Investing In A Gold 401k

No doubt you have heard and witnessed some of the excitement surrounding gold investments. Surely you have wondered whether it is all sensationalism and hype or whether indeed you should be lending serious thought to safeguarding some of your retirement investment in gold. Below we take a comprehensive look at why you should consider diversifying your retirement investments with gold, how you can do so, and what types of gold (and other precious metals are allowed).

This information will, no doubt help you to make an informed decision about whether balancing your portfolio by keeping some physical assets, such as gold, is the right move for you.

Why You Should Consider A Gold 401K

The top reason to invest in a gold 401k is because gold is a tangible asset that can reduce volatility in your retirement portfolio. Simply stated, gold can help make your investments “safer”; giving you a greater peace of mind. Adding the precious metal to your portfolio can help increase profitability; in some cases strengthening returns without adding risk or by decreasing risk without reducing returns.

Gold has been seen and used for thousands of years as a safe and lasting store of wealth. In these fickle economic times, it has once again emerged as a leading investment and very well may be the ideal retirement asset. Let’s compare gold to the asset classes that most often comprise a retirement portfolio. Stocks, savings accounts, and bonds all depend on the success and performance of another institution or person for their value. Gold on the other hand, does not. This quality alone makes it one of the most ideal assets to hold on to for retirement security.

As was once said by the French president DeGaulle, “[gold] has no nationality … [it] is eternally and universally accepted as an unalterable fiduciary value, par excellence.”

What Is Gold 401k Investing?

There are many ways to invest in the precious metal including obtaining gold coins, bars of gold bullion, holding gold mutual funds, holding shares of gold mining companies, trading gold futures and options, as well as gold exchange traded funds. Gold coins are often seen as very valuable because they can also be collector’s items. Their value comes not only from their weight in gold, but also their rarity.

While obtaining and investing in gold may be simple, 401k gold investing is a bit more complicated. The Tax Payer Relief Act passed in 1997 allows individuals to include precious metals, such as gold, as a part of their retirement portfolios. While it is possible to use a 401k in order to obtain gold investments, you will probably not be able to do so with a traditional 401k account.

Most employer sponsored 401k accounts have restrictions on the types of investment assets, which can be acquired under the account. Therefore, it is usually a requirement that an individual must first convert the current 401k account into a gold 401k. Only then will they be able to begin investing in precious metals such as gold and other precious metals.

As a note, a “gold 401k” is actually a gold IRA account that has been funded by a previous and traditional 401k. The only way to actually physically own gold as an investment is a gold IRA account.

Rolling Over Your 401k Into Gold

The means for using a traditional 401k fund to purchase gold investments is to do a gold 401k rollover. Doing a rollover 401k to gold allows you to make investments in gold as well as other precious metals, though you will not be allowed to actually physically receive the gold coins or bullion you buy. Your investments will be safely stored in a secure gold and precious metals repository. You should also receive regular updates regarding your investment’s current market value. As with any other type of 401k, you may sell your gold investment at any time but this may also incur a fee.

Rolling over a traditional 401k to a gold 401k does not liquidate the original investment. It simply allows for you to begin purchasing and holding gold and other precious metals. Additionally, gold in your IRA is exempt from all capital gains taxes.

The Acceptable Kinds of Coins In A Gold 401k Rollover

The United States government allows only specific types of gold to be held as retirement investments within an IRA. You may not place gold coins that you already own in the precious metals IRA account. One gold coin approved for IRAs is the American Gold Eagle coin. Other coins may also be used but must be at least 99.5 percent pure gold, also called .995 fine.

Another requirement is that each coin be legal tender. Under these requirements the Australian Kangaroo or Australian Nugget, Austrian Philharmonic, Canadian Maple Leaf, and the Perth Mint’s Lunar Series is on the approved list of coins that can be held in a retirement IRA fund. Additionally, 99.5 percent gold bars are also approved if they have been made by refiners who are on the Commodities Exchange board, such as Credit Suisse gold or PAMP Suisse gold bars.

Gold is not the only precious metal that is approved for IRAs. Silver, platinum, and palladium are also acceptable investments. The IRA requirements for silver investment allow American Silver Eagle coins, as well as 99.9 percent silver coins and rounds such as the Canadian Silver Maple Leafs, Mexican Libertads, and Australian Kookaburras. Again silver bars by The Commodities Exchange approved refiners are also acceptable.

Platinum is another acceptable precious metal that can be added to your IRA investments. The American eagle platinum bullion, Australian Koala, Isle of Man Noble, Isle of Man Cat, and Canadian Maple Leaf are among the approved coins. Platinum bars must be at least 99.95 percent pure and must also be made by The New York Mercantile Exchange approved refiners.

Finally, palladium is also approved for IRA investment. Palladium bars must be at lease 99.95 percent pure and also must be fabricated by The New York Mercantile Exchange approved refineries.

Keep in mind that your financial security is at stake. It is important to choose and hold the right kind of precious metal for your investment portfolio goals. A gold 401k or gold IRA may be for you.