.

Employer Match and Vesting

Many employers offer a matching contribution to their employee's plans, which can provide additional savings for the employee. The matching contribution is usually a percentage of the employee's contribution, up to a certain limit. 

For instance, let's say an employer offers a 50% match on an employee's contributions, up to 6% of his salary. If the employee earns $50,000 per year and contributes 6% of this or $3,000 to his retirement plan. The employer will match 50% of that contribution, which is $1,500. This means the employee will have a total of $4,500 saved in their retirement plan for that year.

In addition to matching contributions, some employers may also have a vesting schedule for the contributions. Vesting refers to when employees fully own the employer's contributions to the plan. The vesting schedule determines how long an employee must remain with the employer before they are fully vested in the contributions.

Withdrawal Rules and Penalties

There are also rules and penalties associated with withdrawing funds from a 401(k) plan. Withdrawals made before age 59 ½ are subject to a 10% early withdrawal penalty, in addition to regular income taxes. There are some exceptions to this penalty, such as withdrawals for certain medical expenses or first-time home purchases.

Additionally, once an individual reaches age 72, they are required to take minimum distributions from their plan each year. These required minimum distributions (RMDs) are based on the account balance and the individual's life expectancy.

Gold 401k Options

Different Ways to Use 401(k) to Buy Gold

There are several ways to invest in gold through a 401(k) plan, each with its own advantages and disadvantages. In this section, we will discuss three popular options.

Physical Gold

Physical gold includes coins, bars, or other forms of bullion. One of the main advantages of this is that it provides a tangible asset that you can physically hold and store. However, there are also several rules and regulations that must be followed when holding this type of asset in a 401(k) plan.

The IRS mandates that physical bullion must be stored in an approved depository in order to qualify for inclusion in a 401(k) plan. Additionally, the depository must meet certain criteria for security and insurance. This is why they should work with a gold company that offers this plan.

Thus, using a 401(k) plan may be a more complex and costly process compared to alternative options when buying physical bullion.

Gold ETFs

ETF is a type of fund that trades on a stock exchange and is designed to track the performance of an underlying asset, such as gold.

One of the advantages of gold ETFs is that they can provide you with exposure to the price of the precious metal without the need to physically buy and store it physically. This can make it easier and more affordable to invest. Additionally, ETFs can be bought and sold like stocks, which can provide more flexibility and liquidity.

Gold Mutual Funds

Mutual funds pool money from multiple investors and invests in a variety of assets, such as stocks, bonds, and commodities.

One advantage of this is that they can provide exposure to the price of gold through a diversified portfolio of gold-related investments. This can help to mitigate some of the risks associated with holding only a single type of asset. Additionally, mutual funds can be more accessible and affordable for individual investors, as they typically have lower minimum investment requirements than other options.

However, it's important to note that mutual funds may have higher fees and expenses that can impact overall returns. Additionally, they are subject to market risks and fluctuations, which can lead to potential losses.

Gold 401k Options

How to Use Your 401(k) Plan to Buy Gold

This is a simple and straightforward process. Not all 401(k) plans allow for investing in precious metals, so the first step is to check with your plan administrator to see if it's an option. 

If Your Plan Allows Precious Metals Investments

  • Choose Your Assets - You'll need to choose the option that best fits your goals and risk tolerance. This may include gold ETFs, mutual funds that invest in gold mining companies, or physical gold held in a secure facility on your behalf.
  • Determine Your Contribution Allocation - Once you've chosen, you'll need to determine how much of your 401(k) funds you want to allocate to gold. As with any investment, it's important to consider your overall goals, risk tolerance, and time horizon.
  • Make Your Investment - This involves working with a financial advisor or plan administrator to ensure that your investment is made in accordance with your plan's rules and regulations.
  • Monitor Your Plan -  It's important to monitor your plan regularly to ensure that it remains aligned with your goals and risk tolerance. This may involve adjusting your allocation over time as market conditions and your own financial situation change.

If Your 401(K) Does Not Allow Precious Metals Investments

If your 401(k) plan does not allow for direct investments in gold, you still have options for adding the precious metal to your retirement portfolio. 

A recommended option is to roll over your 401(k) plan into an Individual Retirement Account (IRA) that allows this type of asset. A rollover is a process where you transfer the assets in your 401(k) account to an individual retirement account. This process allows you to maintain the tax-deferred status of your retirement savings and avoid early withdrawal penalties. Do note that there is no limitation to how much you can transfer.  Listed below are the steps to follow.

  • Choose a custodian - To roll over your 401(k) account, you will need to open an IRA account with a custodian that allows you to hold precious metals. There are several custodians that specialize in this type of IRA, and we have compiled our list of the top three companies for you to check out in the next section.
  • Complete paperwork - Once you have selected a custodian, you will need to complete the necessary paperwork to initiate the rollover. This will typically involve contacting your 401(k) plan administrator to request a direct rollover to your new IRA account. The plan administrator will then send a check or wire transfer to the custodian on your behalf.
  • Buy your assets - Once the funds are transferred to your IRA account, you can buy precious metals through the custodian. They will typically have a range of options available, including physical bullion, coins, and bars, as well as gold ETFs and mutual funds.

What You Need to Know About Rollovers

It is important to note that a rollover is not the same as a withdrawal. If you withdraw funds from your 401(k) account before age 59 ½, you may be subject to early withdrawal penalties and taxes. However, a rollover allows you to transfer the funds from your 401(k) account to an IRA account without incurring penalties or taxes.

In addition to the tax benefits of a rollover, holding gold through an IRA can provide other advantages, such as portfolio diversification and a hedge against inflation. However, it is important to carefully consider the risks and potential rewards of precious metals before making any decisions. Read this article to know learn about gold IRA vs. 401k.

Precious Metals Companies to Work With

With a lot of companies to choose from, investing in precious metals can be overwhelming. This is why we have compiled our recommended companies to save you time from researching hundreds of options. They can help you open a self-directed IRA and roll over your 401(k) plan.


Augusta Precious Metals has been in the precious metals industry for over a decade and is a reliable provider that can assist you in setting up your account. They provide a range of precious metals products and have an A+ rating with the Better Business Bureau. Additionally, they have a 7-day refund policy for first-time buyers in case they are dissatisfied with their products.

#2. Goldco


Goldco is a reputable IRA provider that offers a buyback guarantee, where they buy your precious metals at the best price possible. This is well-regarded by clients as seen in their positive reviews on Trustpilot and other review sites. This feature ensures that clients can sell their bullion back to the company at the highest possible price, making it easier to liquidate their assets and minimize risks.

American Hartford Gold is a highly-rated precious metals dealer that assists clients in setting up their self-directed IRAs. Their services are affordable, making them ideal for beginners. They also provide various educational resources such as a free precious metals guide and a blog with expert insights and market analysis, which are useful for those who have limited knowledge about the industry.

Gold 401k Options

Choosing the Right Gold Investment for Your 401(k)

When considering what kind of asset to hold, it's important to choose the right option based on your individual needs and goals. Here are some factors to consider:

Risk Tolerance

Due to market conditions, some gold assets, especially physical bullion, can be volatile in the short term, making it advisable to hold onto them for a longer period of time. It's also important to understand the potential risks and rewards of each option. Physical gold, for example, can provide a sense of security as a tangible asset, but it also requires storage and insurance, which can add to the overall cost. Gold ETFs and mutual funds, on the other hand, can provide exposure to the precious metal without the physical storage requirements but are subject to market fluctuations.

Investment Goals

Another important factor to consider is your goals and what you want to achieve with your portfolio. Are you investing for the long-term or short-term? Are you looking for income or capital appreciation? Your goals can help guide you toward the right option for your 401(k).

For example, physical bullion may be a better option for those looking for a long-term hedge against inflation, while gold ETFs or mutual funds may be better suited for those looking for short-term gains.

Portfolio Diversification

Diversification is key to any successful strategy, and holding gold is  However, it's important to consider how much of your portfolio should be allocated to this type of asset.

Financial experts recommend allocating between 5-10% of your portfolio to gold investments, depending on your risk tolerance and goals. This can help to provide some protection against market downturns and inflation.

Fees and Expenses

Lastly, it's important to consider the fees and expenses associated with each option. Physical bullion, for example, can have higher storage and insurance costs, while gold ETFs and mutual funds may have management fees and expense ratios.

Be sure to research and compare the fees associated with each option before making a decision.

Pros and Cons of Investing in Gold through a 401(k) Plan

When considering investing in these assets, it is important to take note of their primary pros and cons.


  • Potential for growth - Historically, gold has shown potential for long-term growth and may provide a steady return on investment.
  • Diversification - Investing in this precious metal can reduce your overall portfolio risk as it moves in the opposite direction of traditional investments.
  • Protection against inflation - Gold can offer peace of mind as it serves as a reliable hedge against inflation and helps to safeguard against the loss of purchasing power.


  • Fees - Investing in precious metals through a 401(k) plan may come with fees that can reduce returns, such as management and trading fees.
  • Limited investment options -  Not all 401(k) plans allow investing in gold, and some may limit options to certain gold ETFs or mutual funds.
  • Volatility - Its prices can be subject to wild swings in either direction, impacting short-term returns. However, they are generally stable for the long term.

Final Thoughts

In conclusion, including gold in your 401(k) portfolio can be a smart move for those who are looking to diversify their portfolio and potentially earn a steady return. There are various ways to incorporate the precious metal in your 401(k) plan, such as physical bullion, gold ETFs, and mutual funds. However, choosing the right asset for your 401(k) will depend on your risk tolerance, goals, portfolio diversification needs, and the fees and expenses associated with each option.

It’s also important to understand that investing in precious metals through a 401(k) can be complex and may involve various rules and regulations. With the right guidance, including gold in your plan can be an effective way to build a well-diversified retirement portfolio that can protect you from market downturns.