How To Convert Your 401(k) to a Gold IRA

Will your 401(k) be enough to tide you over in your golden years? If you aren’t sure, it’s smart to be at least a little worried, as economic and political factors play into things. You may even have thought about whether to convert your 401(k) to a gold IRA to diversify your portfolio, but is that a wise move?

Historically, gold has served as a dependable hedge against inflation and generally volatile markets. Could putting money into a gold IRA safeguard your retirement funds against financial pitfalls in the next few years or even decades? If you decide to go this route, you’ll need to know how to proceed carefully and anticipate potential IRS complications.

Read on to see Learn About Gold’s steps to convert a 401(k) to a gold IRA, the eligibility requirements, tips for choosing a reputable gold IRA company, and how to fund your new account.

Understanding 401(k) Rollover to Gold IRA

Before doing anything about your 401(k), it’s helpful to understand what a gold IRA represents for you. A gold individual retirement account holds gold (or other precious metals) instead of traditional assets such as stocks and bonds.

With this gold IRA, you will invest your retirement funds in the physical gold itself. However, the IRA will hold those assets for you so that you can enjoy a few tax advantages at the same time.

Eligibility Criteria for Your 401(k) Rollover to Gold IRA

client consulting an accountant for 401k rollover

Are you eligible to convert your 401(k) to a gold IRA? If not, you might have to pay penalties to the IRS.

Here’s how to know whether you meet the criteria:

Age Eligibility

If you choose an indirect rollover (more about that below), it’s essentially the same as withdrawing money from your 401(k). If you don’t put those funds into an IRA within 60 days, you’ll pay a 10% penalty unless you’re 59.5 years or older.

If you’re younger than that, it’s far smarter to opt for a direct rollover. That way, you won’t have to worry about IRS penalties. The process is also much simpler.

Employment Status

Many people only consider a 401(k) rollover when they leave a job. It’s possible to convert your 401(k) to a gold IRA at any time, including while you’re still employed. However, the drawbacks of doing so may include the following:

  • Your 401(k) may allow you to take loans from it; your IRA won’t.
  • A rollover requires more fees than your employer-sponsored plan.
  • Certain plan sponsors impose a temporary ban on further 401(k) contributions for those who withdraw funds before leaving the company.

Traditional vs. Roth 401(k)

Do you have a traditional 401(k) or a Roth 401(k)?

  • You’ll fund a traditional 401(k) plan with pre-tax dollars. You pay taxes on the money when you take a withdrawal.
  • You’ll fund a Roth 401(k) plan with post-tax dollars. You don’t pay taxes when you make a qualified withdrawal.

Find an Expert Gold IRA Company

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What’s the first step to moving retirement savings from a 401(k) to a gold IRA? Choose a gold IRA company. You can’t set up a gold IRA with a traditional custodian, so you’ll need to find a reputable company that has experience handling these specialty accounts.

Here’s how to pick the right gold IRA company for your needs:


Virtually all gold IRA companies charge fees to manage your IRA. These costs may vary from one gold IRA company to the next, so shop around. Typical fees associated with owning a precious metals IRA include the following:

  • Application fee
  • Transaction fee
  • Storage fee

Customer Service

Gold IRA companies handle every detail of your investment, so it’s wise to choose a service provider that offers great customer service. If you have questions about your account, you’ll want peace of mind that you can find the answers you’re looking for.

The best IRA providers offer 24/7 support by phone, live chat, or email, and support agents who are knowledgeable and willing to solve problems.


If you search for “top gold IRA providers,” you’ll find dozens of slick websites and convincing sales pitches. However, it’s always smart to expand your research to independent platforms.

For example, you might want to head to the Better Business Bureau to learn whether a gold IRA company has any complaints and, if so, whether they resolved them satisfactorily. You can also check online reviews from third parties and customers.


A good IRA company will be completely transparent about how their entire process works. The best gold IRA companies are totally upfront about their pricing structure and fees, including when they make money by charging more than the spot price for gold.

Insurance Policies

Gold storage companies have extremely tight security, including 24/7 camera surveillance, armed guards, and gated access control. Still, there’s a small risk of theft, and it’s possible to lose your gold IRA investments if a fire breaks out or a natural disaster hits the facility. That’s why if you convert your 401(k) to a gold or precious metals holding, a reputable gold IRA company will work hard to safeguard your investment with insurance.

In fact, the best gold IRA companies carry about $1 billion in all-risk insurance to fully reimburse their clients if any gold is lost, stolen, or destroyed.

Select a Gold IRA Custodian

wooden human figure and magnifying glass

After you’ve chosen a gold IRA company, you’ll need to pick a custodian to manage your assets. Some gold IRA companies have their own custodians. You can also choose your own to avoid a potential conflict of interest.

Your gold IRA custodian will help you with the following:

  • Set up and fund your account
  • Issue quarterly statements
  • Provide Required Minimum Distribution notifications
  • Comply with IRS reporting requirements

Open an Account

To get started, decide which type of IRA account you want to open. You can choose either a traditional IRA or Roth IRA.

A traditional IRA is quite similar to 401(k)s that pay taxes on contributions when you withdraw them. If you opt for a Roth IRA, you’ll pay taxes on funds before making any contributions (you won’t owe any taxes when you withdraw the money).

Begin the Rollover from Your Eligible 401(k)

hand putting dollar bank notes in glass jar

Once your custodian helps you set up an account, you’ll roll over your eligible 401(k) with a direct rollover or an indirect rollover.

Direct Rollover

A direct rollover is excellent if you value a straightforward transaction. With this option, your current retirement account administrator sends your entire balance to your new gold IRA account, either electronically or by check.

Some retirement account administrators will send a check to you, but cashing this check yourself could incur a penalty. The check should be made out to your new account custodian.

Indirect Rollover

Indirect rollovers appeal to people who want total control over the transfer of their funds. However, they come with the risk of fees if you don’t comply with IRS requirements.

With an indirect rollover, your current account administrator will give funds directly to you. Then, you have 60 days to deposit the funds into your new IRA. If you fail to do so, the IRS will charge you a 10% penalty for early withdrawal (unless you’re over 59.5 years old).

Fund the Gold IRA Account

Aside from a rollover, you have a couple of other options for funding your gold IRA account. For example, you can fund your IRA account by check, cash, or wire transfer. A wire transfer has a bank fee.

You can also fund your gold IRA with other types of retirement accounts, including a 403(b), 457, pension account, or Thrift Savings Plan account.

Types of Gold You Can Hold in a Precious Metals IRA

gold coins and gold bars on marble background

The IRS once limited IRAs to holding only American Eagle gold and silver coins. However, the Taxpayer Relief Act of 1997 expanded the precious metal offerings your IRA can hold.

Even so, if you convert your 401(k) to a gold IRA, that physical gold investment must meet certain requirements to be eligible. For example, all IRA-held gold must be 99.5% pure (at a minimum) and meet the other requirements below.

Gold Bullion

Gold bullion investments include high-quality gold coins and bars. Central banks hold bullion in their reserves to stimulate the economy via lending or settling international debts. Individuals can buy and sell bullion through active dealers on global bullion markets.

IRA-eligible gold bars, coins, and rounds must be produced by a manufacturer, assayer, or refiner that is certified or accredited by the national government mint or:

  • LME
  • LMBA
  • NYSE/Liffe
  • LPPM
  • ISO 9000

Gold Coins

The IRS rules extend to the type of gold coins you can hold in an IRA. For example, you cannot have rare or collectible coins or certain national currencies, such as the German Mark, Italian Lira, Chilean Peso, or Swiss Franc.

Proof coins are eligible if they are enclosed in the complete original packaging and in mint condition. They must also include their certificate of authenticity.

Non-proof coins must be free from damage and uncirculated.

Gold ETFs

Gold ETFs allow you to invest in gold without owning or storing physical metal. Exchange-traded funds can hold either bullion or futures contracts. Investors can also trade them on the stock market, like other kinds of stocks.

Reasons To Invest in Gold for Retirement

arrow up down and dollar sign on wooden cube

Why consider investing in gold for your retirement?

Hedge Against Inflation and Market Volatility

Traditional investments, such as stocks and bonds, fluctuate wildly with shifting interest rates, inflation, and general economic uncertainty. If you decided to convert your 401(k) into stocks, you could make a lot of money. But you could also lose your fortune quickly if something goes awry.

Gold, on the other hand, tends to remain stable when the economy isn’t doing well. Investing in gold won’t make you rich, but it’s a smart way to safeguard your assets for retirement.


You’ve probably heard the old saying, “Don’t put all your eggs in one basket,” and that’s true when it comes to investing. It’s never a good idea to rely solely on one high-risk investment that could erode your retirement account’s value overnight. Diversify your portfolio by investing in other, more stable assets, such as gold.


The price of gold rises and falls, but not as much as stocks and bonds do. Historically, gold prices have remained relatively stable throughout periods of recession and inflation, which gives you peace of mind that your money will be safe when you need it.

Tax Benefits

Opening a gold IRA could save you a pretty penny in taxes, but this largely depends on whether you open the right type of IRA.

With a traditional IRA, the IRS taxes you on withdrawals at your income level at the time of withdrawal. If you think your income will be low in retirement, a traditional IRS might be best.

For a Roth IRA, you pay taxes on funds before contributing them. You’ll owe no taxes when you take withdrawals, which could be helpful if you think you’ll be on a tight budget in your retirement years.

Advantages of Transferring a 401(k) to a Gold IRA

judge gavel and golden scale of justice

So, is it a good idea for you to convert your 401(k) to a gold IRA? Here are a few good reasons the experts recommend doing so.

Reduced Fees

Your 401(k) plan comes with annual fees that could potentially reach 1% of your portfolio’s value. The more money your account accrues, the more of this cash you stand to lose. If you have a hefty portfolio, those fees could easily add up to thousands annually.

Gold IRA accounts have fees, too, but many companies charge flat rates rather than a percentage of your total holdings. Opting for a gold IRA could save you a nice chunk of change each year on fees alone.

Increased Cash Incentives

Many gold IRA companies offer incentives to sweeten the deal for you. For instance, they may offer a low-price guarantee and forego buyback fees if you want to sell your gold. Some companies even offer quite a bit of free gold or silver when you open an IRA with them, so be sure to ask.

Simplified Rules

The IRS has strict rules and regulations surrounding 401(k) plans, and navigating all of them can feel like trying to find your way through a maze without an exit. IRA plans are a bit easier to understand. Plus, your custodian will manage your account for you.

You can also choose when and how you pay taxes on contributions. This flexibility is appealing as it allows you to choose the best option depending on your expected retirement income.

Simplified Estate Planning

Finally, choosing a gold IRA gives you more control over what happens when you pass away. You decide who receives your assets and how much they receive. Your IRA can provide your heirs with some tax savings as well.

What Consequences May Occur When Converting a 401(k) to an IRA?

male hand pushes wooden block domino

Converting a 401(k) to a gold IRA has a few consequences for your long-term investment, as follows:

Value-Added Funds

If your 401(k) includes more stable value funds than money market funds, it could make sense to keep it as is. You might also consider keeping some assets in a 401(k) and others in your gold IRA.

Account Fees

While it’s possible that switching to a gold IRA could save you money on account fees, the reverse might also be true. Some gold IRA companies could cost you more than your 401(k)’s fees did.

Creditor Protection Risk

Most rollover IRAs enjoy full protection if you must declare bankruptcy. Creditors can’t seize assets in your IRA account.

Available Loan Options

You can usually take a loan out of your 401(k), but you can’t do the same with a gold IRA. If you need fast cash, this could be problematic.

Minimum Distribution Requirements

Finally, the IRS says that you must start taking distributions from your IRA when you reach the age of 73 (with the exception of Roth IRAs). However, this same requirement is true for 401(k)s, too, so you’ll have to decide which of the many other benefits will influence your decision between the two options.

Why not learn a little more about how to successfully convert your 401(k) to a gold IRA? Complete Learn About Gold’s quick questionnaire to find your ideal gold IRA partner match today and start preparing for the golden years you’ve always dreamed of.

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