How You Can Rollover A 401k Into A Gold-Backed IRA

how to rollover 401k into gold-backed ira

Chances are if you've been employed at a company for a while that you've built up some retirement savings in a 401k plan. 401k plans are always something to take advantage of, especially if your employer contributes matching funds to it. But there may be reasons you would discontinue your 401k such as leaving the company, or deciding you would prefer more control over your investments. A 401k plan probably wouldn't allow you to invest in gold, but a self-directed IRA would, so you may decide to switch your 401k funds to a gold IRA. But how does this work? 

What A 401k To Gold IRA Rollover Is 

A 401k rollover isn't too different from transferring funds from one bank account to another, though there are a few catches to be careful of. The basic process is that you will open your self-directed IRA first, and then contact your 401k provider to start the rollover process. The next step will be critical because you have the choice between an indirect rollover and a direct rollover. 

- Indirect Rollover:  your 401k provider will close the 401k account and send you a check which you then deposit into the IRA yourself 

- Direct Rollover:  your 401k provider will send the check directly to your IRA custodian 

You may want to consult with a financial advisor on which option would work best. Generally, a direct rollover is better because you won't have to worry about IRS penalties for indirect rollovers, including failing to deposit the funds in your new IRA within 60 days. 

What A Self-Directed IRA Is 

A self-directed IRA is a bit different than regular IRAs because you can invest in assets like real estate and precious metals. It still will be either a traditional IRA or Roth IRA, and there are statutes in place that dictate how to move 401k to gold without penalty. The experts at Goldco state, "recessions are cyclical; it is not a matter of if, but when the next one will happen,” which makes it a good reason why you should open a self-directed gold IRA. A gold based ira allows you to buy approved physical gold bullion that can offset inflation and become more valuable over time, especially since gold is always increasing in value due to its limited supply. But a self-directed IRA isn't offered by just any investment brokerage or wealth advisor. You need to find a reputable custodian who can help you set one up, or register an LLC for your account. 

Why You Also Need To Purchase Gold From A Reputable Broker 

The physical gold market can be rife with scammers who either never ship your gold, or who make false claims about the true market price of the coins they sell. That's why you need to choose a reputable company that has delivered to customers and has worked with self-directed IRA programs. Just remember, all gold purchases need to be done through your IRA, and they have to ship directly to a depository and not to you. 

In conclusion, a 401k rollover into a gold IRA is really not that difficult, and it can help diversify your portfolio. Just make sure you do your homework carefully on it, and understand all the risks about buying and holding physical gold.

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