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How to Move 401K to Gold without Penalty

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You’ve finally decided it’s time to take action and explore your options for moving your 401K investments into gold bullion, but before you do anything drastic, be sure you understand the ins and outs of doing so. There are specific ways to make this transition that don’t include hefty penalties from the IRS or steep fees from your 401K administrator. Learn how to move 401K to gold without penalty here!

Why do it?

How to Move 401K to Gold without Penalty

In recent years, many business owners have learned that gold is a great way to diversify their portfolio. Investors of all stripes are flocking to buy physical gold, and for good reason: it’s usually one of (if not THE) best performing asset class in times of financial crises. However, there’s a major hurdle most investors face before investing in gold.

Why? Because at some point, you need to sell an asset in order to use those proceeds towards purchasing gold. And when you do sell an asset, you’ll likely be taxed on gains—thus incurring penalties from your employer-sponsored retirement plan. At first glance it would seem like transferring your 401k into a self-directed precious metals IRA makes sense as long as it doesn’t incur any penalties. But here’s what nobody tells you: there ARE ways around these penalties!

Fortunately, there are options available which will allow you to move your 401k into gold-backed IRAs with little or no penalties. In fact, today we’re going to explain in detail how it can be done—no matter where you work! And by using one of these strategies, not only can you avoid paying your employer’s early withdrawal penalty for taking out assets early, but you’ll also be able to reduce or eliminate taxes that would otherwise be due on those funds.

The general consensus among financial planners is that if you’re ever going to take money out of your retirement plan, it should be prior to age 59 1⁄2. If you wait until then, there are several good reasons for doing so: first and foremost, you won’t have to pay a 10% early withdrawal penalty.

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Second, if you wait until 59 1⁄2, you’ll avoid having to pay income taxes on any earnings in your plan. That’s right—pension plans are tax-deferred, meaning that if you pull money out of your 401k before age 59 1⁄2, it will be taxed at ordinary income rates when it comes out of your account. You could potentially be subjecting yourself to a 35% tax rate or higher!

The good news is that there are several methods of moving assets into a precious metals IRA so you can invest in gold. Depending on your circumstances, one of these options may be better than another. Let’s take a look at three ways you can transfer your retirement plan funds into an IRA.

What if you’re under age 59 1⁄2 and want to move your retirement plan into a precious metals IRA? You might be tempted just to transfer assets directly out of your qualified plan. But here’s what you need to know: there is a 10% early withdrawal penalty that can apply when making withdrawals from your qualified plan before age 59 1⁄2.

That said, if you’re under age 59 1⁄2 and want to move assets from your qualified plan into a precious metals IRA, then you can avoid taxes and penalties by rolling over those funds into an existing IRA first. Once they’re in your IRA, you can transfer them back out of that account into your new precious metals IRA.

Before you Begin

How to Move 401K to Gold without Penalty

You’ll need to know two things: how much money you want to move, and where your money is currently located. Make sure you have access to all of your current retirement accounts (IRAs, Roth IRAs, and workplace retirement plans like a 401(k)). You can move most retirement accounts within 30 days with no early withdrawal penalties.

Once you know where your money is and how much you want to move, there are two options for doing a rollover from one retirement account to another.
You can leave it in a traditional IRA, and roll it over into a self-directed gold IRA later, or roll it over directly into your new gold IRA now. We recommend doing one or two small rollovers first so you can get used to how everything works before moving all of your money at once.

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If you decide to leave your money in a traditional IRA and transfer it later, you’ll need to set up an account with your new provider. Once that’s done, you can go through a trustee-to-trustee transfer from your existing traditional IRA into your new gold IRA. You should talk to your tax preparer or accountant about any taxes or tax implications associated with moving all of your money out of one retirement account and into another. They may recommend leaving some of it in cash until after tax season so you don’t have all of your retirement savings counted as taxable income at once.

If you decide to do a trustee-to-trustee transfer directly into your new gold IRA, you can have most of your retirement savings moved within three business days. Your tax preparer or accountant should be able to help you fill out the paperwork if it’s your first time doing a rollover from one retirement account to another.

Once your money is in your new gold IRA, you can invest it as you would with any other retirement account. But keep in mind that, if you want to open an account with one of our recommended custodians, you’ll need at least $10,000 and must be a US citizen over 18 years old.

Step by Step Instructions

How to Move 401K to Gold without Penalty

First, you’ll need to find a custodian that allows you to purchase gold or other precious metals. Augusta Precious Metals and Goldco are two popular providers that allow their clients to invest in physical precious metals. You’ll also want a trustee who handles your retirement account for you. Once your account is set up, simply go into your investment dashboard and follow these steps:

  1. Select Gold as your asset type.
  2. Select which gold product you would like to purchase (coins, bars, etc.).
  3. Specify how much gold you would like to purchase (in dollars).
  4. You’ll be asked to provide an account number and a bank routing number; make sure that these are correct before clicking submit!
  5. Click submit, and you’re done!
  6. Your gold will be shipped to you, and you can track its online at your providers website or app.

Frequently Asked Questions

What is a rollover?

A rollover is a plan loan that allows you to withdraw money from your current retirement account and transfer it into another type of tax-advantaged retirement account. What are my options for transferring funds over? You can move your 401k balance in one lump sum or several installments, whichever best suits your situation. However, once you make a contribution or withdrawal from an IRA, there is a mandatory wait period before any further contributions can be made – but only if the original contribution was made via rollover (i.e., within 60 days of receiving proceeds). If funds were contributed directly to an IRA (outside of a rollover), there is no mandatory wait period.

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Where can I move my money?

You can roll over a 401k balance into one of three types of tax-advantaged retirement accounts: Traditional IRA, Roth IRA, or your employer’s company plan. The choice you make will depend on how you want to use your funds (i.e., regular income, lower taxes) and whether or not you have an existing retirement account already.

Is there a deadline?

There is no official deadline for rolling money from one type of retirement account to another, but there are some guidelines that must be followed in order to avoid additional tax fees and penalties. Rolling funds from a 401k into an IRA is considered a taxable event; so if you made any contributions toward your original 401k via pre-tax dollars (through payroll deductions), these will need to be added back in before calculating taxes owed upon withdrawal.
If you plan on rolling over a 401k into an IRA, you will have until April 15th of each year (including extensions) to complete your rollover. If you plan on rolling over funds from one retirement account into another employer’s company plan, you have until October 15th of each year (including extensions) to complete your rollover.

If you fail to meet any of these deadlines, you may be subject to additional tax fees and penalties that could offset your savings from transferring your funds. However, if you make an honest mistake on a timely rollover or transfer, ask for a waiver from your employer.

A rollover will not be considered a taxable event if you are rolling over funds from an employer-sponsored retirement plan into a Roth IRA, although there may be some tax consequences. Because of these potential consequences, you should consult with your CPA or financial advisor before taking any action. This is especially true if you have been receiving distributions from your 401k over time and are considering transferring them all at once.