How To Move A 401K To Gold Without A Penalty

Disclaimer: Most if not all the companies we have listed here may offer compensation to us. That is how we keep our free service for clients. Compensation, together with hours of extensive editorial research, determines how and where companies are placed below.

Saving money for your retirement can be done through an independent retirement account (IRA) or a 401(k). Plus, with IRAs and 401(k) plans, you don’t have to pay taxes on your contributions. One of the ways you can diversify your account is to invest a portion of your 401(k) money in gold.

There are several reasons why people turn to gold. Some individuals purchase gold to shield their portfolio from inflation. Gold has been prized for thousands of years. As such, gold investments continue to maintain their value. There are some folks who invest in gold because they have concerns about market instability. Gold does not go bankrupt like corporations. So your bullion and coins will remain in your vault even if the economy is affected in some way.

Companies That Can Assist You To Convert Your 401(k) Into Gold

If you have plans to invest in a gold IRA or 401(k), there are several companies that can assist you. Most companies will not permit you to invest in gold. As such, it is necessary to check with the new provider prior to opening a new account. All you need to do is to conduct a little bit of research before investing in gold.

#1. Goldco – Our Top Recommendation


-The Better Businesses Bureau gave them an A+ rating.

-Its IRAs can invest in gold.

-They have worked with gold IRAs for over 10 years.

-The company offers excellent customer service.


-They don’t have a gold storage facility and they don’t provide custodian services.

-For accounts worth below $100,000, the yearly fee is $175.

The company acts as IRAs brokerage. It also offers top-notch customer service and is well known for doing an outstanding job of handling paperwork with IRA storage facilities and IRA custodians.

Because this organization serves as a broker, all they do is assist you to buy and sell your gold. The precious metal is not stored at their premises. Although Goldco is not a custodian, they are there to assist you to complete the paperwork for other custodian companies. And then they will assist you to purchase gold coins and bullion which the IRS has already approved.

The company will also assist you if you want to carry out a 401(k) rollover. They will sort out all the paperwork that needs to be filled out for the transfer to take place. Goldco is also there to assist you with purchasing other precious metals such as silver.

Visit: Goldco’s Official Website

#2. Augusta Precious Metals



-The company’s setup process is simple and fast.

-Their prices are competitive.

-Their customer support is outstanding.


-You must deposit not less than $50,000 into your new account.

This organization assists people who want to open tax-advantaged retirement accounts. These accounts allow investors to invest in precious metals. The company recommends custodians Equity Trust, Goldstar Trust and Kingdom Trust to investors. However, they are willing to work with various other custodians too.

Once your self-directed IRA has been setup, you can utilize Augusta Precious Metals and your selected custodian to purchase gold. The company can help you to purchase premium coins, bars, rounds and bullions. Plus, they sell commemorative coins and collector sets.

To provide extra protection, the organization has a price protection program. In the event that the price of your gold or other precious metals changes in the first seven days after you have confirmed an order, Augusta Precious Metals will stick to the initial rate they gave you. And the company is also known to offer clients quantity discounts on big bullion orders.

The company also offers several promotions. For instance, they can offer their clients as much as $2,000 in silver once they have made a qualifying investment in their new account. And an order can be cancelled during the first seven days no matter the reason.

Visit: Augusta Precious Metals

#3. Birch Gold Group


-Their level of service is excellent.

-The company has received great reviews from industry professionals and consumer organizations.

-They offer educational materials to their clients.

-If you transfer $50,000 or more into your new account, you do not pay any fees in your first year.


-Their website does not clearly disclose the annual fees and setup costs.

Birch Gold Group was established in 2003 and it is located in California. It also serves as a brokerage for gold and other precious metals. The company can also help you to buy silver, platinum and palladium.

They can also assist you to purchase gold for personal ownership or for an IRA. Because of their dedication to educate clients, investors can learn how to invest in precious metals such as gold and the associated risks. Every investment carries a certain level of risk. That is why it is crucial to know the specific risks prior to making an investment.

They can assist you to purchase gold via your retirement account. Each investment is approved by the IRAs and the IRS. Apart from purchasing tangible gold, you can also buy mutual funds, stocks, bonds, real estate and private loans, among other investments.

If you choose them to be your broker, they will assist you to get a custodian. If you already have a custodian in mind, the company will work with that custodian to purchase and store your gold. They can also help you to ship your precious metal to approved depositories. For instance, your gold can e stored with Delaware Depository or Brink’s Global Service.

Visit: Birch Gold Group


After making the decision to invest in gold, you have to figure out how you are going to get started. Although it is possible to buy bullion and/or gold coins directly, don’t expect any tax benefits from just buying gold. But buying gold through your 401(k) has tax benefits; your contributions can be deducted from your annual tax return. This means that up until you decide to sell your gold and make a withdrawal of your earnings, there is no need to pay taxes on your investment.

Having made the decision to purchase gold, you now have to determine how your plan will be carried out. Chances are that your 401(k) plan does not provide gold investment choices. Most plans have limited investment options. So it is necessary for you to look for a new plan that will enable you to invest in gold directly.

You can avoid paying taxes by doing a 401(k) rollover when you make the transition. A 401(k) rollover is when funds are transferred from your old plan to a new 401(k) new plan. The funds can be transferred to a new 401(k) or IRA.

>>>Visit Goldco – Our Top Recommended Company for Gold Retirement Plans!

In terms of the Internal Revenue Service (IRS), this transfer must be completed within 60 days. In the event that the transfer is not completed within the stipulated time, the transaction will be treated similar to a 401(k) withdrawal. To prevent paying taxes and penalties on your withdrawal, make sure that you adhere to the IRS rules.

You can look forward to enjoying new perks when you change to a new 401(k) or IRA. In general, employer plans have limited choices and high fees. Employers typically offer these plans as benefits to employees. However, they don’t necessarily shop around for the best plan. That is why you may have to choose a new 401(k) if you desire investments that are cheaper, lesser account fees and additional gold investment options.

Converting your 401(k) plan to a gold 401(k) or IRA, you can follow the steps below.

  1. Select the account you want.
  2. Open a new account.
  3. Inform your previous 401(k) plan provider about your plans to do a direct rollover.
  4. Choose your new investments.


  1. Select the Account You Want

When you do a 401(k) rollover, you have more investment options. You will most likely be able to save on fees too. Plans offered by the employer usually carry high fees, so you will be able to save money if you change plans.

Roth IRA: If you decide to rollover to a Roth IRA, you will be required to pay taxes on the monies you transfer. Although you can make tax-free withdrawals with Roth IRAs, your contributions will be taxed.

Traditional 401 (k): If a rollover is done to a traditional 401(k), there is no need for you to pay taxes on the rollover if the transfer is completed within 60 days.

Traditional IRA: Traditional IRAs, just like a traditional 401(k), are tax-deferred retirement plans.

You are allowed to own several IRAs and 401(k) plans by the government. This is advantageous in that it allows you to have a self-directed IRA or solo 401(k) for precious metals. The trustee will act as the broker and custodian of the tangible metals.

You can sell or purchase gold if you use a gold 401(k) or IRA. To achieve this, there are specific government standards that must be followed. If you have a gold IRA or self-directed 401(k), you are not allowed to hold the gold physically.

In general, a solo 401(k) and a self-directed IRA are basically the same thing. The key difference with a 401(k) plan you can contribute more monies every year. Apart from that, their rules and benefits are relatively similar.

  1. Open a New Account

Setting up an account can be done easily online. Most folks use a robo-advisor or online broker to set up an IRA. To avoid the hustle of selecting your investments, simply make use of a robo-advisor to invest in a balanced portfolio automatically.

If you want to have more control over your investments, use an online broker. That way, you can select the investments you want to purchase, and divest any time you want. Fees and commission costs can add up quickly, so search for a provider that offers low fees. Also make sure that you choose a provider whose specialty is precious metals.

  1. Inform Your Previous 401(k) Plan Provider About Your Plans To Do a Direct Rollover.

You should also talk to your previous provider regarding the transfer of your funds. Make certain that you do this early some providers may take their sweet time to transfer the funds because they know they will be losing a client. Also ensure that you ask your provider to carry out a direct rollover since the check has to go to your new account directly and not to you.

The next stage is extremely important. The moment the monies leave the old account, they must reflect in your new account within 60 days. If not, you will be requested to pay taxes and penalties when you make a withdrawal. To prevent a penalty, make sure that the rollover is completed as fast as possible.

Although the process varies, a lot of providers will ask you to send in a couple of forms so that they can do a direct rollover. You can find out more information about this from the administrator of your previous employer’s plan. When you send them the requested paperwork, they will proceed to send a wire transfer or check to your new account.

You can choose to do an indirect rollover. However, that option is very hard to carry out. If you opt for an indirect rollover, the funds will be sent to your account, and you have the responsibility of sending the funds to your IRA within a period of 60 days.

Indirect rollovers tend to complicate people’s taxes. If for some reason you fail to complete the process in time, you may find yourself paying penalties and income taxes. Most providers automatically withhold 20 percent of your withdrawal as tax payment. It is important to note that the new account must receive the entire amount. This means that you will be forced to provide the difference from your personal account.

  1. Choose Your New Investments

When your direct or indirect rollover has been completed, you can figure out what you want to use the money for. For example, you can consider index mutual funds or invest in tangible gold. You can diversify your portfolio to shield it from market fluctuations.

Although a lot of individuals purchase gold coins and bullion, there several drawbacks associated with these investments. You might be asked to pay fees for gold storage and broker commissions. Diversifying your gold portfolio is also possible if you invest in gold through other methods.

Gold futures and options: Basically, these are agreements to purchase or sell gold in the future at a determined price. These contracts are regulated very tightly by the federal government because they are traded on commodity exchanges.

Gold mining stocks: You can also invest in gold mining as well as refining businesses by purchasing stock in a mining company. Make sure that you properly research the mining company you are considering investing in to see if it is financially sound. You can also minimize risk by purchasing shares in a mutual fund which invests in gold mining.

Gold exchange-traded funds (ETFs): An ETF is essentially a basket of various other assets. Gold ETFs may own tangible gold, futures and gold options. Unlike mutual funds that are only exchangeable when the market has closed for the day, ETFs are tradable when the market is still open.

How To Move A 401(k) To Gold Without A Penalty

When Is a Penalty Charged on 401(k) Rollovers By The IRS?

In terms of the IRS, a 401(k) must be completed within 60 days. People who make a withdrawal from their old 401 (k) but do not deposit the money into their new account within the 60 day period will have to pay a penalty. To prevent this, it is best to do a direct rollover. That way, the transfer of funds is done instantly.

Withdrawing funds before you turn 59.5 years old attracts a 10 percent penalty. You will also have to pay your usual income tax rate on early withdrawals. If state income tax has to be paid too, you may find yourself having to spend as much as 45 percent of your withdrawal on penalties and taxes.

Ways To Turn A 401(k) Into Gold Without Attracting Penalties

The good news is that avoiding paying taxes and penalties on your 401(k) rollover is quite easy. Simply do a direct rollover. With a direct rollover, your provider takes care of the transfer so that funds reach your new account automatically.

If you decide to sort out the transfer yourself, you can carry out an indirect rollover. But ensure that the rollover is finished within 60 days. If your old provider holds back 20 percent of your monies as a tax payment, those monies must be replaced when the indirect rollover is completed.

This can only work if the new account is a tax-deferred plan. Unless you are the age of 59.5 years or older, you cannot deposit the money into your bank account, or else you will have to pay taxes plus a penalty when you withdraw the funds.

Frequently Asked Questions

Making changes to your retirement plan is no small decision. Fortunately, the process of converting to a gold IRA is relatively straightforward. Below are some of the commonly asked questions regarding changing a 401(k) plan into gold.

Can I Invest My 401(k) in Gold?

Chances are that your current plan may not allow you to invest in gold. However, there are other plans that permit gold investments. It is important to note that there are certain IRS rules that have to do with buying and storing gold. That is why it is vital to work with a reputable company. Check with Goldco for more useful information.

Do You Pay Taxes When Rolling Over to an IRA?

Legally, you can do the rollover without payment of penalties or taxes. All you have to do is to do the rollover the right way in order to avoid taxes. Begin by talking to your current 401(k) plan provider and start the process. Because this process can take a couple weeks or months, start as soon as possible.

Can I purchase Tangible Gold in My 401 (k)?

Yes, you can purchase tangible gold in your 401(k) plan. However, that is a tricky process. Generally, it is impossible for your IRA to be the holder of the gold and the seller. The physical gold has to be stored with a third party. You are not permitted to hold the gold. In terms of the IRS, your 401(k) can hold tangible gold only if a third party stores the gold. Although you may have access to the storage facility, you cannot have physical control of the precious metal.

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