You want an efficient savings plan for your retirement. The 401k investment allows employees to divert a part of their salary towards a long-term investment for their future.
These contributions have limits depending on the size of your salary and your age. The question most investors ask is whether or not they could use these funds to purchase physical precious metals.
Unfortunately, you cannot use your retirement funds to purchase gold unless you have a self-directed IRA. Expert recommends metal IRAs for clients with existing IRA funds they can rollover.
If your current company doesn’t have an in-service rollover, you can always roll your saving into an IRA once you leave the company. Anyway, if you are asking, can I invest in gold through my 401k, here are a few things you need to know.
Purchasing gold with your 401k
- Self-directed IRA rollover
If your 401k plan doesn’t allow you to purchase gold directly, you can always opt for a self-directed investment retirement account (IRA).
IRA gives you access to any type of gold investment options including ETFs, mutual funds, commodity futures and options, and stocks.
Another good option is the precious metals IRA. With this retirement account, you qualify to purchase coins, bullions, or any other precious metals of your choice.
Once you retire from your job, you can simply roll over your 401k funds into an IRA. On the other hand, if you opened a 401k plan with your current company, you can request to take an in-service withdrawal before retirement.
This way, it becomes easier to invest directly in gold funds or stocks. Plus, as long as you re-invest your money in either an alternate 401 k or IRA within 2 months, you won’t incur any tax penalty.
- Gold ETFs
With the help of a brokerage account, Investors enrolled in an employer-sponsored retirement plan have the freedom to purchase any assets including precious metals.
One of the easiest ways to achieve this is through ETFs (exchange-traded funds). ETFs allow you to trade in shares from companies with physical gold bullion such as the Goldman Sachs Gold Bees.
Likewise, with this brokerage option, you can also invest in individual stocks from gold manufacturing companies.
- Gold mutual funds
The good thing about this savings plan is that there are many ways in which you can invest in precious metals. Investing in mutual funds or paper gold allows you to own the metal without holding it.
If you don’t have enough space or safe storage for your gold, then this is your ideal investment option. Based on the amount of money in your 401k account, you can choose whatever the number of mutual funds to invest in. You can make good returns during the peak season when the value of stocks from the gold mining companies rises.
Now that you know how to invest in precious metals using your 401k plan, you will need a good brokerage company to establish a gold IRA. See this link to learn if it is a good idea to invest in gold IRA rollover https://themoneygains.com/benefits-of-a-gold-ira-rollover/
Finding a broker
As mentioned, you will need a self-directed IRA to purchase precious metals with an employer-sponsored retirement plan. Here are some of the qualities to look for in a good broker.
- Flexibility
A good broker understands that every investor is different in terms of goals and needs. Since the entire process involves money, you definitely cannot afford to settle for anything less than the best.
For this reason, your preferred vendor should be able to cater to your needs individually. They should also be conversant with the latest technology and tools rather than using the one-size-fits-all approach.
- Transparency
There are various charges involved in owning an old IRA including custodian fees, storage fees, markups among others. Before you come into any agreement with a particular vendor, ensure you know all the expenses involved to avoid nasty surprises.
They should also be very transparent with their costs. For instance, the markup should be a one-time fee and have no hidden costs after you’ve made your payment.
- Qualifications
The company should be fully authorized to conduct the business. Ask the management to provide a legal document to prove their legitimacy.
Find out also if it has an up-to-date insurance cover and bonds to secure your investment. The broker should also have the right accreditation from a known institution.
The last thing you want is to lose your hard-earned money by working with an unregulated broker. Every unregistered company risk getting shut down by the SEC without notice.
- Track record
The reputation of the company is also very important. The best gold IRA companies are popular for their quality services and experience who it is also helpful to read through various customer reviews about the company.
If the number of complaints exceeds the number of praises, just look for another vendor. Also, be on t the lookout for scammers. Always work with a trustworthy vendor to safeguard your money. Click here to read more.
Conclusion
The question of whether or not you can purchase physical gold for your retirement account still remains a puzzle among most investors. While most plans do not allow investors to purchase the actual gold directly, you can still invest in gold through EFTs, mutual funds among others. You can also choose to roll over your money from your employer to an individual retirement account (IRA). This permits you to purchase any precious metal as long as it is within the IRS codes. However, before rolling your 401k over into gold, you must pick the right vendor. Choose a skilled and well-experienced vendor with vast knowledge in the field.
