Precious Metals IRA

401k Rollover to Precious Metals IRA

What Is a 401k Plan?

A 401k is a tax-deferred retirement savings account by an employer. It allows employees to contribute and invest a portion of their paycheck before taxes are taken out. Taxes are not paid until the money is withdrawn from the account. With a 401k plan, employees control how their money is invested and although most plans offer a spread of mutual funds, they may be limited in the investment choices available.

Investors today seek to diversify their portfolios, and many are looking for ways to own precious metals funds, such as silver and gold. Investing in these precious metals provide balanced portfolios and give investors insurance, as the value of precious metals generally holds value within unstable markets. They also provide a hedge for purchasing power, as it generally remains intact as inflation slowly devalues physical currency.

What Is a 401k Rollover? 

“Rolling over” refers to the transferring of a 401k account from a former employer. The first step to investing in precious metals is rolling over funds into a gold or silver backed IRA account. A self-directed IRA gives an investor the freedom to choose what to invest in. Many people are not aware that a self-directed IRA account gives them the power to invest in alternative asset classes such as precious metals.

Most Recommended IRA Approved Precious Metals

Gold

Silver        

Other IRA Eligible Precious Metals

In addition to gold and silver, many investors are unaware that platinum and palladium may also be added to an IRA.

IRA-eligible platinum includes:

  • British Coins
  • Austrian Coins
  • Australian Koala Coins
  • American Eagle Coins
  • Canadian Maple Leaf Coins
  • Various Bars and Rounds

IRA-eligible palladium includes:

  • American Eagle Coins
  • Canadian Maple Leaf Coins
  • Various Bars and Rounds

Benefits of a 401k to Silver and Gold IRA Rollover

  • Diversifies your portfolio—Additional asset classes allow you to strategically balance your portfolio.
  • Regards to inflation—Investors often buy precious metals to try to hedge against inflation. Some believe that precious metals may not lose value like other assets during times of high inflation.
  • Dollar devaluation—Some investors buy precious metals to hedge against the dollar. Similar to inflation, as the value of paper currency is eroded, goods and services become relatively more expensive. Silver and gold are denominated in U.S. dollars and at times, exhibit an inverse correlation to the dollar. Often times when the dollar falls, gold and silver rise. Conversely, the value of gold and silver may decline when the dollar is rising.
  • Reliable store of value— Precious metals have been used for transactions for thousands of years all around the world and have proven to be a reliable store of value over time. They are still recognized today for their value.
  • No counterparty risk—Unlike paper currency investments, physical metals cannot go bankrupt or default on an obligation. 

401k to Gold IRA Rollover Step-by-Step Guide

  • Once the IRA custodian has received all necessary paperwork and funds, you may shop various gold and silver dealers for the products you wish to purchase.
  • Once you have decided on a purchase and locked in a price with the precious metals dealer, the dealer will invoice your IRA custodian for payment.
  • The IRA custodian and the precious metals dealer will arrange for shipment of your precious metals to an approved depository.
  • Your IRA custodian will provide you with regular account statements on your gold or silver holdings.

There are several things to consider when rolling over an old 401(k) plan into a self-directed precious metals IRA account. Some issues to consider are:

  • Choice of custodian
  • Choice of depository
  • Gold or silver products to purchase
  • Ongoing contributions

There are many gold and silver IRA custodians to choose from. When comparing IRA custodians, some things one may want to compare include length of time in business, customer reviews and fees, and expenses. Custodians may be compared online from the comfort of your home or office. The same can be said for choosing a depository. There are numerous approved depositories to choose from in various locations. You may want to compare fees and expenses, as well as security and/or any insurance provided.

  • Set up IRA – How To?

  • The first step to investing in a precious metals IRA is to roll over a 401k plan from a former employer. The process is relatively quick and can be completed in a short period of time.

  1. Select an IRA custodian who offers a Precious Metals IRA.
  2. Complete all paperwork with your preferred custodian to finalize the transfer of your 401k funds from your previous account to your self-directed IRA account.
  3. Shop for various precious metals on Metals.com that you wish to purchase. 
  • Choose a Custodian

Self-directed IRA accounts are held by an IRA custodian or trust company. These companies act as a fiduciary on behalf of the account. Some of their responsibilities include account setup, producing account statements, and accepting allowed contributions. There are many different IRA custodians to choose from. Metals.com can partner with any self-directed IRA custodian. Different companies charge different amounts for their services and may have varying fee structures. One can use the custodian of their choice when setting up a self-directed IRA account.

  • Choose a Dealer

  • Once your self-directed IRA account has been established and is funded, you are now ready to make your purchase. From this point, visit Metals.com or call us at 800-463-1326 to select your IRA-eligible products and lock in pricing.
  • Decide on Bullion Product

  • What do I want to buy?
    • There are only certain bullion products that are eligible to be held in an IRA account, this includes gold and silver American Eagles, Philharmonics, and Canadian Maple Leaf’s. One can also purchase other IRA eligible products such as Australian Kangaroos and silver Australian Kookaburras, among others. Visit Metals.com to view our varied selection. Certain platinum and palladium products are also eligible.
    • Decide on a depository

    • Metals must be stored in an approved depository, as precious metals held in an IRA account cannot be delivered to the account holder. IRA custodians can recommend a depository, but it is important to note that investors do have the ability to choose where their metals are stored from approved depositories. Depositories are a third party storage facility where customers can store their precious metal bullion. Depositories are ideal for those who have made significant investments in precious metals and do not have the capacity to store these large collections in their homes or on their property. Depositories are equipped to hold large amounts of precious metals and have been built to provide optimal protection for valuable investments. While storage at a depository can be more expensive, it spares customers from potential problems in the future.
    • Where can I find a depository?

      • Investors can find IRS approved depositories by completing a simple online search. Below is a list of a few authorized depositories:
      • Transcontinental Depository Services, LLC
      • Delaware Depository Company 
      • Brinks (brinks.com) 
    • Make the Purchase

    • Your selected IRA custodian will handle the payment and the dealer will ship the purchased precious metals. The custodian will provide the customer with account statements, detailing their holdings and the bid or wholesale value of those holdings.

    Any questions regarding a precious metals IRA should be directed to one’s CPA or tax professional. It is important to note that investors should consult their CPA or tax professional prior to investing.

    FAQ

    Which retirement accounts can accept rollovers?

    All IRAs (Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, Solo) are eligible for a direct rollover. Make sure to ask your IRA custodian for details.

    You may also view the IRS Rollover Chart by clicking here: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf or visit www.irs.gov for more information.

    Can I transfer money from an existing IRA to fund my gold/precious metals IRA without tax penalties?

    Yes. If you have an existing IRA or 401k plan, the simplest way to set up a new Precious Metal IRA is by a transfer or rollover. One will need to transfer the amount they want to invest in a new IRA, and there are no tax penalties. Your IRA custodian will advise on how to do this and will administer the process.

    When can I rollover?

    If you are currently employed by the company that sponsors your 401k plan, you likely will not be able to roll over funds into a gold or silver backed IRA. However, exceptions may apply and it is best to check with your plan sponsor.

    One could also possibly choose to keep his or her existing 401k plan and purchase physical gold or silver through a separate, self-directed IRA account.

    401k accounts from former employers can be transferred into self-directed gold or silver IRA accounts, a new 401k plan with a current employer, or may be cashed out. However, cashing out can involve tax penalties and should be thoughtfully considered.

    Can I open a new IRA?

    Yes. An investor can open a new IRA with a contribution, however, your total annual contribution limits remain the same.

    Can I have more than one IRA?

    Yes. An investor may have multiple IRA’s, and your annual contribution limit will remain the same. 

    What are the costs involved in setting up a Precious Metals IRA?

    When it comes to precious metals or any type of investment, an investor should have a solid understanding of the costs and/or fees involved. There are many associated costs that should be considered. Due to the tax-deferred nature of an IRA account, an approved IRA custodian must be used to hold the account.  Below are some of the potential costs:

    • Account application fees — An IRA custodian may charge an application fee for processing a new account or an IRA 401k rollover. These fees may range.
    • Transaction fees — IRA custodians may charge a transaction fee for the sale or purchase of metals within the account. This is usually a “per transaction” basis fee.
    • Annual account fees — IRA custodians maintain accounts and take care of any account administration and bookkeeping. Fees for this may vary per year. IRA custodians will disclose their annual fees in their account paperwork. Additionally, these custodians may offer discounts based on an investors account size.
    • Wiring fees — IRA custodians charge a fee per outgoing wire.
    • Storage fees — Depositories charge annual fees in order to hold and secure precious metals. Fees may vary based on which depository is used but typical fees may range based on the value of the precious metals.
    • The cost of the precious metals — An investor will also have to purchase the desired precious metals from a dealer for his or her IRA account. In addition to the cost of the precious metals, investors may also pay premiums over the spot price (the price at which a commodity could be transacted and delivered on right now- this is in contrast to future or forward contracts. The spot price of gold or silver refers to the price of one ounce of gold or silver) based on such things as product type, demand and dealer premium.