Are you ready to finally begin investing in gold? You’ve likely discovered this site because you want to buy gold but you’re focused on doing it the right way. You’ve decided that a 401k to gold IRA rollover is the best way to accomplish this task. And it’s obviously a great way to grow your retirement account.
Like many people, you’re undoubtedly new to the gold IRA. And it’s doubtful if you have any experience rolling over a 401k. I’m here to help provide a much better understanding of this process from start to finish.
And even more important, there are certain rules and regulations that one must follow while initiating the rollover process. I’d like to share specific insight on the key rules and regulations established by the IRS.
Are you ready to discover important insights into critical gold IRA rollover related topics? Please keep reading to find out the facts below.
An Introduction to the Gold IRA
Before getting into the specific rollover rules and regulations, I feel it’s prudent to briefly define a gold IRA.
In the simplest terms, a gold IRA became possible because of the Taxpayer Relief Act of 1997. In this act, custodians were granted the ability to hold precious metals in an IRA retirement account for investors.
Because people commonly refer to this type of account as a gold IRA, it can actually be slightly misleading. You are allowed to purchase other investments besides gold with this plan. Other permitted and allowable investments include:
- Real Estate
- Cryptocurrencies (Bitcoin, Ethereum, Etc.)
- Tax Liens
- Hard Money Loans a/k/a. Private Loans
- Private Businesses
So, even though we call this type of self-directed IRA a “gold IRA,” it’s actually much more than that.
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The Process of Opening a Gold IRA
Believe it or not, there’s a relatively straightforward process to follow to open a gold IRA. But before you can even begin, you’ll need to acquire the services of an IRA custodian.
Truth be told, I tend to approach this a little bit differently. Instead of looking for an IRA custodian, I recommend looking for an online gold company to do business with.
Why approach it this way?
The online gold broker has years of experience working in this industry. They can connect you with the best IRA custodians, secured vaults, and other specialists. Plus, you need a precious metals dealer to buy gold from. So, avoid spending hours researching every different aspect of this process. Instead, you can trust one company to help you with everything.
I promise it so much easier opening a gold IRA this way.
Once you’ve discovered the best gold dealer to meet your needs, you can move forward from here. They will help you initiate the 401k to gold IRA process and complete the task from start to finish.
By following this approach, your first and only real job is to find a gold company that you trust implicitly. They’ll help you find the right qualified support through their strategic relationships and recommendations.
I’d like to make this much easier on you. You see, I’ve evaluated dozens of gold companies in the precious metals IRA space. And I developed 7 factors that I used to determine if a gold dealer is reputable or not.
After evaluating dozens of companies, I’ve distilled the most trustworthy companies down to a list of my top 10 recommendations. You can learn all about my top 10 recommendations by clicking here.
Gold IRA Rollover: Which Retirement Accounts Qualify?
Before sharing steps about how to initiate a 401k to gold IRA rollover, it’s time to explore eligible retirement accounts. We may call it a 401k rollover, but in actuality, 5 different account types encompass the transfer and rollover process.
The eligible accounts in question include:
- 401(k) accounts – do you currently have an inactive 401(k) account? It may no longer be active because you no longer work for your former employer. This account is specifically eligible for a gold IRA rollover. Your precious metals broker can help you initiate the process and recommend a top-rated IRA custodian. Or, people 59 ½ years old are potentially eligible to begin an in-service distribution. In this case, you’ll initiate the gold IRA rollover but you only do so partially from your existing 401(k) account.
- IRA accounts – you may currently have a self-directed IRA, traditional IRA, simple IRA, SEP IRA, or Roth IRA. You might prefer to purchase gold using this account. In this case, you’ll need to initiate an IRA transfer. Your gold broker can provide detailed information about how to get started. Or, you can talk to your existing IRA custodian to learn more from them.
- TSP accounts – also known as a Thrift Savings Plan, this account is a federal employee government sponsored retirement account. People that work in the military or have civil service jobs typically have this account. Your employment must come to an end via retirement or termination before you can begin the gold IRA rollover process. Or similar to the 401k account, you might be eligible for an in-service distribution at 59 ½ years old. The in-service distribution rule allows you initiate a partial gold IRA rollover.
- 403b accounts – nonprofit organization workers and public-school employees tend to have 403b accounts, among others. It’s possible to start a gold IRA rollover with this account once you’re no longer employed by the organization. In-service distributions are also allowable through this account at 59 ½ years old, which leads to a partial IRA rollover.
- 457b accounts – local and state government employees typically receive a 457b retirement plan from their job. Firefighters, police officers, sanitation workers, and other employees usually qualify. Gold IRA rollovers are only legally permitted within this plan after the employee is no longer employed by the government. This can happen via termination, retirement, or quitting. An active employee 70 ½ years of age or older might receive permission to perform a rollover in certain circumstances.
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Gold IRA Rules
It’s always important to follow the rules set forth by the IRS. If you make a mistake – unintentionally or otherwise – your tax benefits could end up in jeopardy. We obviously want to avoid this scenario like the plague.
Complying with the rules and regulations is an absolute must. Some people are so afraid that they’ll make a mistake that they avoid opening a gold IRA. I hope you aren’t one of them because the tax advantages in this account are rare and so beneficial.
With a traditional IRA, you receive a tax statement each year. Gold IRAs are technically self-directed IRAs, which means you must personally keep track of your tax responsibilities. You also need to know the IRS rules and regulations.
Basically, you should learn the rules that a traditional IRA is subjected to. This way you’ll know the rules for your gold IRA as far as early withdrawal penalties are concerned.
In the end, you’re allowed to take money out of the account before reaching 59 ½ years old. But you’ll have to pay income taxes immediately, which is a given. But you’re also subject to a 10% early withdrawal penalty that many people tend to overlook.
At 59 ½ years of age, you can begin withdrawing from your gold IRA account without suffering from any unnecessary penalties. You’ll still have to pay income taxes in a tax-deferred account. But you were going to pay them anyway no matter what.
Another thing is the required minimum distributions rule. At 70 years old, you are required to withdraw a minimum amount each year. The minimum amount varies based on life expectancy, so speak with a qualified tax professional when the time comes.
401k to Gold IRA Rollover Steps
First off, to get started you need to open a gold IRA account. Otherwise, you will not have an existing account to rollover your 401(k) into. And this is the first and most important part of the process. I recommend connecting with one of the top 10 gold companies that I’ve reviewed, which you’ll find by clicking here.
Choose your gold company and have them open a gold IRA on your behalf. After this step is completed, contact your 401k account manager and tell them about your desire to begin a rollover. When they initiate the process, it can happen one of two ways that include:
- Direct IRA rollover – with a direct rollover, the account custodian will move your account proceeds directly into your new account without further intervention on your part. For the most part, this is the simplest option. It’s also the least likely method to cause you to incur penalties from the IRS.
- Indirect IRA rollover – with an indirect rollover, your account manager will transfer the proceeds of the account directly to you. You’ll have 60 days to transfer the funds to your new IRA custodian. Failure to transfer funds within 60 days below 59 ½ years old means paying a 10% early withdrawal fee.
All in all, initiating a 401k to gold IRA rollover sounds a lot scarier than it really is. But you do not need to remain intimidated by this process. Connecting with one of the best gold companies in the industry is the smart move. They’ll take you by the hand and help you every step of the way.
Please read my top 10 review of the best gold IRA companies in the industry by clicking here.