How To Move A 401K To Gold Without A Penalty

401k Gold

A retirement account is a vitally important thing. Protecting retirement savings is a top priority for most people, and many investors are also concerned about the best way to grow the funds over time. Traditional IRAs (individual retirement account) and 401(k) plans are both types of tax-advantaged retirement accounts that allow people to save without paying taxes.

Gold investments have long since been a popular choice amongst long-term investors who want to diversify their portfolios and protect their interests. However, they need a suitable account to hold it in since most IRAs do not allow it.

That is where a self-directed gold IRA account comes in. It is possible to move all or part of a 401(k) retirement fund through a gold IRA rollover into a precious metal account to invest in gold.

What Are Precious Metals IRA Accounts?

A precious metal or gold IRA account works very similarly to any other tax-deferred retirement count in that it allows people to save and invest without having to pay taxes. The difference is that these accounts can be used to buy gold.

There are several elements to consider about investing in and owning precious metals. It is not as simple as walking into a store, buying $20,000 worth of physical gold, and driving home with it in your car. If you want to purchase gold using some of your retirement savings, you need to have three things:

  • A gold IRA
  • An approved gold IRA custodian (available through various gold IRA companies)
  • The funds available to buy physical gold or other precious metals

Gold IRAs are essentially just a tax-advantaged retirement account with a twist. Precious metals are unique and solid investment options, but they can be complicated transactions. The actual buying and selling of any precious metals should go through an approved gold IRA company, according to the IRS rules.

What Can be Stored in a Precious Metals IRA Account?

The name is a good giveaway, but the main idea is to be able to buy and store precious metals, including gold and silver. A traditional IRA or 401(k) retirement account most likely does not allow this type of investment, especially not physical gold.

A precious metals self-directed IRA operated alongside a custodian company is the safest and most effective way to carry out this type of investment.

Here are some of the investment options that come with a precious metals or gold IRA.

  • Gold Coins

Gold coins are a great first step into buying gold. They come in many varieties and prices to suit any investor. Some gold coins have collectible value that may increase over time, some are valuable because of how rare they are.

It is also possible to find more gold investment options by buying old coins from different currencies, commemorative coins.

  • Gold Bullion

Just like choosing to purchase gold coins, gold bullion offers a varies of investment choices. They tend to be cheaper investments than verified gold coins, but they are still worthwhile in a varied gold portfolio.

  • Gold Bars

It is possible to buy gold bars through a licensed gold IRA custodian. There are restrictions on buying gold in the sense that the transaction should always go through a licensed broker, such as Barrick Gold or the Birch Gold Group.

When you want to purchase physical gold bars to store in a gold IRA (even if it is self-directed), you must go through a custodian company.

  • Other Precious Metals

Silver, bronze, platinum, copper, palladium, brass, and just about any other physical metals a person may want to buy can be stored in a precious metal IRA.

  • Rare and Collectible Items

Some gold IRAs allow the owner to store other valuable items, including books, memorabilia, art, and other collectibles. If you are opening a new IRA with this in mind, be sure to check with multiple gold IRA companies to find one with a suitable offering.

What Is a Gold IRA Rollover?

A gold IRA rollover is the first step in diversifying a retirement portfolio and moving into precious metals. It involves withdrawing retirement money from a savings plan with tax benefits to move it into a new retirement plan that allows for gold investing.

Furthermore, a lot of retirement accounts have limited options regarding investments and withdrawals. Gold 401(k) rollovers open up many new possibilities.

Is There Normally a Charge by the IRS (Internal Revenue Service)?

There are technically no IRS penalties applied specifically to the rollover process. A gold rollover IRA is perfectly legal within the IRS playbook, as long as it is carried out compliantly and on time. Basically, to avoid IRS penalties, all you need to do is play by the IRS rules.

If the exchange-traded funds do not go from the 401(k) to gold IRA within 60 days, the owner of the multiple retirement accounts could end up paying income taxes on the deposit as well as an additional tax penalty.

Indirect Rollover

An indirect rollover involves withdrawing all the funds from your current 401(k) into a personal account then sending it into a gold IRA by yourself. Indirect rollovers are usually best avoided, as they are more complicated and could result in a loss of funds through taxes or a penalty if the money is not transferred within 60 days.

When the original payment arrives in the account, many providers take 20% as tax since it appears like any other lump sum payment. The account holder is still required to forward the entire amount to the new gold IRA, so they may have to pay the difference from their personal funds.

Additionally, the only reason a person would normally opt for an indirect rollover is if they had an urgent need for the funds and were certain there was zero risk of missing the transfer deadline.

How to Move a 401k to Gold Without a Penalty

You are set on investing some of your retirement funds into precious metals through a gold IRA rollover, but you don’t want to lose any of the hard-earned cash. Luckily, there is a very simple way to avoid penalties and taxes. The IRS does not say that people cannot do it: they only apply a time frame and a couple of conditions.

As long as you arrange a direct gold IRA rollover from your current 401(k) or other tax-deferred retirement account into your new precious metals account and make sure the funds clear within 60 days, there are no fees or penalties involved.

How to do a Direct Gold IRA Rollover

A gold IRA rollover is not overly complicated. If you are ready to diversify your retirement portfolio and add gold bullion, bars, or premium coins into your retirement plan, just follow these steps.

Pick an Account Type

First of all, you need to know exactly what type of gold IRA you want. It is not one size fits all, and there are differences. The three main choices are a traditional IRA (for gold), a traditional 401(k) rollover, or a Roth IRA.

Traditional IRA for Gold

They function exactly the same as normal tax-deferred retirement plans. The money in the account has the same tax benefits whether it is under a normal 401(k) plan or a gold IRA tax-deferred plan.

Traditional 401(k)

If you move 401(k) to gold but keep the same account structure, nothing is taxable as long as it is completed in the correct timeframe. There may also be a few more restrictions when it comes to the 401(k) investment, so be sure to talk to the gold IRA company first.

Roth IRA

Roth IRAs are slightly different. When you do a 401(k) rollover to a Roth gold IRA, you need to pay taxes on the deposit. Any future deposits are also taxed. However, Roth gold IRAs allow you to make tax-free withdrawals. You can also access the money much earlier, and there are more flexible policies on gold options.

Open the Account Online

Once you know what type of account you want to start your gold portfolio under, you need to open it through an online broker. There are so many options available, so take the time to browse before you make a decision (see below for some possible options).

It is usually very quick and easy to open a gold IRA when you find a good company to work with. Some offer more assistance than others to get things moving and start the rollover process, so look for a company with positive reviews regarding customer service.

Inform your Current IRA Account about the Move

It is important to inform your current 401(k) bank account operator as early as possible about the decision to roll over the funds. The other retirement account providers may not want to lose your business and could drag out the process.

In the interest of time, you need your existing tax-deferred savings accounts to get things moving as soon as possible.

Arrange a Direct Rollover

The rollover from one retirement account to the next should be directly between them, ideally. Instruct the current provider to arrange a direct rollover and provide them with the details of your new gold IRA account.

At this point, you should find out exactly how both accounts process the move since it can vary from place to place. The more you know about the move, the better, so you can make sure your money is safe.

Make Sure the Money Transfers Within 60 Days

The whole idea of a rollover is that the funds are simply transferring from the old account into a new account without making any other stops on the journey, so there is no reason for it to take too long. 60 days is the IRS limit on how long a gold IRA rollover has to go from one account to the next.

There may be paperwork to complete before the money can go into the new gold IRA, even in a direct rollover agreement, so pay attention and do what needs to be done so that you do not lose money.

Decide on New Investments

From index mutual funds to physical gold, there are plenty of investments available through precious metals accounts. You can always discuss more investment options with your financial advisors or IRA custodians.

Investing in gold, especially physical gold bars, is a long-term investment that lends itself well to retirement funds.

Recommended Gold IRA Companies

Gold IRA companies offer varying services, from buying and selling gold to acting as a custodian for your accounts. The option you pick could dictate a lot about your experience of investing, so it is worth taking the time to compare.

Here are three of the most popular and trusted services in the country, all backed by solid reputations and reviews.


GoldCo is an excellent provider for all your gold investment needs. It has an A+ rating from the better business bureau and is a trusted brand name across the country. The company has more than a decade of experience with buying, selling, and holding gold for investors, and it even offers its own gold IRA.

Sadly, GoldCo does not have its own storage facility, nor does it offer a custodian service, but the excellent customer support team is on hand to help you source everything you need. The other downside is the $175 annual fee for any account with less than $100,000.

What people love about GoldCo is the assistance with all paperwork and admin associated with every stage of the gold IRA setup and precious metal purchase processes. What they cannot offer directly, they more than make up for in helping clients find it elsewhere.

All the coins, bar, and bullion sold by GoldCo are IRS-approved and graded for quality. It is beneficial to buy from the same place that holds your IRA, and the transaction fees are often lower.

Birch Gold Group

If you want a highly professional service with backing and recommendations from many respected voices in the industry then the Birch Gold Group could be the one for you. Renowned for its world-class customer service and educational materials, the Birch Gold Group is a leading choice amongst big investors and industry experts.

The California-based company has been brokering gold deals for almost two decades and is at the front of the pack. It specializes in helping people to buy and sell gold but can also assist with registration for a gold IRA.

Whether or not you already have a custodian in mind, the Birch Gold Group can work flexibly with you to find the best solution for your money. All the advice and guidance you need about gold, investing, and rollovers are readily available from the first phone call.

One last advantage is the one year of no fees when you deposit at least $50,000. You can deposit less than this if you choose, but the fees are then payable.

Augusta Precious Metals

Augusta precious metal is one of the most competitively priced gold companies on the market, and it is very user-friendly. Setup is quick and easy, and customer support is second to none. The main downside to Augusta Precious Metals is the minimum deposit requirement of $50,000.

This company works with various renowned gold IRA custodians, including the GoldStar Trust and Kingdom Trust. Specialists in retirement fund management, they have flexible options and various accounts to choose from.

In terms of protection, storage, and security, Augusta Precious Metals is one of the best across the board. It offers price protection during the first week of a new gold purchase, regularly offers discounts and promotions, is partnered with leading storage facilities, and follows the strictest privacy protocols.

Frequently Asked Questions

Is there something we missed? Do you want to learn more about your retirement options? Here are some of the most frequently asked questions regarding 401(k) gold rollovers and investments.

What is better- an indirect or direct rollover?

A direct rollover IRA is less likely to result in an IRS penalty. If the priority is to move gold without penalty charges or taxes, direct is far better. It is also better to rollover directly because it is far more simple, with less paperwork and chances for error.

If penalties and taxes are not the prime concerns but you need access to the money very quickly, you may want to move your 401(k) to gold indirectly to save time. However, even if you use the money from your retirement accounts, you must still deposit the full amount in the gold IRA within the timeframe.

Can I hold physical gold in my precious metals IRA account?

Technically, yes, you can. However, most gold IRAs only allow for buying physical gold, not storing it. When you transfer your 401(k) into gold IRAs, you open up the funds for gold and silver investments, but you must then buy gold through a brokerage.

Most companies that sell gold offer some type of secure storage facility. The Birch Gold Group and Goldstar Trust, for example, help you to invest in gold and give you a place to store it. The funds, however, come from the gold IRA.

What is a self-directed IRA?

A self-directed IRA account is controlled by the account owner rather than the bank or financial company that holds it. The money and mutual funds in a self-directed IRA are managed by the person who put it there, allowing them to invest directly in whatever they see fit.

One benefit of self-directed IRAs, other than being able to directly invest without bank intervention, is that the investments available are far more diverse. If a person chooses to use their money to invest in gold or invest in precious metals of another variety, then so be it. Of course, they would need to move their 401(K) into gold self-directed IRAs first.

Are gold coins and other precious metals good investments?

Precious metals and gold investments have always been attractive to many individual investors. Physical gold and precious metals are tangible assets that cannot go bankrupt or vanish into thin air: they are always going to be right there in storage where you left them. In this sense, gold is a reliable investment.

Another benefit of transferring some of your 401(k) to gold is that currency and precious metal values often go in the opposite direction to one another. By that, we mean that when the value of a currency drops, the value of gold exchange-traded funds goes up, so your interest is always protected.

It is a luxury asset and has always carried a certain status that keeps its value high. Highly liquid but not readily available, gold is a reliable and exciting investment opportunity.

Penalty-Free 401(4) Rollovers In a Nutshell

  • Precious metals are not usually an investment option with normal 401(k) savings accounts, so funds should be moved into a gold IRA if the owner is interested in this type of purchase.
  • A gold IRA rollover, when done compliantly, lets people avoid paying taxes on their savings.
  • To move gold without risk of an IRS penalty or tax liability, the entire transaction must be complete within 6o days.
  • You need to open your gold IRA through a licensed custodian company that can broker any precious metal purchases you make.

If you want to roll over your 401(k) into a Gold IRA without paying taxes or suffering penalties, make sure you organize in advance with both your new holder and previous bank. Any transaction that takes too long or does not end up in full in the agreed account becomes a taxable withdrawal according to IRS rules.

Investing in gold is a great way to diversify your retirement portfolio, and a 401(k) gold rollover is the best way to do it.

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Kevin Lee is a former tech advisor who cut his teeth in Silicon Valley. He now spends his time sharing his passion for investing in diamonds and jewelry. You can reach Kevin for any comments by using this form.