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How to Move 401(k) to Gold Without Penalty in 2024

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Gold is considered by many as the ultimate safe haven during times of economic turmoil and high inflation. This long-standing reputation may come from the time that countries held the precious metal in their vaults and used it to support the value of their currencies.

In the modern era, investing in gold is easier than ever due to the technological advancements that the financial industry has embraced. However, is it possible to take advantage of tax-deferred accounts to invest in gold?

In this article, we discuss how investors can incorporate gold into their retirement accounts by rolling over their 401(k) to a self-directed individual retirement account (SDIRA).

What is A Gold IRA?

A Gold IRA is a type of tax-advantaged investment account that is used to build a retirement fund, and that was specifically created to invest in gold and other precious metals directly.

With this type of account, investors can buy physical gold instead of having to rely on a financial vehicle such as an exchange-traded fund (ETF) or mutual fund to get exposure to the precious metal. It is important to note that the Internal Revenue Service (IRS) allows Self-Directed IRA holders to purchase precious metals other than gold, such as silver, platinum, and palladium.

The reason why people open a Gold IRA is that 401(k)s and traditional IRAs don’t typically allow them to buy precious metals physically. Therefore, a Gold IRA gives investors more freedom to choose what financial asset they would like to incorporate into their portfolios to grow or protect the value of their retirement funds over time.

Same as regular IRAs, there are Traditional and Roth Gold IRAs. The Traditional version imposes contribution limits on a pre-tax basis, while the contributions made to a Roth IRA are on an after-tax basis — among other differences.

What is a Gold IRA Rollover?

A rollover, in the context of investing, means transferring the funds held in one investment account to another. In the case of a Gold IRA, a gold IRA rollover can be performed if the investor wants to move the funds held in a 401(k) or regular IRA to this type of account to invest in the precious metal.

A rollover can be coordinated with the financial services provider used by your employer if it involves a 401(k) or with the brokerage firm with which you have a regular IRA. In some cases, there are costs involved when performing a rollover.

Things to Consider Before Moving Your 401(k) Into A Gold IRA

If you want to move some of your retirement funds to a self-directed IRA like a Gold IRA, you may want to understand some of the dynamics and regulations that affect these transactions so you can make an informed decision.

Understanding 401(k)s 

A 401(k) is an employer-sponsored type of investment account that allows you to save money for retirement. These accounts are also referred to as tax-advantaged accounts, as no taxes have to be paid on the earnings produced by the investments held within the account unless the money is withdrawn before retirement age.

Most employers in the United States offer matching contributions to the amount deposited by employees into a 401(k) account. The matching percentages vary from one employer to the other, and they could go up to 100% in some cases. This means that for every $100 deposited into a 401(k), the employer adds another $100.

These accounts are typically offered by financial services companies that impose limitations on the type of assets that can be added to the portfolio based on the applicable regulations on the subject and the scope and reach of their services. 

Meanwhile, there are limits to the maximum amount of money that investors can contribute to a 401(k) every year. The limits are modified annually, and as of 2023, they stood at $22,500 per year.

Rollover Eligibility 

If you currently work for the employer that sponsors your 401(k), it is important to know that not all administrators permit a rollover to an individual retirement account. These rollovers are known as “in-service withdrawals.” To get further information about whether you are eligible or not, you should consult with the financial services firm that your employer works with.

If you are not eligible for a rollover, going with this alternative will that you any taxes applicable to the earnings made by the investments held within the account. This is often not the desired outcome, as it can hurt you financially. 

Meanwhile, if you no longer work with that employer, it should be relatively easy to transfer all or a portion of the funds held in the 401(k) to a self-directed IRA. The company managing the 401(k) will provide all the instructions required to perform the rollover.

Finally, if you are planning to roll over a regular IRA to a Gold IRA, the following conditions must be fulfilled:

  • The gold you buy must be 99.5% pure.
  • The assets have to be held by a custodian.
  • Pre-owned gold cannot be transferred to the new account.

IRS Penalties for Retirement Accounts 

There are two penalties that the Internal Revenue Service (IRS) imposes on transactions made with 401(k)s or IRAs. 

The first is a 6% penalty that applies to any excess contributions made during a given year. The penalty is carried over to subsequent years until the error is corrected.

In addition, a 10% penalty applies to all withdrawals made before the investor reaches retirement age. However, there are some instances in which the person could be allowed to make a penalty-free withdrawal of up to $100,000. Some of the exceptions include buying your first home and suffering from a disability.

401(k) Rollover Fees and IRS Rules

Most companies that offer self-directed IRAs, such as those created for precious metals, do not charge a fee for rolling over the assets from a 401(k) to one of their products. The reason for this is that once the funds are with them, the Gold IRA provider typically charges an annual administrative fee along with some other charges as part of their business model. Hence, a rollover fee may discourage the investor from performing such a transaction.

Meanwhile, the IRS imposes some rules that need to be met before a rollover can be performed. First, the Gold IRA provider must have appointed an IRS-approved custodian for the assets that will be held within the account. 

In addition, the precious metals bought for the account must be stored in an IRS-approved depository institution. These are companies that have adequate facilities to safely store these assets.

How to Transfer an Existing 401(k) Into a Gold IRA?

Now that we have shared further details about how rollovers work and some of the rules that you should consider before performing one, here goes a step-by-step guide that teaches you what you should do to complete a transaction of this nature.

Step 1 —Open A Gold IRA Account

The first step to roll over a 401(k) to a Gold IRA is to open an account with a financial services company that offers this kind of product. To choose the most suitable provider, you should consider the following aspects of their services:

  • Minimum deposit.
  • Available investment products.
  • Customer support.
  • Educational resources.
  • Administrative fees.
  • Custodial and depository fees.
  • Administrative fees.
  • The types of rollovers they support.

There are a number of gold IRA providers in America, but it is important to stick with companies like Augusta Precious Metals, Goldco, and American Hartford Gold which are reputable and have a good track record. When choosing a Gold IRA company for your investments, here are the criteria we recommend you pay close attention to.

Augusta Precious MetalsAmerican Hartford GoldGoldco
Our Rating




Annual Fees$200 (waived for the first year)$175 – $225 (waived for the first year)Varies depending on custodian
Minimum Deposit$50,000$10,000$25,000
Trustpilot RatingN/A5.0/5.04.8/5.0
BBB RatingA+A+A+
TrustLink Rating4.9/5.05.0/5.04.8/5.0
Information KitPhysical KitPDFPhysical Kit
VerdictBest For TransparencyBest For Low Minimum PurchaseBest For Customer Service

Minimum Deposit

Most Gold IRA providers require a minimum deposit that may start at $2,000 but can go up to $50,000 in some cases. This minimum deposit ensures that you can buy a sufficient amount of gold for your account, so the applicable administrative and other fees make sense from a financial standpoint.

The deposit does not have to be in cash necessarily. However, it would be easier, and often cheaper, to transfer cash to a new Gold IRA account to avoid paying higher fees if some of the assets transferred are stocks or bonds — which can typically be traded either for free or at a negligible cost with a larger brokerage firm. 

Account Fees

Gold IRAs charge different types of fees, and they function slightly differently than regular IRAs. First, some Gold IRA providers may charge a one-time account setup fee. However, if the deposit is large enough, they may agree to waive it. These fees, if applicable, vary from $50 to $150.

Meanwhile, since the gold held in these accounts has to be stored at an IRS-approved depository, there are shipping and handling costs that apply to every gold purchase.

In addition, both the custodian and depository charge a fee for their services, while the Gold IRA company commonly charges an annual administrative fee for their services too. Before you open an account with any provider, make sure you understand the fees you will be paying per year, and for every transaction you make.

Precious Metals Selection

The selection of products you can invest in is important as you may be unable to deploy small amounts if your gold IRA company only offers access to gold bars. In most cases, these providers offer the possibility of buying 99.5% pure gold coins and gold bars.

These products are typically minted by top-notch producers such as the Royal Mint, Perth Mint, New Zealand Mint, or Royal Dutch Mint.

In addition to gold products, it is often nice to be able to buy other precious metals with your Gold IRA, such as palladium, platinum, and silver coins and bars. The ampler the catalog, the better.

Customer Service

The best service providers are truly tested whenever their customers encounter a problem. Hence, one of the key elements to keep an eye on when selecting a Gold IRA provider is how easy it is to reach out to a customer support representative.

In the ideal scenario, customers will have multiple choices to get in touch with the company, including phone calls, support tickets, e-mail, and even live chat. Moreover, it is also a good idea to check online reviews from sites like Trustpilot and the company’s track record with the Better Business Bureau (BBB) to see what other customers have to say about the company’s services.

Educational Resources

The best Gold IRA providers understand that their customers do not necessarily have a background in finance to understand the dynamics that pertain to these accounts and the many details associated with investing in precious metals.

Therefore, you should check out the website of the Gold IRA companies you are considering working with to see if they have made available educational materials such as webinars, tutorials, blogs, research papers, and other similar resources that you can use to learn more about finance-related topics.

Step 2 —Choose Between Direct or Indirect Rollover

Once you’ve picked the company that you will open an account with, it is time to choose how you will roll over your 401(k) to your brand-new Gold IRA. Two methods can be used to perform this operation — a direct or indirect rollover.

Direct Rollover

This is the easiest way to roll over a 401(k) to a Gold IRA account. The process starts by asking your 401(k) administrator to transfer the funds and assets held within your account to the financial services provider you have picked for opening a Gold IRA account.

The instructions for the transfer can be supplemented by the Gold IRA company’s trustee and the process should be completed in a period of one to three weeks. Other than that, you will receive an IRS Form 1099-R to notify the transaction. To make sure the assets within your account are not subject to a 20% withholding tax, the form should have a distribution code that is used to inform the IRS that this is a non-taxable event.

Indirect Rollover 

This procedure is more complicated than the latter, as the 401(k) administrator will provide you with a check for 80% of the assets you held within your account. That money must be deposited with the Gold IRA company within the next 60 days. Otherwise, the funds will be subject to a 20% withholding tax.

Moreover, the IRS demands that 100% of the funds held in the 401(k) have to be deposited into the IRA to avoid being penalized. Therefore, you will be forced to put down the remaining 20% and wait until you fill your taxes that year to get a reimbursement.

Step 3 —Contact Your 401(k) Administrator and Transfer Your Funds 

Whether you go with a direct or indirect rollover, you are required to contact your 401(k) administrator for them to make the necessary arrangements to either provide you with a check or execute the transfer of your funds and assets to the Gold IRA company you picked.

Most financial services companies allow you to make a request online, and some have even automated the process. However, some 401(k) administrators may still require that you fill out some paperwork and send it over via e-mail or physical mail to confirm that you are the one who is requesting the transfer and not an unauthorized third party.

Step 4 —Setup Custodian Trustee Services and Storage

Even though many Gold IRA companies may take care of this for you, some others won’t. Therefore, you should know that before you complete the rollover, you must have opened an account with a custodian trustee and an IRS-approved storage that will receive all of the physical gold you purchase.

Some companies that offer custodian trustee services for gold investments include Equity Trust, GoldStar Trust Company, New Direction IRA, and The Entrust Group. These companies typically charge a flat annual fee for their services ranging from $150 to $500 per year.

Your Gold IRA company may or may not act as your trustee. If they don’t, you’ll have to pay for this service separately. 

Meanwhile, you must also open an account with the depository that will receive your gold shipments. Some of the most commonly used institutions within the United States are the Delaware Depository Service Company, Brinks Global Services, and Regal Assets.

Gold storage companies typically charge an annual fee and may also charge separate fees for receiving and sending gold shipments on your behalf. In addition, you may also be required to pay a one-time setup fee for opening an account with them.

In many cases, Gold IRA companies have established partnerships with custodian trustees and storage services that facilitate the task of opening an account with them. You can check beforehand which companies the Gold IRA provider works with and how much they charge for their services.

>> Read More: Home Storage Gold IRA

Step 5 —Buy IRS-approved Precious Metals

Now that you have adequately set up an account and rolled over the funds from your 401(k), it is time to start buying up some precious metals. It is important to note that the IRS requires that all the gold, silver, and platinum bought for a Precious Metal IRA is 99.5% pure. 

Most Gold IRA providers offer access to a selection of coins and bars of different sizes, designs, and mints. You can pick among them depending on the amount of money you have at your disposal. Coins are, for example, much more affordable if your account balance is not that high, and you can buy various ones to create a diversified portfolio.

Step 6 —Make Regular Contributions to Your Gold IRA

As with any other investment account, you’ll need to make regular contributions to it to see its value grow over time. Keep in mind that precious metals do not generate a dividend or any kind of fixed income. Hence, your account balance will fluctuate based on how the price of these financial assets varies over time.

To make sure you do not buy gold when the price is at a seasonal peak, you can adopt a dollar-cost averaging (DCA) strategy to spread your gold purchases within a certain number of months or even an entire year.

Reasons for Moving Your 401(k) into Gold IRA

Is it a good idea to move your 401(k) to a Gold IRA? In this section, we highlight the advantages and benefits of investing in gold by using this type of account.

Hedge Against Inflation

Research shows that gold can be a great hedge against inflation when held for long periods. For example, a study from the World Gold Council indicates that gold has delivered returns of 14% per year when average inflation has been above 3% globally, while it has produced gains of 6% or less when inflation is below that level.

However, during relatively short periods, gold prices are much more volatile. Therefore, investors should know two things about gold and inflation. First, gold does protect the purchasing power of your money if held for a long period, and second, it is not a good idea to speculate with gold as its price can fluctuate erratically during relatively short periods.

Portfolio Diversification

Gold has been considered a suitable means of exchange for centuries, and that makes it a great tool for building a diversified portfolio of financial assets. Since gold’s returns in the long term appear to have been positive in real terms (e.g., inflation), investors can opt to allocate up to 5% of their account balance into the precious metal just for the sake of diversification.

Tax Benefits as A Conventional IRA

The possibility of opening a Precious Metal IRA makes an even stronger case for gold investing, as you can take advantage of the tax-deferred status of these accounts to make the most out of your investment.

In the case of an IRA, you don’t have to pay any taxes on the realized gains you obtain from your gold investments unless you decide to withdraw money from the account before your reach retirement age.

Protection Against Currency Devaluations

When inflation rises, the purchasing power of the local currency tends to go down in relation to its peers. In addition, you may be living in a country where policymakers are making decisions that weigh on the value of your local currency.

In any of these scenarios, gold can act as a hedge as it can be exchanged for any other currency aside from your domestic one. Hence, even if you don’t own US dollars or euros, if you own gold, you can trade the precious metals for these stronger currencies at any point.

Alternatives to Buying Physical Gold

In this article, we have discussed at length how you can invest in gold by using a tax-advantaged account such as a self-directed individual retirement account (IRA) and the steps you would have to take to transfer your 401(k) assets to a Gold IRA to invest in physical gold.

However, you could also invest in gold by using your 401(k) by buying an exchange-traded fund (ETF) that offers exposure to the precious metal. Some of the most popular gold ETFs are the SPDR Gold Shares (NYSEARCA: GLD) and the iShares Gold Trust (NYSEARCA: IAU).

In addition, there is a small selection of mutual funds that also track the performance of gold, and that could be incorporated into your 401(k) to invest in this asset. This is the case of the First Eagle Gold Funds (MUTF: SGGDX) and the Invesco Gold & Special Minerals Fund (MUTF: OPGSX).

These investment vehicles charge an annual management fee for overseeing the portfolio of assets they manage, and they typically offer to deliver similar returns as if you were buying and holding gold physically.  

FAQ on How to Move 401(k) To Gold Without Penalty

In this section, we provide answers to the most frequently asked questions (FAQs) we get on the topic of how to roll over a 401(k) to a Gold IRA without a penalty.

Why There Aren’t Any Gold 401(k)s?

Gold is a commodity, and the dynamics of dealing with it physically are much more complicated compared to paper investments such as an exchange-traded fund (ETF).

There are storing, insurance, shipping, and other similar costs that would have to be taken into consideration, and since 401(k)s are offered to large corporations with thousands of employees, managing those costs and transferring them appropriately to customers can be difficult and inconvenient.

Can I Move My 401(k) into Gold?

Yes. It is possible to rollover your 401(k) to a Gold IRA, which is an account that has the same taxation privileges but that is considered a self-directed alternative, meaning that you have full control over the kind of investments you want to make with the money you set aside for your retirement.

Do I Own Physical Gold with My Gold IRA?

Yes. The gold you buy for a Gold IRA is stored physically at an IRS-approved depository that has adequate facilities to keep your assets safe. The most commonly bought gold products for investment purposes are coins and bars, both of which have to be 99.5% pure to comply with the IRS’s rules.

Where Is My Gold Stored?

The gold bought for a Gold IRA must be stored at an IRS-approved depository. This is an institution that has adequate facilities to protect your assets from being stolen. They offer insurance to their customers and are heavily guarded. Some of the most common depositories used for this purpose are the Delaware Depository Service Company and Brinks Global Services.

What Are the Benefits of Owning Physical Gold Versus Paper Gold?

When you buy physical gold, there is no question about who the owner of the asset is, and that frees you up from the counterparty risk that is present with “paper” investments such as exchange-traded funds (ETFs). 

In addition, you can buy and hold gold anonymously, and nobody would know unless you reveal it. This is a positive side of gold versus other financial assets that leave a paper trail, such as stocks, bonds, or certificates of deposit (CDs).

Is It Better to Buy Gold Coins or Gold Bullion for My Gold IRA?

Gold bullion is considered the best gold-made product for investment purposes as it can be more easily traded, and its purity can be more easily verified than that of coins. In addition, since coins have different designs, their spot price may, in some cases, be affected by the market’s predilections for certain imagery printed on the coins.

Can I Hold Precious Metals Other Than Gold in My Gold IRA?

Yes. Most Gold IRA companies offer Precious Metals IRAs. These are more versatile versions of the same product that allow investors to incorporate other precious metals aside from gold, such as silver and platinum, into their investment portfolio.

What Is a Gold IRA Trustee?

A trustee, in the context of a Gold IRA, is an intermediary that is in charge of executing all of the transactions required to buy and sell physical gold on your behalf. They arrange the shipments of your gold and, in some cases, can help you set up your accounts with the depository institution of your choosing.

What Types of Retirement Accounts Can I Use to Hold My Precious Metals In?

Three types of accounts can be used to invest in physical gold. The first is the self-directed versions of individual retirement accounts (IRAs). These are the Traditional, Roth, and SEP IRA accounts.

In addition, Self-directed Health Savings Accounts (HSAs) and Self-directed Coverdell Education Savings Accounts (ESAs) can also be used to invest in physical gold with tax privileges.

Final Thoughts 

Gold has been considered a safe-haven asset during times of economic distress and high inflation for centuries. When held for long periods, the precious metal has proven to be a great way to maintain the purchasing power of investors’ hard-earned money.

If you are looking to invest at least a portion of your retirement funds into gold, rolling over your 401(k) to a self-directed IRA can be one of the easiest ways to get more control over the assets you add to your portfolio.

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