What Is a Gold IRA Rollover?


Rolling over a 401(k) plan into a traditional or Roth IRA is pretty common. You’ll often do this when you transition to a new job and want to keep your retirement savings in one place or when you want additional investment options. But you may also roll over funds if you want to capitalize on the many benefits of gold and hedge against inflation. To fund your investment in precious metals, you might consider rolling over some 401(k) funds to a gold IRA, otherwise known as a 401(k) to gold IRA rollover.

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What Is a Gold IRA?

A gold IRA is a self-directed individual retirement account that allows investors to hold hard, physical assets in their retirement portfolios. Traditional and Roth IRAs typically hold only cash, bonds, and stocks, but the Taxpayer Relief Act of 1997 broadened the types of investments allowed in individual retirement accounts to include certain types of precious metals. These IRAs are called “self-directed” or “alternative-asset” IRAs. Not all precious metals are allowed. Usually, they are limited to gold, silver, platinum, and palladium of a specific quality and type.

Tax law also specifies the purity standards for each metal. For example, the American Gold Eagle coin is an approved gold asset.

What Is a 401(k) Rollover?

If you have a retirement plan such as a 401(k), 403(b), or TSP through your employer and leave to take another job, you can roll over the money in your current retirement accounts into another IRA.

The most common time to initiate a rollover is when you are no longer employed by that company; however, some companies and plans allow you to do an in-service rollover while you are still employed. Rollover terms can be pretty specific according to the company and the plan, so always consult with a financial advisor before making any changes.

How Are Gold 401(k) Rollovers Done?

Once you’ve opened your gold IRA, you can contact the company managing your 401(k) account to begin the rollover process. The IRS stipulates three ways to complete a 401(k) to gold IRA rollover.

  • Direct Rollover: Ask your retirement plan administrator to issue a check directly to the retirement plan or IRA to which you wish your money rolled over. This method (instead of an indirect rollover) assures the IRS will not withhold any taxes.
  • Trustee-to-Trustee Rollover: If you are rolling over your IRA, the trustee of the IRA can facilitate the rollover to the trustee of the other IRA. There are no taxes withheld using this method.
  • 60-Day Rollover: A check can be issued directly to you for the amount of your rollover. No taxes will be withheld if you invest it in another IRA or retirement plan within 60 days.

Some investors choose to roll part of their retirement savings into a gold IRA rather than all their savings. In this case, a portion of the retirement savings will be subject to the special rules concerning a gold IRA rollover.

How to Initiate a 401(k) to Gold IRA Rollover

A reputable gold IRA company will help you execute a gold 401(k) rollover, including purchasing the assets as well as storing and maintaining them. If you want to roll a portion of your retirement savings into a traditional or Roth gold IRA, you’ll follow these general steps.

  1. Establish the IRA. To begin leveraging the benefits of a gold IRA, you must first work with a gold IRA account manager to open an IRA so you can initiate a rollover. This is an important distinction, as you should not buy gold first and then try to open an IRA to transfer the funds. 
  2. Initiate the rollover. After you’ve created the gold IRA account, you’ll roll over the funds from your existing retirement account to the newly established gold IRA account.
  3. Buy the gold. Next, decide what type of gold you want to buy. You can purchase physical gold, gold stocks, ETFs, and more. If you opt for physical gold, you must buy coins or bullion that meet the purity standards defined by the IRS. Otherwise, they count as “collectibles,” which are prohibited by the IRS in an IRA account.
  4. Store your assets. If you buy physical gold, it must be held with an approved custodian who follows the proper guidelines for storing your gold. Gold meant for an IRA cannot be stored at home or in a safe deposit box. (If you store gold at home, it is not considered part of your IRA.) Your gold broker likely partners with reputable storage depositories, and can point you toward facilities that will store your gold safely.

There are a handful of factors to consider before executing a rollover. Speak with a financial advisor to determine if a gold IRA rollover is something that will benefit you. If you determine that a rollover is the right move, find a gold IRA company to purchase gold and help assist you with the rollover process. After the company purchases the physical gold, it can fund the gold IRA and store your assets at a secure, IRS-approved facility.

Our guide on the best Gold IRA companies to help you identify companies that can help you get started in your investment process. When choosing a company to work with, look for these three things:

  • Qualifications: The broker should have all the appropriate licenses, bonds, and insurance to protect your investment.
  • Reputation: The broker should have an excellent reputation. Research customer reviews on several websites, including complaints filed with the Better Business Bureau.
  • Responsiveness: Inquire about the company processes and educational resources with a representative. The company should be responsive, knowledgeable, and patient.

Bottom Line According to Our Expert:

“Rolling over some or all of your investments into a gold IRA is a popular option for people looking to diversify their portfolio with an asset that has, over long timeframes, continued to grow in value in line with inflation,” says Ryan Sullivan, an investment advisor and owner of the registered investment advisory firm Off the Beaten Path Financial. Before starting the gold 401(k) rollover process, research reputable companies that partner with vetted storage facilities and abide by all government regulations.

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