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Investors-and-soon-to-be retirees understand the value of buying precious metals. But typical employees do not have access to precious metals retirement investments. They tend to have a traditional 401k account that doesn’t allow this style of investing.
When this is the case, a 401k to gold IRA rollover is in order. I understand this process from beginning to end. So, I will break it down for you in further detail below. Just know that initiating this process is a lot easier than you likely think.
To get started, please read along to learn the ins and outs of initiating 401k to gold IRA rollover right now.
401k to Gold IRA Rollover Types
Believe it or not, there are two ways to go about the working strategy. Your options are called an indirect rollover or a direct rollover. I’ll share the differences between the two below.
This is the best option to take if you have the opportunity. This option is safe because the administrator and IRA custodian handles everything for you. The administrator will receive the check and issue it directly to your new IRA custodian.
Why is this important?
It’s critical because the responsibility to deposit your money within 60 days isn’t yours any longer. It becomes the 401k administrator’s responsibility. This means you won’t have to worry about accidentally failing to deposit your check within the allotted 60 days. This will prevent unnecessary early taxes and penalties.
During an indirect rollover, your 401k account administrator will send the proceeds of your business account directly to you via check or wire transfer. You are responsible to deposit the funds into your new gold IRA account within 60 days.
What happens if you fail to deposit within the allotted 60 days?
First, the IRS will consider this a distribution. Not only will it be a distribution, but it’s also called an early distribution if you aren’t 59 ½ years old.
Next, you’ll have to pay taxes since the account requires you to pay business taxes once the funds are distributed. But that’s not all, because you’ll also have to pay a 10% early withdrawal fee. Remember, you aren’t allowed to take these funds out of the account early. If you do, the IRS provides heavy penalization in the form of a 10% fee.
401k to Gold IRA Rollover Process to Financial Freedom – 5 Steps
Are you ready to learn the steps of a gold IRA rollover? This often seems intimidating to certain people, but have no fear. We will tell you exactly how to get going if you implement these five steps.
1. Picking Your Gold IRA Custodian
First, it’s necessary to choose a gold IRA custodian. Most of the best precious metals companies will connect you with their top-of-the-line custodian. This eliminates the need to find one on your own.
Instead, find a precious metals company that you can trust and ask for their expert advice and assistance. In some cases, the precious metals company will also act as a gold IRA custodian. So, look into this if it’s something you’re interested in.
In my opinion, it’s always best to work with a company that has a strong relationship with an IRA custodian. This way everybody on your team is on the same page.
2. Opening Your New Gold IRA Account Via Rollover
Now is the time to initiate a rollover. Let your 401k administrator know about it and have them completed via an indirect or direct rollover.
As mentioned, a direct rollover is a much better choice if the option is available. This takes the onus to deposit the money out of your hands and puts it squarely on the administrator’s shoulders.
To begin this process, you will need to fill out paperwork. But have no fear, because the gold company that you choose will help you throughout the entire process.
3. Purchasing Precious Metals Investments for the Account
Third, it’s time to begin purchasing precious metals for your new gold Individual Retirement Account (IRA) investing account. This doesn’t need to be difficult. Just let your custodian know that you’d like to buy eligible gold and silver investments.
Some excellent IRA eligible gold coins include:
- Austrian Philharmonic Gold Coin
- American Eagle Gold Coin
- Canadian Maple Leaf Gold Coin
And a few great silver options include:
- Silver Bars from the Royal Canadian Mint
- Britannia Silver Coin
- American Eagle Silver Coin
- Chinese Panda Silver Coin
4. Initiating Depository Shipping Arrangements
At this stage of the game, you just purchased some amazing precious metals for your new gold IRA investing account. This is a good thing because your retirement future just got a lot brighter.
The Internal Revenue Service (IRS) requires that all precious metals from an IRA account be stored in a predetermined vault. Your gold company will help you choose the best vault that they have great connections.
After you’ve picked your storage facility, you must let the custodian know your new account number and other important information. From here, they will ship your precious metals directly to the storage facility for protective vault storage.
5. Repeat Steps 3-4 Again When Buying More Precious Metals
More than likely, you will continue to invest in precious metals over and over throughout your lifetime. This is how you ultimately grow your account and retire comfortably decades from now.
All the hard work is finished. The account is open, you have a custodian managing everything for you, and you’ve chosen your storage facility. It’s time to repeat steps three and four whenever you intend to add more precious metals to the account.
Remember to buy more gold and silver and ship them directly to your storage facility right away to avoid any confusion.
When all is said and done, a 401k to gold IRA rollover is a wonderful idea. It may seem difficult on the surface, but after reading through the five steps you’ll know that this isn’t the case.
Do yourself a favor and connect with a great gold company, an excellent IRA custodian, and a top-notch storage facility. This will make your life so much easier and you’ll feel confident investing in precious metals repeatedly throughout the years.