How to Buy a Gold 401k

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When you retire or otherwise leave your job, the money in your employer-sponsored 401k will have to be removed. Taking a cash payout means you'll have to pay income taxes on that money, and the IRS will probably charge you early withdrawal penalties. If your 401k is eligible for a gold IRA rollover, this process can save you from facing those extra taxes and fees. It will require following an IRS-approved method for rolling your funds over into a self-directed gold IRA, which you will have set up in advance.

How to Buy a Gold 401k

Why Investing in Gold is Important

Gold is a precious metal because it's scarce and there's a limited supply of it. This increases the overall demand for gold, helping to drive up its value consistently over time. For this reason, gold can be used to store your wealth in a tangible product when economic uncertainty threatens the value of paper investments, such as stocks and mutual funds.

When there's political upheaval, a natural catastrophe, or a similar event, economies throughout the world will be threatened. Even though an event may seem far away, it can significantly affect the supply of goods, and that can lead to a Wall Street panic and dropping stock prices. However, the value of gold will remain constant and, as the only durable form of currency, its value may even increase.

Even when there's inflation in our own communities, gold will retain its value. This means you won't lose your retirement wealth when it's invested in gold. The same won't be true for your investments in stocks, bonds, and funds. By diversifying your investments and converting some of your savings into gold holdings, you can better protect your financial future.

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How to Buy a Gold 401k

What Types of Gold Can You Buy for Your Self-Directed Gold IRA?

Before you buy any gold for your self-directed IRA, it's essential to do your research. The IRS won't allow you to add any gold to your IRA holdings so it's important to meet the government's standards for purity. To ensure those standards are met, the IRS vets each gold specialist.

A gold provider, such as American Bullion, will be able to sell you a wide range of gold products. The most popular gold products available for self-directed gold IRA accounts include the following:

  • American Eagle coins
  • American Buffalo coins
  • Austrian Philharmonic coins
  • Canadian Maple Leaf coins
  • Proof American Eagle coins
  • PAMP Suisse bars

You don't have to stick with one type of coin or bar. As you build your retirement nest egg, you can buy a variety of coins in any quantity you choose. If you plan ahead, you can create a gold investing strategy that will help you reach your retirement goals as soon as possible.

How to Buy a Gold 401k

Plan an Effective Rollover Strategy

There isn't a steadfast rule for how much of your wealth should go into your self-directed gold IRA. Aside from meeting the gold IRA company's initial deposit requirements, you're free to invest as little or as much of your savings in gold as you want. While you shouldn't invest all of your savings in any one type of investment, it is recommended to invest some portion of your wealth in precious metals.

A good rule of thumb to follow is to increase your quantity of precious metals as you age. For example, if you're in your 20s and just starting to generate retirement wealth, you really don't need to have more than 5% or 10% of your savings invested in gold. However, if you're within a decade of retiring, you should convert 20% up to 30% of your wealth to gold. If there are market changes that adversely affect your paper investments, maintaining gold holdings in a self-directed IRA account will help you protect some of your wealth.

How to Buy a Gold 401k

What's Involved in Buying a Gold 401k?

There's a 5-step process involved in converting your 401k account into a self-directed gold IRA. Following this step-by-step process will make it easier for you to open your gold IRA and roll your funds over from your 401k account.

Step 1: Choose a Gold IRA Company

A major difference between a gold IRA and a traditional IRA is that a gold IRA involves holding physical assets. The IRS won't allow you to keep gold bullion and coins in your home when they are assets held in an IRA. That means you'll need a gold IRA company that will help you set up your account, buy gold products, and store them in an IRS-approved depository. Each company will work with different depositories, so it's necessary to research the depositories your gold IRA company uses.

When looking for a gold IRA company, you should try to evaluate the quality of customer service each company offers, the educational materials they will provide, and the fees and minimums they require.

The top gold IRA companies that have consistently rated highly in each of these three areas are:

Augusta Precious Metals

Augusta is praised for its transparency in regard to the fees they charge as well as for the vast supply of educational resources they offer. Customers find their online webinars especially helpful. The company maintains a staff of professional economists to help their customers evaluate their investments and retirement goals.


There are several reasons that Goldco has earned a strong and positive reputation among investors. To begin, their prices are very competitive and they provide enough information to help their customers feel confident with their purchases. The staff is knowledgeable and customers find them to be patient and communicative.

American Hartford Gold

The thing that sets American Hartford Gold apart from other companies is that they don't require a minimum initial investment. Even though they forgo that minimum, they don't let that interfere with the high quality of customer service they offer. The company has built a strong reputation by ensuring their customers have positive experiences with them.


Each of these companies has high customer ratings and large numbers of positive customer reviews. They are known for providing assistance with 401k rollovers, account setups, and selling gold products that meet their customers' retirement goals.

Step 2: Find a Self-Directed Gold IRA Custodian

Some tax laws prevent you from legally holding physical gold in your IRA, but the creation of self-directed IRAs has helped to sidestep those restrictions. This means you'll need an IRA custodian in addition to a company from which you'll buy the approved gold. Your IRA custodian will manage your records for you, processing paperwork the IRS will need to keep an accurate account of your gold holdings.

When you open a traditional IRA with a bank or another financial institution, you will store your savings with them. This gives them access to your funds to invest as they choose. A traditional IRA gives you very little control over your investing strategy, but the same is not true for a self-directed gold IRA.

Many gold IRA companies can also serve as the custodian for your account. While your gold will be delivered to a depository, the custodian will maintain the records for your account. To find out if you're choosing a gold IRA company with these capabilities, be sure to ask if they can manage self-directed IRA accounts.

Step 3: Open Your Gold IRA Account

You will need to open an account with the gold IRA company of your choice before you can take any action in funding your account. Your gold IRA company can help you set up the account if you have any questions. Once you do get your account initiated, your gold IRA custodian can communicate with your precious metals provider. This will help ensure gold and silver purchases are proceed properly in accordance with IRS regulations. It will also ensure your purchases are delivered to your vault at the designated depository.

How to Buy a Gold 401k

Step 4: Initiate Your 401k Rollover

The next step in this process is to roll your funds over from your 401k into your new gold IRA account. Your self-directed gold IRA custodian will communicate with your 401k administrator to help this process go more smoothly. They can also assist you with the paperwork and documentation that you'll need to submit to the IRS. If the government doesn't receive this paperwork within 60 days, they will assume you took your 401k funds as a payout and charge you early withdrawal penalties.

There are two options for rolling over your 401k funds into a self-directed gold IRA. The first and less popular option is to take the payout and deposit the entire amount in your new gold IRA account. In addition to requiring more work, this indirect type of rollover can expose you to greater risks of an error. If something does go wrong, the IRS may require you to pay taxes and penalties even though you didn't really keep that money as a payout.

The less complex method is a direct rollover, which involves using a wire transfer to send your funds directly from one account to the other. Since this is easier and faster, it's a preferred method by most investors. It's also recommended by financial advisors because it significantly reduces the financial risks to the investor.

Step 5: Start Buying Gold

Now that your rollover has been processed, you will have the funds you'll need to start investing in gold or silver. Your gold IRA provider will work with you to help you buy the products that will best meet your retirement goals. They can help you devise a buying strategy for the future to help you in continuing to meet your retirement investing goals.

Many providers sell gold and silver products that don't meet IRA standards for purity, so it's important to make sure you're only buying products that can be included in your self-directed gold IRA. While American Gold Eagle coins can have a lower purity of 91.67%, all other gold coins and bullion must have 99.5% purity ratings.

You can also invest in certain silver coins and bars. For silver, the IRS requires a minimum purity of 99.9%. Even though silver tends to be less expensive than gold, it's more volatile. For this reason, investors tend to limit how much of their retirement wealth is invested in silver products. Even so, you may want to add some silver holdings to your vault's inventory for diversification purposes.

As you complete any purchase of precious metals, make sure your gold and silver provider issues the proper receipts and paperwork. In addition to verifying your purchase, learn about their delivery process. You'll want to ensure every purchase is insured and secure on its way to your vault.

How to Buy a Gold 401k

Is a 401k Rollover Into a Gold IRA Worthwhile?

For many people, investing some of their retirement funds in gold is a desirable option. It allows you to broaden your retirement investments to ensure your wealth is more diversified. Since gold and other precious metals gradually increase with inflation over time, you'll grow wealth without having to take any action. In fact, gold appreciates in value at a greater rate when hard economic downturns have the opposite effects on paper investments.

You should recognize that there are some risks with investing in gold just as there are risks with any other form of investing. Primarily, gold values will drop with increased supply or lower demand. The risk of loss through theft is also a concern, which is one reason the IRS requires investors to store their gold in approved depositories. Your precious metals will be protected in more secure facilities and, if your gold is stolen, the loss will be covered by the depository's insurance.

Final Thoughts

As you gain more retirement wealth, it becomes more important to diversify your holdings. With a self-directed IRA, you'll have a wide range of options from paper investments to investing in gold and silver. While you may not want to put all of your wealth into precious metals, investing some of your savings in gold and silver will help you protect your financial future.

Top 3 Companies to Buy a Gold 401k: