401k to Gold IRA Rollover Guide and Review - 2014

Learn Why Convert Your 401k or Rollover Your IRA to Gold in 2014. Discover the Pro's and Con's of Investing in Gold and 401k Rollover Rules.

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  1. Gold has always been a good investment in hard times. If there’s a recession or high inflation, investors buy gold and other precious metals because it’s a great store of value. When other investments are performing badly, gold tends to rise.

     

    That means gold can be a wise investment to add to your retirement plan. After all, if you’ve been saving for your retirement for years, you don’t want the value of your plan to crash just when you’re going to need it.

     

    The problem is that in most cases, investing in gold and other precious metals isn’t easy. If you have a 401(k), like many people, then you won’t be allowed to add gold to it – or it could be too expensive. The good news is that it’s possible to convert your existing 401(k) to a type of retirement plan that does allow you to invest in gold. This is known as a ‘rollover’, and it’s generally a fairly straightforward process.

  2. What is a 401(k)?

    A 401(k) is a very common kind of savings plan for retirement. Many people have these plans because they are arranged by their employers. Every month you will pay a set amount of money into the plan. Your employer may match this with a set amount of money. The money is paid before your earnings are taxed, which means that more is saved. (When the plan pays out on your retirement, your income from it will be taxed.) You can invest up to $17,500 per year in a 401(k), and you won’t usually be able to access the money until you are 59½.

     

    A 401(k) works for most people. They are designed to make it easy to save for your retirement, and your workplace will take care of most of the decisions and administration that will be needed. They will also decide the types of investments that are made. Usually, this means investing in a range of funds that are linked to the stock market. The whole idea of the 401(k) is to make it as cheap and simple to invest as possible, because your employer will be using the same plan for everyone.

     

    Because of this, you will probably get good returns on your investment in the long run. Retirement savings plans are designed to run for many years before you cash them out. Some people will be paying into their plan for 40 years or more. But they can also have disadvantages.

     

    401(k) advantages

    ·         Straightforward plan arranged by your employer

    ·         Easy to understand

    ·         Payments are made automatically from your earnings

    ·         Your employer can top up your contributions

    ·         Payments are made before tax is taken from your earnings

    ·         They invest in a wide range of funds

    ·         Over the long run you should see good returns on your investments

     

    401(k) disadvantages

    ·         Your employer makes most of the decisions about how to invest

    ·         The stock market can go up and down sharply

    ·         If you’re close to retirement the changing value of your plan can be worrying

    ·         They don’t take into account your particular circumstances

  3. Why can’t I include gold in my 401(k)?

    Your 401(k) should invest in a wide range of different funds. This is to make sure it is relatively safe from problems that might affect one or other area of business (if you just invested in one kind of share or fund, there would be a huge risk of something going wrong in that sector).

     

    According to GoldIRARolloverPros.com, the funds that are included might include shares in gold mining companies. But you generally cannot include physical gold in your investment portfolio. (Physical gold means coins, rounds and bars of gold that are kept in a secure facilities that are insured. However, the gold literally does exist, rather than being shares in a gold fund that may or may not be backed by real gold.) In most cases, all of the decisions are made for you, anyway, so there’s no saying what ‘exposure’ you will have to gold assets of any type.

     

    In order to invest in physical gold, you will specifically need to instruct your retirement fund provider to add it to your plan. Because your 401(k) doesn’t allow you to make this kind of decision, you will need to switch to a different plan than does let you make your own choices.

  4. What is a ‘rollover’?

    The process of moving from one savings plan to another is called a ‘rollover’. When you move on from the employer that set up the plan (or sometimes if you are still there, under certain circumstances) you have different options about what to do with the money.

     

    1) Cash out. The first option is simply to cash out the money you have saved in your 401(k). This is generally a bad idea, for several reasons. The first is that unless you have reached the required age (59½) you will be heavily penalised for withdrawing the funds. This does give you access to your money, but you will probably have to give up 10 percent of the total, and possibly more if you also end up liable for income tax. This can seriously eat into your savings. Not only that, but once you withdraw from your savings plan then you will no longer gain the benefits of investing in the funds where your money was held.

     

    2) Leave it in the 401(k). Whether or not you have left that employer, you might simply choose to leave your savings where they are in the original 401(k). There are usually restrictions, so this will only be possible if you have a minimum level of funds in the plan. This isn’t a terrible idea, since your savings will continue to grow as the investments pay dividends and increase in value. If you’re not sure where you’re moving on to then it can be best to leave it alone, because the options available to you won’t always be the same. A large employer will have access to funds at lower fees, and if you tried to invest in them as an individual you would end up paying much more. But it’s not a great option, either. Once you’ve left that employment you may not be able to keep paying into the plan, and you might not remember to check on it from time to time – with the result that the investments originally made might become outdated and no longer suit your needs.

     

    3) Rollover. The final option is to rollover the 401(k) to a different plan. If you know what you are doing and want full control over your retirement savings, then a rollover to an Individual Retirement Account (IRA) is the right option. If you perform a ‘direct rollover’, you instruct one administrator to communicate directly with the other and the funds are moved automatically from one provider to the next, without going to you first. You can withdraw from the 401(k) and move the money to the IRA yourself, but this can have problems. For a start, if the process ends up taking longer than 60 days then you may have to pay income tax on the whole amount – which could add up to tens or even hundreds of thousands of dollars.

  5. Why Invest in gold?

    Gold is traditionally viewed as a ‘safe haven’ investment. This means that when other investments such as stocks and shares are falling in value, gold keeps its value and often increases it.

     

    There are different situations where this might apply:

    ·         Recession, when companies are making less money, people are losing their jobs and share prices on the stock market are falling.

    ·         Inflation, when your money is worth less and less over time and you need more and more dollars to buy the same goods.

    ·         Hyper-inflation, which is extremely high inflation often caused by a war or complete collapse of the markets.

     

    The Global Financial Crisis and the measures taken by the banks and Federal Reserve to address it has led to first a serious recession and now the prospect of high inflation in the coming years. The US also has extremely high debts, which may prove unsustainable. In short, the future is uncertain. What is clear is that whatever the circumstances, when the economy is struggling for any reason then investors flock to gold to preserve their wealth.

  6. Why invest in gold?

    Gold is traditionally viewed as a ‘safe haven’ investment. This means that when other investments such as stocks and shares are falling in value, gold keeps its value and often increases it.

     

    There are different situations where this might apply:

    ·         Recession, when companies are making less money, people are losing their jobs and share prices on the stock market are falling.

    ·         Inflation, when your money is worth less and less over time and you need more and more dollars to buy the same goods.

    ·         Hyper-inflation, which is extremely high inflation often caused by a war or complete collapse of the markets.

     

    The Global Financial Crisis and the measures taken by the banks and Federal Reserve to address it has led to first a serious recession and now the prospect of high inflation in the coming years. The US also has extremely high debts, which may prove unsustainable. In short, the future is uncertain. What is clear is that whatever the circumstances, when the economy is struggling for any reason then investors flock to gold to preserve their wealth. Invest today with GoldIRARolloverPros.com!

  7. Do you actually receive any physical gold?

    If you invest in a gold-backed IRA, you will not receive any physical gold yourself. This would be too risky. Instead, gold is purchased on your behalf and held securely by the administrators. It is also insured, which means you do not have to worry about loss or theft. (Of course, there is nothing to stop you buying gold coins or bullion yourself and storing them at home, but this is not how a gold-backed IRA works.)

     

  8. What kinds of gold asset can you include?

    You can choose the type of gold and gold-based assets that are included in your IRA from a range of options. The options available are well-known and carefully regulated, so that you can be assured of the weight, purity and value of the bullion. They include:

    ·         American Eagle coins

    ·         American Buffalo coins

    ·         Canadian Maple Leaf coins

    ·         Austrian Philharmonic coins

    ·         A number of other bars, rounds and coins

     

    You can also invest approved forms of silver, platinum and palladium.

     

    As well as physical gold bullion and other precious metals, you can invest in gold ETFs (exchange traded funds), which is a very easy and low-cost way to add gold to your portfolio. You can also invest in mining companies for gold and other precious metals.

     

    How do you rollover a 401(k) to gold?

    Generally speaking the rollover process is simple. If you no longer work for the company that arranged your 401(k), then you just need to contact the provider and instruct them to move your funds to the correct form of IRA. You can then use the money to invest in gold and other assets. You only need to invest part of your 401(k) in gold if you want – you can include funds and other assets in the IRA too. There are companies that can help you with the process if you need it.

     

    If you still work for the employer that arranged the 401(k) then things are a little more complicated and you would probably benefit from further advice. Ask the provider if an ‘in-service distribution’ is allowed. This enables you to rollover the 401(k) to an IRA. If it is not allowed, then you can try approaching the plan’s administrator at your place of employment and ask them to include gold in the plan, but there is no guarantee that they will. However, it may be that a number of employees would like this option, so you may be able to gather some support by asking others about it.

  9. Will I need to pay any fees?

    It is usually fairly cheap to rollover your 401(k). Set-up fees can be around $250, and there may be other small charges, but overall the process should be inexpensive. The problems to watch out for are if you are sent the money from your 410(k) and do not move it into the IRA within 60 days – in which case, you will have to pay tax on it. When you invest in physical gold, you will have to pay insurance on it, which usually comes to around 1 percent of the full amount. These charges will not apply if you are investing through an ETF or mining shares, though you will still have to pay small administrative fees and dealing charges.

     

    Summary

    A 401(k) rollover to gold is an excellent way to preserve the value of your retirement savings, so long as you know what you are doing. If you need any help then there are companies that can give you advice and assist you in the process.

    Get a Free Quote Today with GoldIRARolloverPros.com.


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