A gold IRA allows investors to hold precious metals, such as gold, as assets in their Individual Retirement Account portfolio. It’s quite similar to a Roth and Traditional IRA, but it features bars and coins made of gold instead of bonds, stocks, and cash.
With any rollover IRA, a person can move money from a previous employer’s 403(b) or 401(k) to an IRA. It’s also possible to transfer funding from one account to another if the investor feels it’s a better choice.
There are strict regulations and rules to follow, even with a Gold IRA. In a sense, it’s only possible to use a gold IRA rollover under these circumstances:
- The employer discontinues employment with the company sponsoring the IRA
- The retirement plan custodian changes
- The sponsoring company suddenly changing the plan
Benefits of Using a Gold 401K Rollover
Diversifying a person’s investment portfolio is very wise, and gold is one of the options. Many investors have long-term success with such accounts.
One of the primary benefits of a gold IRA is the security it offers. Gold is an excellent asset because it hedges against inflation. The value of it is more stable than real estate, bonds, and stocks during economic crises.
A person has more control over a gold IRA. If the stock market crashes, the gold stays dominant, giving the investor more power in the weak economy. The assets don’t drop in value and could even increase. Having more money during an economic crisis can open other doors to investment opportunities.
In a previous article, I spoke about a company that is very well known in this space, Noble Gold Investments.
Other advantages of having a Gold 401K rollover include:
Penalty-free Transfers
No one wants to lose money during transfers. When an investor rolls over their 403(b), 401K, or a traditional IRA into gold IRAs, they don’t have any transfer penalties. The new custodian handles everything, so the money can be moved between accounts with no extra charges.
Inflation Protection
The value of the precious metals often rises quickly. Therefore, having them in the portfolio helps balance wealth against inflation. Over the past few decades, gold outperformed mutual funds, index funds, and stocks.
By moving the funds into a gold IRA, the assets are expected to gradually increase each year. This is the best way to ensure that the investor has a sustainable retirement fund.
Protect the Investments
Many renowned investors claim that precious metals are ideal to protect the assets from economic issues. Why do recessions rarely affect gold? Gold offers intrinsic value, so it’s a resource that can be used for real-life applications. For example, electronics manufacturers use it to build computer chips and mobile phones.
Such inherent value is what makes gold a substantial investment, even during economic crises. This is why it’s important to invest in it.
Higher Returns
Yes, in the long run, gold IRAs can produce higher returns than other strategies and investments. Real estate and stocks could achieve higher yields but only in the short term. With that, investors risk losing their funds if the economy falters.
However, gold is safe and consistent. With a gold IRA, it’s easy to relax and watch the portfolio grow. Regardless of how old a person is, they can secure themselves and their families a better future with gold.
The Process
The first step is to find a custodian that offers gold IRAs. Open an account with a reputable gold 401k custodian.
From there, the custodian or the investor must contact the 401K company holding the account to start the rollover process.
A direct rollover is best because the money goes from the 401K account to the gold IRA. This saves the investor from having to pay taxes on the funds.
An indirect rollover means that the funds are withdrawn from the 401K account by the investor and given to the gold IRA custodian. A person only has 60 days from the date the funds are received to move the money to the gold IRA company custodian. Otherwise, that amount is taxable, and a 10 percent early withdrawal fee penalty is applicable.
Conclusion
Moving some funds from a traditional IRA to a gold IRA is a great choice for those who want financial stability. However, it’s important to research every option. There are differences and various rules to consider.
Still, if it’s possible to do a gold 401K rollover, it’s well worth the time and effort.
