How to Move a 401k to Gold Without a Penalty

Investors of all kinds see a profitable and safe investment in gold. The reason for that is that it represents a hedge advantage against inflation, which makes it excellent for retirement plans.

Regardless of that, moving your retirement money to gold coins or gold IRA is not as easy as it seems. You can get a penalty while doing so, and some laws even limit what you can do with your retirement plan. One of the most popular ones is the 401(k) plan.

People looking forward to saving money for retirement can do it with 401(k) plans. However, these plans have to work with individual retirement accounts (IRAs). In addition to that, 401(k) plans and traditional IRAs keep you from paying taxes on your contributions, which helps you save money in the long run. If you want to diversify your account, you can invest some of your 401(k) funds in gold coins, gold IRA, and physical gold.

Many investors turn their 401(k)-retirement money to gold for several reasons. As we mentioned before, one of them is protecting their portfolios from inflation. Humanity has prized gold for thousands of years, so gold investments and precious metals IRA retain their value even after a time you get it.

Investing in gold IRA and physical gold is also a good alternative for you if you are worried about market volatility. Unlike a corporation, gold cannot go bankrupt. Therefore, your gold bullion, retirement savings, and tangible coins are still valuable regardless of what happens to the economy.

Investing in gold is always a good thing for you, but you have to start on the right foot. You can buy gold coins and bullion with no problem, but there are no tax advantages to just purchasing gold. Buying gold through your 401(k), on the other hand, allows you to deduct your 401(k) contributions from your annual tax return.

What that means is you don’t have to pay investment taxes until you sell the gold you invested in or withdraw your funds. Doing so lets you focus on other things and save money in the long run, so it’s an excellent option for everyone opening a retirement account or investing in other precious metals.

Read on to know how to move a 401k to gold without a penalty! You can also find some other information about gold and precious metals here.

How Do You Move a 401(k) Into Precious Metals or a Gold IRA?

Now that you have made the exciting decision to buy gold, the only thing you need to do is plan how to do it. If your current 401(k) plan does not offer gold investment options, you need to find a new plan that allows you to invest directly in gold. Many of these plans offer you limited options when investing in a precious metals IRA, though.

The best way to avoid paying taxes during this transition is to go for a 401(k) rollover. A 401(k) rollover is when you transfer funds from your old 401(k) plan to a new one. Doing that allows you to transfer money to a new 401(k) or IRA.

According to the Internal Revenue Service (IRS), you have 60 days to complete this task. If you go over that deadline, the government is going to address your case as a 401(k) withdrawal. Make sure to follow the IRS rules if you don’t want to pay taxes and penalties during this process.

Switching from an old account to a new 401(k) plan or IRA brings you several benefits, unlike other employer plans with limited options and high fees. Employers often offer those plans to benefit their employees, but they lack something that encourages everyone to switch to a different retirement plan.

Therefore, getting a new 401(k) can help you if you want less expensive investments, lower account fees, and more gold investment options.

Follow the next steps if you want to turn your current 401(k) account into a gold IRA or a 401(k) gold retirement plan:

  1. Choose the account you want
  2. Open your new account
  3. Talk to your previous 401(k) plan provider about doing a direct rollover
  4. Decide on your new investments

Here is a brief explanation of each step:

1. Pick the Account You Want

Going for a 401(k) rollover helps you get more investment options and save on fees as well. Employer plans often have high fees, so switching plans can save you a lot of money.

Roth IRA: All transferred money from it is taxed. Take into account that although these IRAs enable tax-free withdrawals, your contributions are taxed.

Traditional 401(k): When you use a rollover for a traditional 401(k), you don’t have to pay taxes on your rollover. However, that only applies if you pay for everything before the ’60 days’ deadline.

Traditional IRA: Traditional IRAs are tax-deferred retirement plans. They are similar to traditional 401(k) retirement plans, so people often confuse them.

The government allows you to own multiple 401(k) plans and IRAs. This is essential considering it allows you to make self-directed IRAs for gold and other precious metals. When going through this process. the trustee in this retirement plan is the custodian of the physical metals and your broker.

You can buy and sell gold when you use a gold IRA or 401(k) retirement plan. If you want to do this, you need to meet certain government standards. Self-directed 401(k) plans and gold IRAs don’t allow you to physically hold the gold yourself, though.

Self-directed IRAs and solo 401(k) plans are essentially the same things. The main difference between them is that 401(k) plans let you invest more money each year. Aside from that, they offer the same perks.

2. Open Your New Account

The easiest way to set up your account is by doing it online. Many people set up an IRA with the help of a robo-advisor or an online broker. If you don’t want to deal with the hassle of picking your investments, robo-advisors automatically invest in a balanced portfolio for you. Therefore, you can use them if you don’t know a lot about the matter or are scared to do it alone.

Online brokers help you get more control over your investments. You can choose which investments to buy, and you can even divest whenever you want. Fees and commission costs can quickly add up, so it’s best for you to find a provider that charges low fees. You also need to pick a provider that specializes in precious metals.

3. Talk to Your Previous 401(k) Plan About Doing a Direct Rollover

You need to talk to your old provider about transferring your funds. It’s critical to begin this step early since your provider might slow the process down to keep itself from losing a client. Ask your provider to do a direct rollover to make sure the check goes directly to your new account instead of going to you.

Once the funds leave your old account, they must arrive in your new account within 60 days. Otherwise, you may have to pay taxes and penalties on your withdrawal. Complete your rollover as quickly as possible to avoid getting a penalty.

Although the process can vary, most providers require you to send in a few forms before carrying out a direct rollover. After you send in the paperwork, you are going to receive a check or wire transfer to your new account.

Technically, you can also do an indirect rollover, but this option is significantly harder to do. When you go through an indirect rollover, the money is sent to your account. Once you do that, you have to send your funds to your IRA without going over the 60 days deadline.

An indirect rollover can end up complicating your taxes. Not completing the process in time leads you to pay income taxes and penalties on the rollover. Many providers withhold 20 percent of your withdrawal automatically as a tax payment. You must transfer the entire amount of that money to your new account, so you would also have to furnish the difference from your account.

4. Decide on Your New Investments

Once you have completed a direct or indirect rollover, you can determine how to use your money. You can either invest it in physical gold or look at index mutual funds. Diversifying your portfolio can protect it from market fluctuations.

Many people purchase gold coins and bullion without knowing the drawbacks of those investments. You may have to pay broker commissions and fees for storing the gold. Investors looking forward to diversifying their portfolios have an excellent alternative with a traditional IRA or self-directed IRA.

Here are some examples of that:

Gold futures and options: These contracts are essentially agreements to buy or sell gold at a fixed price in the future. Since these contracts are traded on commodity exchanges, the federal government strictly regulates them.

Stocks in gold mining: If you want to invest in gold mining and refining businesses, you can buy stocks in a mining company. Regardless of that, remember to study the company you want to invest in to avoid falling for a scam.

• Gold exchange-traded funds (ETFs): An ETF is a basket of other assets. Gold ETFs represent gold options, futures, and physical gold. One of the best things about gold ETFs is that you can invest in them even when the market is open.

When Does the IRS Charge a Penalty on 401(k) Rollovers?

According to the IRS, you must complete your 401(k) rollover within 60 days. Withdrawing your funds from your previous 401(k) and not depositing it in your new account before the 60 days deadline can lead you to pay a penalty. The best way to avoid this is by doing a direct rollover, so your funds are instantly transferred from one account to another.

People who are 59.5 years old or younger have to pay a 10 percent penalty if they withdraw their retirement money. They also have to pay their normal income tax rate on early withdrawals. If you want a more visual idea of how much this can jeopardize you, paying that, as well as your oat state income tax, can make you spend 45 percent of your withdrawal on taxes and penalties.

How Can You Turn Your 401(k) Into Gold Investments Without a Penalty?

Avoiding penalties and taxes on your 401(k) rollover is not that difficult at the end of the day if you do a direct rollover. Doing this allows your provider to handle the transfer and make your funds automatically show up in the new account.

If you have to handle the transfer yourself, you can do an indirect rollover. Nonetheless, make sure that the rollover is completed within 60 days. If your previous provider held back 20 percent of the funds for taxes, you have to replace these funds when you finish the indirect rollover.

Overall, if you want this plan to work, the new account must be a tax-deferred plan. Don’t deposit these funds in your bank account unless you are at least 59.5 years old. Remember that, otherwise, you are more likely to need to pay a penalty for an early withdrawal.

Which Companies Can Help Me Convert My 401(k) Into Gold Coins?

If you are trying to invest in a gold 401(k) or IRA, there are a few companies that can help you get started on the right foot. Many companies don’t allow you to invest in precious metals. Therefore, it’s essential to consult everything with your new provider before you open a new account.

Investing in a gold IRA rollover is not as difficult as many people think, so call any of the companies listed below and ask them to help you with that.

#1. Goldco


• It has an A+ rating from the Better Businesses Bureau (BBB)

• Goldco’s IRAs can invest in precious metals

• The company has worked with gold IRAs for more than a decade

• Goldco provides top-notch customer service


• Goldco doesn’t store gold, and it doesn’t offer custodian services either

• The annual fee is $175 for accounts that are worth less than $100,000

Goldco serves as a brokerage for gold IRAs. This organization’s customer service is one of the best on this list. Unlike other companies, Goldco manages your paperwork excellently, and it does it with IRA custodians, storage facilities, and account providers.

Since Goldco is a broker, it only handles the purchase and sale of precious metals. Take into account that Goldco doesn’t store the gold in the company. While Goldco cannot serve as the custodian, it can help you fill out the paperwork for a different custodian company. Afterward, Goldco helps you buy IRS-approved coins and bullion.

If you are trying to do a 401(k) rollover, Goldco can help you do it with no problem. This company also handles all the paperwork involved in the transfer of your account and helps you buy any precious metal you want for your portfolio.

#2. Birch Gold Group


• It offers excellent customer service

• It has great reviews from professionals in the industry and consumer organizations

• The company provides educational materials to its clients

• You do not have to pay any fees during your first year as long as you transfer at least $50,000 to your new account


• The setup costs and annual fees are not discussed on the firm’s website

Based in California, Birch Gold Group started working in 2003. This experienced company serves as a brokerage for precious metals. Other than gold, it can also help you purchase platinum, silver, and palladium.

Birch Gold Group allows you to buy gold for an IRA or personal ownership. Thanks to that and to all the educational sources it offers you, you can learn about how to invest in gold and the risks that come with it. All investments are risky at a certain degree, and you need to study those risks before investing in anything. All the investments processed through this business are approved by the IRS for IRAs. Apart from gold, you can also purchase stocks, mutual funds, real estate, raw land, bonds, private loans, and other investments.

If you choose Birch Gold Group as a broker, it finds a custodian for you. People who already have a custodian can still ask this company to buy and store their gold. The company can ship your gold to approved depositories too. You can, for example, store your gold with Brink’s Global Service or Delaware Depository.

#3. Augusta Precious Metals


• Augusta Precious Metals has a fast and easy setup process

• It’s affordable

• Top-tier customer support


• You have to put at least $50,000 into your new account

Augusta Precious Metals allows investors to save money from taxes and invest in precious metals through it. This company recommends Goldstar Trust, Equity Trust, and Kingdom Trust as custodians, but you can choose others if you feel more comfortable with them.

After you set up your self-directed IRA, you can ask Augusta Precious Metals and your custodian to buy gold and other precious metals for you. This company is ideal if you want to buy premium coins, bullion, bars, and rounds. In addition to that, Agusta Precious Metals sells collector sets and commemorative coins.

You can also rely on this company if you care a lot about safety since Augusta Precious Metals offers a price protection program to its customers. People investing in volatile precious metals can benefit a lot from this company since it sells you what you were going to buy for the initial price it offered you. Additionally, Augusta Precious Metals often gives customers discounts on large bullion orders.

If you love companies that offer tons of promotions, then you’re going to love Augusta Precious Metals. This company can, for example, give you up to $2,000 in silver after you make a qualifying investment in your new account. Plus, you can cancel any order within the first seven days regardless of the reasons you have to do it.

Frequently Asked Questions

Switching to another retirement plan is not something you have to take lightly. Fortunately, turning to a gold IRA is fast and simple. These are some of the most common questions about moving a 401(k) plan into gold:

Can I Invest My 401(k) in Gold?

Yes! However, remember to follow every recommendation given on this page and do it with a reliable company.

Do I Have to Pay Taxes When Rolling Over a 401(k) to an IRA?

You are legally allowed to do a 401(k) rollover without paying any taxes or penalties. Nonetheless, not following this process correctly is what makes the government charge you with taxes and penalties.

Can I Buy Gold Without Paying Any Taxes?

Traditional IRAs and 401(k) plans are tax-deferred savings accounts. This means you don’t have to pay any taxes on your contributions or investments. You only have to pay taxes for your withdrawals when you finally withdraw your funds, so don’t worry about that.

People buying gold for the sake of having it always have to pay taxes for it. You can only avoid paying those taxes by buying gold through your 401(k) plan.

Can I Buy Physical Gold in My 401(k)?

You can buy physical gold in your 401(k) plan, but this process can be a little tricky since, technically, your IRA cannot be the seller and holder of the gold.

Banks and precious metals companies have to store physical gold with a third party since you are not personally allowed to hold your precious metals. According to the IRS, your 401(k) plan can only contain physical gold if someone else is in charge of storing that gold.

You always have access to the storage facility where the gold is, but you can’t have it on you for security reasons.


As you could see, investing in gold and precious metals is not that difficult if a professional company helps you with it. However, always remember to background check the companies you hire, and follow all the tips given on this page.



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