The practice of doing 401k to gold IRA rollovers has become pretty standard these days, which must have made you wonder. Could this be the right thing for you too? And, if yes, then how can you do it without facing any penalties from the IRS? Those are probably the most significant questions that have popped up in your mind right after you have heard about the whole idea of doing these rollovers. Well, those are all some legitimate questions, and just like you need to learn more about how to invest in gold and why do it in the first place, you also need to learn more about how to do this rollover without penalty.

If you have come here with those questions in your mind, then I have a few things to tell you. First of all, it’s a good thing that you haven’t started the process before getting adequately informed. Furthermore, it’s a great thing that you have even taken interest in this whole practice because you can very well benefit from it, even if you might not be aware of it right now. And, lastly, today’s your lucky day, because I am here to answer those questions for you.

Why Own Gold?

Before we get to the main topic, i.e. the question of how you can essentially move your 401k to gold, I believe it would be good for us to talk about the actual idea of owning this asset. I am pretty sure that you would like to hear about the reasons behind doing this so that you can decide all on your own if it is something that you would like or not. After all, you cannot possibly make this decision if you first don’t get acquainted with the benefits of it all, and with the reasons to do it.

Let us start with the basics here. If you take your time to inspect just how gold had behaved throughout history, you will realize one important thing. It has always been rather valuable and that didn’t seem to change even when times were tough economically and when other assets plunged in value and lost their purchasing power. Now, if you ask me, this kind of stable behavior is a pretty good reason to actually invest in this asset.

If you think that we are now immediately going to skip to the question of how to move 401K to gold without penalty and that the above is the only reason why you should own gold, then you are extremely wrong. There are a couple more reasons we need to mention. Not only is this asset known for holding value, but its price tends to increase during inflation, i.e. when the costs of living increase as well. This is another significant benefit that it can bring your way.

On top of all that, gold is always very much in demand, while its supply is definitely shrinking. If you know anything about economics, then you can guess that this is the formula that leads to an increase in the price of a particular asset. To put it all simply, since demand is high and supply is low, the cost of gold is bound to increase, meaning that owning it will be a huge advantage.

Why Do The Rollover?

You now know why holding gold is beneficial, but you probably have another question. Why do the 401k to gold rollover? Well, if you have any assets in a 401k and you want to have gold as well, there is no point in having all of the different accounts. To be even more precise, you will have to fund your new, gold account, in one way or another, and doing this rollover is one of the most convenient options. I suppose that you understand the reason why you should do the rollover and I am guessing that you have some more reasons of your own.

How To Do It?

After realizing that this could be the perfect step for you, there’s no doubt in my mind that you will want to do it right away. Of course, you can decide to rush into everything and make some mistakes along the way, which might lead not only to paperwork nightmares but also to certain IRS penalties. As I am guessing that you don’t want to face any penalties whatsoever, my advice is for you to learn how to do this properly before taking any final steps.

The general process of investing in gold is explained here: 

To even be able to do the rollover and invest in gold, the first thing you will need to do is open a self-directed IRA account. Of course, you will have to find a custodian first, because opening such an account without them will be impossible. After having opened the account, you will have to do the rollover and you’ll have two options there.

First things first, you can do a direct rollover, which will lower your chances of getting a penalty. Plus, this way, no taxes will be taken from it. To do the direct one, you’ll need to contact the company holding your 401k and tell them to transfer the funds without you touching the money. The indirect rollover consists of you getting a check instead of the money being directly transferred. If you don’t transfer the money using the check within 60 days, you will get a penalty.

Also Read: Financial Management – the Time Value of Money

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