How to Move a 401k to Gold Without a Penalty

How to Move a 401k to Gold Without a Penalty

Lear Capital Review

Scott R. Hillford

Author & Founder Gold Is Money 2

Disclaimer: Some or all of the companies reported here may provide compensation to us, at no cost to our readers. This is how we keep our reporting free for readers. Compensation and detailed analysis are what determines how companies appear on this website.

Saving for retirement takes decades of planning and careful calculations. Most people start with a 401(k) offered by their employer. In addition, they might add an IRA or Individual Retirement Account to their portfolio as a way to diversify their investments.

Currently, investors are curious about investing in precious metals as yet another diversification tactic. Gold and silver are assets that can increase in value over time. Explore how to move a 401(k) to gold without incurring a penalty today. There are safe ways to complete this transaction.

Prior reading further, it is important to acknowledge that investing your savings is a not easy. When it comes to incorporating precious metals into your investment portfolio, how can you tell which companies are reliable?

After devoting extensive time and effort, we have conducted thorough research within the precious metals industry and compiled a selection of the most trustworthy companies.

Take a moment to read our list and determine which gold companies made the list this year!

This lets you to quickly compare the leading companies in this field and select the one that aligns with your specific requirements and investment objectives.


Get a FREE Gold Information Kit from our #1 recommendation, by clicking the button below:

Get the FREE Gold Kit smart investors are using to protect their retirement savings.

Understanding a 401(k) Plan

In the past, many employers offered pension plans as their retirement benefit. These plans are nearly nonexistent now.

Currently, 401(k)s tend to be the most common employment perk. These accounts allow investors to save pre-tax dollars from their income through payroll deductions. 

These funds end up in a 401(k) account that's invested in stocks, bonds, and mutual funds. In addition, some companies offer a match to the employee's contributions at a certain percentage. When the employee is at retirement age, he or she takes distributions from it. 

These funds are then taxed at the prevailing rate. There are penalties and fees associated with 401(k)s, however. Early distributions call for taxation and penalties. The 401(k) will always have maintenance or account fees each year too. 

Benefiting From a 401(k) Account

Because 401(k) contributions come from pre-tax dollars, investors appear to make less money in the eyes of the IRS. During income tax season, investors may be in a lower tax bracket, which reduces overall taxes due. 

Those employer matches are also a main benefit because it's essentially free money. It wasn't earned in the traditional sense. No other account has this matching feature. Overall, 401(k)s have benefits that usually outweigh their drawbacks.

There are stiff penalties associated with early withdrawals from a 401(k), however. Investors should see these penalties as advantages.

They basically deter investors from accessing the money for frivolous reasons. A safe, nest egg will be the reward for waiting on these funds.401(k) funds can also be rolled over in certain cases. In fact, they can be used to fund a gold IRA.

Defining a Gold IRA Rollover

A gold IRA rollover is essentially a movement of funds from a 401(k) and into a precious metals account. It's referred to as a rollover because these funds are never withdrawn like a normal distribution. As a result, investors reduce their tax liability.

Unlike 401(k)s, gold IRAs are available to all investors regardless of who their employer is at the time. Any individual can open these accounts. As a result, investors have complete control over which investments are part of the gold IRA.

From gold to palladium, certain metals are available for purchase with the rollover funds. Diversifying a portfolio becomes even easier with these accounts. In fact, investors might even think about other assets for the gold IRA, including real estate.

Rolling Over a Traditional IRA

Investors have alternative options to a rollover from a 401(k). If investors already have an established IRA with paper assets, it's possible to use these funds for the gold IRA. The process is similar to a 401(k) rollover where the investor never takes physical possession of the funds. They move seamlessly between accounts.

Traditional IRA

The gold IRA will have a different custodian than the traditional IRA, however. It's important to work with a custodian who's experienced with precious metals. These accounts are in a niche area of the finance world.

Custodians who deal with traditional IRAs won't have the credentials necessary to manage the account. In contrast, gold IRA custodians will have contacts in the industry for physical storage of the precious metals once they're cleared for the account.

Benefiting From a Gold IRA Rollover

Unlike paper assets, precious metals are tangible assets. A gold IRA rollover gives investors a chance to own actual gold and silver. These coins or bars remain under lock and key until retirement. At that point, investors can either cash them out or take possession of the precious metals.

Precious metals, such as gold, have historically good returns in the investment world. They can be bought or sold for a steady price, which is unlike the dollar which can suffer from inflation and deflation based on current economic conditions. 

A gold IRA rollover also comes with tax incentives. Investors only pay taxes on the balance as it's withdrawn in retirement. A rollover incurs no tax liability. The next step is to start the rollover process. Financial experts can walk investors through this phase.

Moving a 401(k) Into Gold

Investors must open a gold IRA account before a rollover occurs. Select a company that has experience in precious metals. Ideally, this account comes with a custodian who facilitates all orders, shipments, and other maintenance duties. 

Subsequently, investors must contact their current 401(k) administrator. Request a certain amount of funds to be moved into the gold IRA. The 401(k) administrator performs this step after completing the necessary paperwork.


Once the 401(k) funds roll over into the gold IRA, investors are ready to buy precious metals. They work with the gold IRA custodian to pick out IRS-approved items. Afterward, the custodian orders the precious metals with the investor's funds.

Investors usually receive a tracking number for their precious metals shipment. It will end up at a secure depository of the investor's choosing. As a result, the investor has now moved the 401(k) into a gold IRA. Physical precious metals are now part of the retirement fund.

Looking at Penalties With Rollovers

There are a few penalties associated with gold IRA rollovers. For example, an investor withdraws funds before age 59-1/2. This age doesn't qualify as a retirement period, so the IRS charges a 10 percent penalty plus any applicable income tax on the distribution. 

Alternatively, investors who place unlawful items into the gold IRA are subject to penalties. The government only allows certain precious metals into a gold IRA. Collectibles, including rugs, jewelry, and other metals, cannot qualify for the tax benefits associated with the gold IRA. 

If an investor tries to roll over more than one account into the gold IRA within a calendar year, there may be penalties as well. The government has strict rules regarding gold IRAs so that they remain a legitimate source of retirement funds.

Avoiding Potential Penalties

Following the government's gold IRA rules is the best way to avoid potential penalties. Ideally, never withdraw any funds from the account until after age 59-1/2. There are only certain instances where it's allowed.

First-time home purchases, college tuition, and specific medical bills might be allowed from the gold IRA without penalty. If investors want to use funds for these purposes, consulting a tax expert beforehand would be a smart choice. 

Avoid penalties by following the contribution rules each year too. The IRS sets limits on contributions to an IRA. Investors' custodians should have the current information. Contribute up to the limit, and then save the next contribution for next year. A 6-percent penalty occurs on any amounts over the set limits.

Exploring Businesses For Gold IRA Rollovers

Gold IRAs aren't always available at everyday banks. In fact, these specialized accounts are often found online by various financial experts. Investors must research and select the best gold IRA service provider so that their interests are properly protected. Get to know a few of the top names in gold IRAs right now.

1. Goldco

Goldco is one of the most familiar names in the precious metals industry today. It's been featured on several news channels, including Fox. In fact, it has endorsements from Chuck Norris and Sean Hannity.


This particular company highlights a hands-off approach to investing in precious metals. Interested customers call the hotline, and follow the steps toward funding a gold IRA. Goldco essentially does the work for the investor. 

Investors should note that Goldco doesn't offer either custodial or depository options. It merely helps investors with account setup and precious metals purchases. A separate custodian and depository will be necessary to fully fund and open the gold IRA.

Advantages Of Goldco

Goldco mentions that they can work with any self-directed IRA custodian. They also don't advertise who they recommend. This fact may be refreshing to investors. They can pick and choose a custodian who fits their needs. The decision doesn't need to be dictated by Goldco.

This same advantage appears to extend to depository choices. As long as the depository is IRS-approved, Goldco can allow precious metals shipments to be sent there.

This company also has several communication pathways, which isn't always the case with precious metals dealers. Connect with them through a phone call, contact form, live chat, or email.

In fact, Goldco even has a physical address with business hours. Presumably, investors can stop by and ask questions about their retirement goals. Face-to-face meetings are always a business advantage.

Disadvantages Of Goldco

Goldco has mixed reactions from its customers regarding online reviews. Investors either praise or scold Goldco for its business practices. Although the praise far outweighs the complaints.

The other disadvantage is the lack of transparency. It's difficult to find any pricing on the website. Most pages simply direct investors to call for a quote. Once investors call Goldco, they already feel committed to the process. A few prices on the site would be a helpful addition.

2. Augusta Precious Metals

This company is another gold IRA provider. The website offers plenty of information about precious metals' history and current evaluations. 

Augusta Precious Metals - Logo

Augusta partners with specific custodians and depositories in the industry. It appears that these relationships can help the average investor. For example, certain fees may be removed or discounted based on the chosen custodian.

In addition, this company also has a lot of well-known endorsements, such as Joe Montana. They're also transparent about their reviews. Scroll to the bottom of the homepage to find reviews from many different websites.

Advantages Of Augusta Precious Metals

Augusta offers many resources on their site. Calculators, spot pricing, and videos are just a few of the items that can help any investor with their retirement planning. Augusta appears to care about the individual investor by offering both visual aids and detailed articles. These tools only expand the minds of investors who want to protect their futures.

There are hundreds of reviews about Augusta too. Investors can gain a lot of insight into the company through these reviews. Looking for patterns is the best way to narrow down a reputable company for a gold IRA. Investors need a mixture of guidance and freedom to diversify those portfolios.

Lastly, Augusta breaks down the IRS-eligible coins on their dropdown menu. This feature reduces confusion and concisely places all available products on one page. If there was any question about proper products for the gold IRA, they're answered on this page.

Disadvantages Of Augusta Precious Metals

Although Augusta has many products listed on their site, there is no pricing to be found. Every item requires a call to the company. It's understandable to quote prices over the phone because precious metals have fluctuating costs. However, a starting price or range can give the investor some sense of how much they can afford to buy with their gold IRA.

Some investors may be turned off by the minimum order required for a gold IRA. Augusta requests at least $50,000 to start an account. This amount may be out of reach for some investors. A smaller amount would bring in more investors as they continue to diversify their portfolios.

3. American Hartford Gold

Based out of Los Angeles, California, American Hartford Gold has been serving customers for many years. They offer consultations about gold IRAs, which allows the investor to work with one person through the entire setup process.

American Hartford Gold Review - Logo

AHG doesn't have custodial or depository personnel, but they've partnered with some of the best in the business. They clearly display custodians and depositories on their website too. Investors simply select a desired company for their long-term savings goal.

Their website has a simple layout so that investors can see all the available products. In fact, they're even labeled as "IRS Approved" when applicable. AHG encourages investors to call for a personalized experience. A gold IRA can be opened in a matter of minutes.

Advantages Of American Hartford Gold

It's impressive to see such a detailed "About Us" page. AHG doesn't hide behind any fancy promises. In fact, they offer comprehensive biographies of their top officers in the company.

It's followed up with a list of community organizations they work with throughout the year. Offering full transparency on this page alone is a good sign that AHG is consumer friendly.

It's refreshing to see a "Current Specials" page for investors on a budget as well. These specials presumably change over time, so investors have a reason to visit the website regularly. Offering unique sales to its customers is a great way to spark investors' shopping urges.

Disadvantages Of American Hartford Gold

It's difficult to find a fee chart on AHG's website. Most references to fees are followed by a request to call the company. Investors may want more information about fees and product pricing before calling. The company wants investors on the line first before disclosing costs. This disadvantage can turn off investors because it has poor optics.

There is a very long and complicated form that must be filled out before shipping items out to the investor. It appears to limit AHG's liability regarding shipments and transactions.

Investors who don't have a legal background may not understand these disclosures. It's possible they could sign away their rights in some cases. A closer look at this document may be necessary before working with AHG.

Asking Important Questions

1. Are there contribution limits to a gold IRA?

Contribution limits for a gold IRA are the same for any other IRA. Contributing up to $6,500 a year is allowed for people younger than age 50. Older individuals have up to $7,500 a year as their contribution limits.

2. Do these contribution limits apply to a 401(k) rollover?

A rollover isn't considered a contribution. For this reason, investors can roll over any amount desired. They're simply limited to one rollover each year.

3. Are the precious metals mixed together with other investors' purchases at the depository?

Depositories usually offer both commingled and segregated facilities for precious metals coins, bars, and rounds. Investors should speak to their custodians about various options. There are different fees based on the storage type.


Final Verdict

No one should pay penalties when they properly move their money. Follow these tips, and explore various companies offering gold IRAs today. Achieving those retirement goals is even easier than before when investors diversify as much as possible.

Let our expertise and analysis help you before you invest your savings by reading our list of the best companies!

Or click the button below to request a Free Gold Kit

Scroll to Top