401K Rollover to Gold IRA
401K Rollover to Gold IRA
Every working person wants to have enough money to cater to their every need when they retire; that’s why investing for retirement is such a popular topic. It is encouraging to hear people talk about the importance of investing for retirement; a few decades ago, people used to count on the government to take care of them when they retired. Saving for retirement can be done through a Gold backed IRA, traditional IRA or 401k. While all these options have their pros and cons, buying physical gold as a way of investing for retirement is a great idea.
Gold is a non-renewable natural resource. The cost of extracting the metal from the earth is very high, so gold prices are always increasing. Furthermore, the demand for gold is on the rise as more and more electronics manufacturers step up production of electronics to meet global demand. The fact that India, China and Brazil, among other emerging economies, have been amassing gold at an unusually high rate should give investors a good idea about the importance of investing in gold for retirement. Paper currency can be devalued by central banks or the Fed. It can also be rendered useless in case of political and economic crisis. On the other hand, gold has intrinsic value since it is a raw material in electronics manufacturing, so its relevance and value is assured.
If you have a 401k account or a traditional IRA, you may want to consider 401k rollover. In this process, retirement savings in an existing 401k account are transferred to a new gold backed IRA. The transaction involves three parties, the account holder, the 401k trustee and the new gold IRA custodian. After the funds have been rolled over, the account holder can pick their favorite gold assets and allocate their funds to those assets, which must be IRS-approved gold. The custodian will have to deliver on that order and make arrangements for storage with the client’s preferred gold storage company, which must also be IRS approved.
Some of the benefits of investing for retirement using gold include; immunity to inflation, high returns and greater financial security among others. As production costs and demand for the precious metal continues to increase, supply is expected to be strained. Consequently, prices will increase significantly, which means higher returns for investors. Accumulating gold over a period of decades will leave the account holder with a nest egg that will secure his or her future for decades.
What is a 401k?
A 401k plan is a tax-qualified and defined contribution pension account. It is a kind of a retirement benefit plan set-up by an employer to provide retirement savings contributions that are directly deducted to the employee’s income or paycheck before the application of taxes.
What is Gold IRA?
Gold Individual Retirement Account (IRA) is a retirement investment account that is backed up by the physical gold rather than money or dollars. This type of plan is usually ignored or even set aside by most investors because of the fact that the value of gold is never regular and determined; rather, it fluctuates depending on some factors, like economic status of the state, emotions of the people and maybe even political swings.
What does it mean when we “rollover”?
A rollover is when you move all your assets into an employer sponsored plan from a 401k or 403a plan to an IRA plan.
401K Rollover Rules
Rollovers between eligible retirement plans may be accomplished in one of two ways: by a distribution to the participant and a subsequent rollover to another plan, or by a direct rollover from one plan to another.
The required number of days to accomplish rollovers after the distribution to a participant is 60 days. The failure to comply with the sixty-day limit will result to the disallowing of the rollover. If this happens, the distribution to the participant will be taken as an ordinary income, which will be taxed accordingly, and a payment of 10% penalty will be imposed if the situation is applicable.
What will Rollovers entail?
When one person does a rollover from 401k to Gold IRA, the one thing that is essential is that he or she may not use the physical gold to add to the purchasing power of a Gold IRA. Though, he or she can actually add to the 401k amount that is being rolled over into a Gold IRA with any other asset at his or her disposal. The participant can actually use gold mining stocks as a reference, but never those in the form of physical precious metals, like coins or bullion.
Risks of a 401K to Gold
Generally, nothing in this world will work without risks. A 401K rollover to gold IRA involves risks. One is that, the value of gold fluctuates depending on current trends, like all commodities. However, what is one thing that we can be sure of is that, at present, gold still looks very good and it will retain its luster, good looks and demand in the next coming decades. Experts are already talking about a major shift in the greatness of gold. Risks are normal, but understanding the risks will help you decide on what your future will be. You can mitigate the disadvantageous effects of the risk if you properly and carefully examine them.
Usually, a person who is rolling over to Gold IRA needs the assistance of a custodian. The custodian’s responsibility is to roll over your funds from the 401k to a Gold IRA, making sure that all the necessary steps, applications of tax laws and regulations are followed diligently. Make sure you are choosing the right gold custodian for you. Currently the most trusted gold custodian in our opinion is Regal Assets. Featured in Forbes Magazine Regal will handle all your gold purchasing needs.
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