How To Perform A 401k To Physical Gold IRA Rollover

How To Perform A 401k To Physical Gold IRA Rollover

January 13, 2020 0 By Aumi Haqe

We are living in times of economic uncertainty, the purpose of saying this is not to spread fear or panic but to present the prevalent economic environment of the world as it is. It has been over a decade since the economic crisis of 2008 and the major economic indicators are all flashing red. Many economic analysts were predicting 2019 to be the year of recession but thankfully that did not happen. They are saying the same for 2020, it may or may not turn out to be the year of recession but one thing is for sure that the indicators are suggesting that a recession is on its way. The more it gets delayed, the more it will worsen.

The global debt is over $250 trillion, the federal debt of USA alone is over $23 trillion. This means that the super structure of modern economy is standing on the foundations that are made out of debt and this is not sustainable in the long run. The 10 year U.S treasury yields are showing a concerning trend and the gold rates are climbing in a manner similar to the months leading up to the 2008 crisis. On top of all this, there are growing threats of U.S – Iran tensions that may throw the wrench flying into the whole situation and induce the recession.

In such a situation investors and individuals who save money for retirement or for any other purpose need to act in a very prudent manner because the memories of 2008 crash are still fresh when many families saw up to 20% of their savings wiped out. In such an uncertain situation, prudent investors try to take precautionary steps in order to secure their investment and minimize the risk of any loss. Let us now narrow down the list of investors to people who have got their savings in 401(K) plans.

What Is A 401(K) Plan?

Employees who have a portion of their earnings deposited in 401(K) plans, have the funds as retirement savings. The 401(K), by itself is a great way to save money for retirement, the account holders doo not have to worry much and in addition to savings the funds are invested into shares and mutual funds to generate income and increase the savings exponentially over time. The investment options available to 401(K) plan owners are very limited in scope because the government does not want people to invest their retirement savings into risky investments. While this is a good control measure, but this also means that the savings in 401(K) plans are at a risk when we look at the prevalent economic uncertainty.

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Investors may want to invest in precious metals such as gold or silver to secure their savings and stabilize them but doing so is not possible in a 401(K) plan. Fortunately the government recognizes the need for doing so and there exists another way to invest the funds from 401(K) plans into precious metals.

Gold IRA Rollover

This alternative is known as “Gold IRA rollover”. While your 401(K) plan does not allow investment into precious metals, the gold IRA account does but there is a roll over process that needs to be followed first.

First of all you, as an investor will need to look for a gold IRA company that suits your needs. There are plenty of companies to choose from so carry out your due diligence and choose wisely. Remember that you will be handing over your retirement savings to the company, so the company needs to be one you can rely on. Once you have chosen the company you can contact them and open up your Gold IRA account. The representative will ask for your credentials and once the paper work is done you will receive your account number and other relevant details. This process takes hardly 48 hours.

The “Rollover” Process

Now you need to perform the “roll over” of your funds from your 401(K) account to your new Gold IRA account. Make sure to check up with your account or fund manager first for any restrictions or tax implications. Normally, the funds from a 401(K) plan can be rolled over into a gold IRA without much hassle. The roll over can be either direct or indirect.

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In a direct rollover, your funds will directly transfer from the 401(K) account to your gold IRA account. In an indirect rollover, you will first have to withdraw our funds from the 401(K) plan and then deposit them in the gold IRA account. Care has to be take in the indirect method, if your funds remain un deposited in the gold Ira for over 60 days then they become liable for tax and penalties.

Select A Custodian

Once the funds have been deposited in the gold Ira, you are good to purchase the precious metals of your choice but there is another step that needs to be taken care of first. Under the current law, investors cannot hold their precious metals. This means that you cannot purchase the precious metals and keep them under your custody, they have to be kept under the care of a custodian or a trustee. Only banks, credit agencies or government approved brokers can act as custodians.

You can contact banks and credit agencies to find out their custodial policy and rates, once you have arrived at the custodian of your choice and made an arrangement with them, now you are ready to purchase your gold and/or silver to secure your investment.

Purchase The Precious Metals

It must be remembered that gold jewelry and artifacts are not allowed to be deposited in the gold Ira, only approved bullion or coins can be deposited. Only bullion or coins that have been issued by the secretary of the treasury or under any law of any state can be deposited. Once you have finalized the precious metals, the details of the transaction have to be given to your IRA managing company and they will complete the transaction and have the precious metals delivered to the custodian.

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The delivery and processing times depend upon the gold dealer and your IRA company, most top of the line companies have quick processing times but some lower end companies looking to speculate on gold prices may have processing time of over weeks. You should steer clear of such companies as they may end up making you lose your investment.

Once your precious metals are with your custodian, you can rest assured that your retirement savings are safe from loss and hedged safely.