How to Initiate a Gold IRA Rollover

Gold IRAs can be a safe and reliable way to save for your retirement, as well as diversify your portfolio.

To fund these self-directed investment accounts, you have two options: you can transfer funds from an account into the IRA, or you can rollover funds from an existing retirement account, like a 401(k).

This guide will delve into the gold IRA rollover process, including how and why to do it, and what to know before you get started.

How to roll over your 401(k) into a gold IRA

There are a few steps to rolling over your 401(k). Here is what that process looks like:

1. Open a gold IRA

To open a gold IRA, you’ll need a self-directed IRA account and a designated custodian to manage it. These custodians are in charge of reporting to the IRS, so they must be approved by the agency to operate.

You will also need a metals dealer who can sell you IRS-approved gold, as well as a secure storage facility to store the metal. 

Your best bet is to start with an experienced gold IRA company. They’ll be able to walk you through the process of setting up your account, funding it, and choosing the appropriate vendors and investments.

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How does a gold IRA work?

Once you have your gold IRA ready to go, you can begin the process of rolling over part or all of your funds from another retirement account, including 401(k)s, 403(b)s, thrift savings plans, and more.

2. Contact your 401(k) plan administrator and complete the paperwork

To initiate the rollover, contact your 401(k) plan administrator and tell it you want to roll over funds into your new IRA account. The administrator will have required forms and paperwork for you to complete.

Make sure they know you’d prefer a rollover—not a transfer. With a rollover, the money will go directly to you, and then you’ll deposit the funds into your new account. Transfers are when the money goes straight from one custodian to the next.

The two major types of rollovers are direct and indirect.

• Direct is when your money is transferred electronically or there is a check made out in the name of the new administrator for your benefit (preferred method).
• Indirect is when there is a check made out to you and the IRS makes your previous employer withhold 20% in taxes (not the preferred method).

With either check option, the check must be redeposited within 60 days to avoid penalties (the entire account balance, including whatever was withheld for taxes, must be redeposited within 60 days).

3. Receive your funds

Your plan administrator will send you a check for the funds you plan to roll over from your 401(k) to your IRA. Once you receive them, make sure to put them in your gold IRA account within 60 days, or you’ll face a financial penalty (10% if you’re under 59.5).

Remember, with an indirect rollover you must deposit the entire balance, including the amount withheld for taxes, within 60 days to avoid penalties.

4. Purchase your gold

Choose the IRS-approved metals you’d like to invest in, and direct your custodian to purchase it using your IRA funds.

5. Have the gold shipped to an approved storage facility

Your custodian will likely have a recommendation here.

Once that’s all done, you’ll need to keep an eye on your account. Check-in regularly to see how your investments are doing and consider making an annual rollover if you’d like to continue buying gold.

Reasons for rolling over a 401(k) to a gold IRA

Rolling over part of your 401(k) or another retirement account into a gold IRA can be a smart way to diversify your portfolio without putting in any additional cash.

Here are just a few reasons you may want to roll over funds into a gold IRA:

• To diversify: If your existing retirement account is heavily invested in traditional stocks and bonds, investing a portion of your portfolio in gold can help diversify your investments.
• To protect against economic uncertainty or inflation: If you’re worried about the dollar’s value declining or a potential stock market downturn, gold investments can provide a nice hedge against these risks. Currently, the value of gold is outpacing the value of the U.S. dollar.
• To increase your retirement account’s value: The price of gold has climbed significantly over the past decade (from $1,300 per ounce to more than $1,900). If the trend continues, it could mean increased value by the time you retire.

Make sure you’ve got your gold IRA account set up and ready before you start to initiate your rollover. If you’re under 59.5 years of age and miss the 60-day deadline to deposit your funds, you’ll be penalized (10% of the total). 

Expert take

Chloe Moore

CFP®

There are risks of rolling over funds from a 401(k) to an IRA (not specific to gold). 401(k)s are protected from creditors in bankruptcy while IRA protection may vary by state. If you retire early, you also have the potential to access funds from your 4011(k) as early as age 55. In most cases, you can’t begin IRA distributions without a penalty before the age of 59.5. 

Are there any gold IRA rollover fees?

Any fees charged for your gold IRA rollover would come from your custodian — either your existing 401(k) administrator or the custodian on your new account.

Make sure to ask about these fees when choosing your gold IRA custodian and when talking with your 401(k) plan administrator.

Are there any tax implications from a gold IRA rollover?

There are no tax penalties with a direct, custodian-to-custodian transfer of funds, but there is the potential for some with a rollover. To avoid these, you’ll want to be sure to deposit your funds within 60 days of receiving them from your 401(k) provider.

Upon withdrawal, the tax implications depend on what type of self-directed IRA account you’ve chosen.

• If you have a traditional IRA, you’ll pay taxes on any funds you withdraw in retirement.
• If you have a Roth IRA, you’ll pay those taxes before investing them in your account, making your withdrawal tax-free.

According to the Journal of Accountancy, gold returns tend to be higher in traditional IRAs than Roth IRAs, historically speaking.

Where can I open a gold IRA account?

Gold IRA accounts typically come with annual fees, so make sure you shop around before choosing where to open yours. Need some suggestions? Our guide to the best gold IRA companies can help.