Have you been hearing about a gold 401(k)? But exactly what is a 401k? Do they even exist and is it something that you should be considering? These are just some of the questions that we are going to answer here.
Do you want to protect your retirement savings by adding some gold to it?
Be aware though. Because all gold are not the same and what you thought would provide you security for your retirement may turn out the be very risky.
What is a 401k account?
A 401(k) is a savings plan that allows workers to invest for their retirement before any taxes. Basically before you are getting taxes on your salary you can add some of this money to your retirement fund.
This has been an important factor for a lot of employers, besides health care and salary, to attract and keep skilled workers.
The reason why is because the employer will often match up, to a percentage, your contribution. Say that you decide to add 5% to your 401k, then your employer will maybe put in 5% as well.
This may sound great but there is some major weaknesses in a 401k. You are only allowed to invest in paper assets such as stocks, bonds and mutual funds. This means that you are directly impacted by the strength or weakness of the economy.
For example, during the 2008 financial crisis people with retirement funds such as 401(k)’s lost almost $2 TRILLION. Because as you probably remember the stock market crashed and most of the peoples retirement funds were in paper assets that took a major hit.
One of the big reasons to why a lot of people want to own gold in their retirement accounts is because of the safety from another stock market crash. Gold has always been seen as a safe haven and when it comes to money for retirement, people want to feel safe and don’t want to wake up one morning and see half of their retirement savings gone. That’s what happened to a lot of people 2008.
What is a gold 401k, then?
A gold 401(k) is just as it sounds. It’s a 401(k) account (so a retirement account where you can add pre-tax dollars to) that are funded with gold.
BUT BE AWARE! You can not own physical gold in your 401k account.
This is very important. As we were talking about above you can only own paper assets in your 401(k). There are paper gold in the form of Gold ETFs and Gold Stocks that you can own. But that is a huge difference from owning physical gold.
There is a way to own physical gold in your retirement account though and we will explore how that can be done shortly. But first, it’s important to talk about the difference between paper gold and physical gold for retirement.
What is the difference between paper gold and physical gold in my retirement account?
Investing in paper gold is not even close to investing in physical gold. With paper gold we are talking about things like Gold ETFs and Gold stocks. This means that you are holding a paper certificate saying that somewhere in the world you own physical gold, but all you hold and can see is a paper (or some digits on a screen).
When you are thinking about adding gold to your retirement account what you want is security. You want to know that if the stock market crashes or anything other unusual and bad happens you still have your wealth protected. With paper gold you have none of that security.
Lets have a look at one of the most popular paper gold assets that you are allowed to own in a 401(k). This is a gold ETF that’s trading on COMEX. A primary market for trading commodities like gold, silver, aluminium, copper. Located in the United States.
In short how a Gold ETF (Exchange Traded Fund) works is that there is a vault somewhere in the world where the fund is storing it’s physical gold. Then they sell contracts to this fund saying that you own for example 1 ounce of gold in the vault. Kind of the same way as any other publicly traded company sells stock.
The reason why these exist is so that you can trade gold. You do not have to think about storing it or going out and purchase it yourself. You leave that up to the fund.
Their customers are then allowed to take physical delivery of gold whenever they want. That’s why it sounds good. But have a look at this latest chart from COMEX. There are 228 paper claims for every ounce of gold in the vault. Basically 228 people think that they own the same ounce of physical gold.
Or in other words: if one person decides to take physical delivery of their gold there is 227 people that are left holding nothing but a paper claim. If 0.45% of the people holding these paper ETFs decides to take physical delivery of their gold they drain the vault of physical gold.
Is this the way you want you hard earned retirement money to be stored?
Please, if you have understood the importance of adding gold to your retirement account do NOT invest in paper gold like ETFs or gold stocks. They are just the same, and many times even riskier, as owning any other paper assets like stocks and bonds. You do not get the security that you want.
How can I get physical gold in my 401k then?
In order to own physical precious metals in your retirement account you have to open a self-directed IRA. A self-directed IRA is a retirement account where the investments are completely controlled by you.
This means that you are allowed to invest in other vehicles than just stocks, bonds and mutual funds. A self-directed IRA has the same limitations on withdrawal and deposits as any other retirement accounts. The only difference is, like we talked about, the fact that you are allowed to invest in almost anything you want (that’s still approved by the IRS).
After you have opened a self-directed IRA you will do a thing called a 401(k) rollover. This means that you can transfer all, or part of, your funds from your existing 401(k) into your self-directed IRA. Once the funds are received you can purchase physical gold and silver to store in your self-directed IRA.
If you want to know the difference between investing in gold and silver have a look at this post.
What type of gold are you allowed to own in a self-directed IRA?
There are two criteria that must be met for the gold in order to be allowed to own it in your self-directed IRA.
- It must be official currency of a recognized public entity.
- The gold must be of at least 0.995 in purity.
There are a variety of gold that meet these two requirement and some of them are:
- Gold American Gold Eagle Coin
- Canadian Gold Maple Leaf Coin
- American Gold Buffalo Coin
- Austrian Philharmonic Gold Coin
- Gold Britania Coin
- Gold Kilo Bars
- Credit Suisse Gold Bars
- PAMP Gold Bars
- Perth Mint Gold Bars
- And many more…
You can learn more about the self-directed gold IRA rules if you like.
Does this sound overwhelming to you and not anything that you think you could do yourself? Good, because you don’t have to.
How do I rollover my 401(k) to a self-directed IRA? Which forms do I fill out? How do I fill out the forms? How does it work with taxes? What gold should I get? Where do I store it?
These are surely just some of the questions you have. And to do this all by yourself would be a big challenge and the possibility of something going wrong would be extremely high.
Good thing is that there are companies out there that specializes in helping people buy physical precious metals in their retirement accounts. The bad thing is that there are also a lot of scammers out there that will pretend to help you and then sell you some gold on a high premium so that they can make more money.
The first decision you have to make is to chose which company that should help you. Personally I have done a lot of research into these companies and the evidence are very strong for who the best one is.
Please do your own research and leave a comment below if there is something that I’ve missed but from my research a company called Regal Assets are undoubtedly the one with the most positive feedback.
Regal Asset is a market leader in precious metals and have a A+ rating with the Better Business Bureau and a AAA rating by the Business Consumer Alliance. These are the two highest ratings that you can have and speaks of a well trusted, serious company.
If we have a look at customer reviews on the Internet there is not a company that is even close to have as many reviews as Regal Assets. Regal Assets holds a 5 out of 5 star rating at Trustlink with over 900 reviews. These are real customers that have completed the process and done business with Regal Assets.
If that wasn’t enough Regal Assets has also been ranked number 20 in financial services by the Inc. Magazine and has been featured in the Investment Guide by Forbes Magazine.
When you read through the reviews you can see that a lot of people speak about a very helpful support staff. They are said to not by pushy and not trying to sell you anything. That they understand how important this decision is for you and are there to answer all of your questions.
Regal Asset will help you fill out all of the necessary forms and you will have a person that guides you through the whole process. Basically what you do is electronically sign the forms and then pick out the metals you want to purchase. The rest Regal Assets will take care of.
Don’t hesitate to start your contact with Regal Assets today to get started with converting your IRA to physical gold. There are no obligations and that way they can review your individual case and answer all of your questions.
Read the full review of Regal Assets if you want even more information.
If you are eager to get the process started you can start their online application by clicking here. After that a representative from Regal Assets will contact you to go over all of the steps needed for you to add some physical gold to your retirement account.
If you want more information you can request Regal Assets FREE gold IRA rollover guide by clicking here. It contains a lot of information about how the process works and what gold to choose from.
I hope that you now know more about how to add physical gold to your retirement account. You can NOT do that by owning a 401(k). So a gold 401(k) only contain paper gold.
With this I hope that we have answered the question of What is a gold 401k? Please leave a comment below if you have any questions or other input. I would love to hear from you.