While uncertainty over the trading market is nothing new, given the difficult economic climate currently, there is even more uncertainty and volatility. This can leave plenty of holes in your plans to provide you and your family with a certain level of financial security upon your retirement. There are, however, options that you may have to improve your return on investment.
Most people like to use alternative assets as a hedge against market uncertainty. One popular asset is a precious metal like gold. The question that many have is if you can use an under performing retirement scheme like a 401k to invest in gold.
This is a common question because gold is skyrocketing in value and it looks to continue it’s rise for the foreseeable future. However, investing in gold in a 401k is very difficult, if not impossible, if your 401k doesn’t already have some sort of gold backed stock already. There is a chance you could request that the brokerage house that manages your 401k offer this option, but it’s unlikely that they will comply.
If you are still employed with the company that provides your 401k, you’re kind of stuck, however. If you no longer work for that company, you can turn your 401k into a gold investment.
Cash in Your 401K
You first want to liquidate your existing 401k. Once your 401k is liquid then you will want to look for a self directed IRA or for a gold backed IRA. A self directed IRA will allow you to make investments as you see fit, such as gold. With a gold backed IRA, your IRA can hold legal tender gold coins, gold bars or gold related stocks such as gold mining companies.
Find a Gold Broker
You may need to look around as not every brokerage house that offers IRA’s offer gold IRAs. Once you have chosen a brokerage house, you’ll need to roll over your 401k funds into a gold or self directed IRA.
It also important that this step be handled properly. If done correctly, there will be no resulting tax burden. If the brokerage house is less skilled in these rollovers, you could find that you have certain tax liabilities.
Regulations for Your Gold IRA
Lastly, you need to understand that with gold backed IRAs, not just any gold can be purchased. Jewelry as well as collectable gold coins aren’t permitted. The gold owned must be either gold bars or legal tender gold coins.
In addition, once you purchase gold with your gold backed individual retirement account, or your self directed IRA, you are not permitted to hold the gold. This is where the custodian of the IRA will employ the services of a third party to store the gold for you until the IRA matures.
While you may not be able to incorporate gold into an existing 401k, you can turn your 401k funds into gold investments, whether through directly owning physical gold or rolling over your funds into a gold backed individual retirement account. With the rising value of gold, with it being an excellent hedge against market volatility and the fluctuating value of paper money, it may be time to use capital from an under performing 401k and maximize your money’s growth with gold.
Check out this video to learn more about how to do a gold 401k rollover: