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Gold 401k How To Start a Gold IRA and Protect Your Retirement

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Investing In A Gold 401k

You have undoubtedly 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).

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This information will undoubtedly help you 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 that gold is a tangible asset that can reduce volatility in your retirement portfolio. Gold can help make your investments safer through investment diversification, giving you greater peace of mind. Adding the precious metal to your portfolio can help increase profitability; in some cases strengthening returns without adding risk or decreasing risk without reducing returns.

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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 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 ideal assets to hold on to for retirement security.

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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?

You can invest in precious metals by 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 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 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 to obtain gold investments, you will probably not be able to do so with a traditional 401k account.

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Most employer-sponsored 401k accounts have restrictions on the types of investment assets that do not include precious metals. Therefore, you need to convert part or all of a traditional IRA to a gold IRA. Only then will you be able to begin investing in precious metals such as gold and silver.

Note that a “gold 401k” is a gold IRA account that a previous traditional 401k has funded. The only way to physically own gold as an investment is with a gold IRA account.

Rolling Over Your 401k Into Gold

A gold 401(k) is typically funded by doing a partial rollover from a traditional 401(k) fund to purchase the gold. Doing a rollover 401k to gold allows you to make investments in gold as well as other precious metals. However, you will not be permitted physically to receive the gold coins or bullion you buy. When you get your gold IRA account set up and start purchasing gold, the IRA company will store the gold safely in a secure gold and silver repository. You will receive regular updates regarding your investment’s current market value. As with any other types of 401k, you may sell your gold investment at any time, but this may incur a fee.

A rollover from a traditional 401k to a gold 401k does not liquidate the original investment. It simply allows you to begin purchasing and holding gold and silver. Additionally, gold in your IRA is exempt from all capital gains taxes.

How to Move 401k to Gold Without Penalty

Starting a gold IRA is easy especially when working with a reputable company that understands the IRS rules. You avoid penalties and taxes on your 401(k) rollover by doing a direct rollover from an existing traditional IRA to a gold IRA.

If you handle the transfer yourself, the rollover must be done within 60 days and if your previous provider held back 20 percent of the funds for taxes, you’ll need to replace these funds when you complete the indirect rollover. There are more rules to follow so that’s why it is recommended to work with professionals that will ensure the rules and regulations are followed to avoid taxes and penalties.

How to Fund a Gold 401k / Gold IRA

You can get started easily and quickly with a gold IRA via a rollover of a portion of an existing IRA. Funding your gold 401k this way will give you a good start on building your gold IRA.

The other option is to fund it directly (i.e., cash), but you will be limited by IRS rules to the following annual amounts starting in 2021:

  • $6,000 under age 50
  • $7,000 age 50 or older

The Acceptable Kinds of Coins In A Gold 401k Rollover

The United States government allows only specific types of gold in 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 must be legal tender. Under these requirements, APM will assist you in selecting the coins you want to purchase from the approved list of coins that the IRS specifies can be in a retirement IRA fund. Also, 99.5 percent gold bars are approved if they are made by refiners on the Commodities Exchange board.

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Gold and silver are precious metals approved for IRAs. The IRA requirements for silver investment allow American Silver Eagle coins and 99.9 percent silver coins and rounds. Again silver bars by The Commodities Exchange approved refiners are also acceptable

Keep in mind that your financial security is at stake. It is essential to choose and hold the correct type of precious metal for your investment portfolio goals. A gold 401k, aka gold IRA, might be right for you.

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