Guide to Execute a 401k Rollover
Given the all-time high on stock-market volatility and uncertainty over the future, it comes as no surprise that people across the country are questioning how safe their 401(k) funds really are.
The desire for more control over what happens with that money and how it is protected is a growing one, and it is clear to see why. A gold 401(k) rollover is amongst the best ways to do so.
Primary Differences between a 401(k) and Gold IRA Account
A 401(k) fund is controlled entirely by a custodian. The person to who the funds belong has no say in how they are used and invested. As such, they are left in the dark about what steps are taken to protect them. With an IRA, the investment choices are down to the person whose future is actually affected.
What makes a gold-backed IRA different is that it allows for the conversion of funds into gold bullion. Rather than tieing one’s future to the vulnerable and volatile dollar, a person can opt to buy physical, tangible precious metals. Gold is not subject to the same uncertainty as a normal currency and is considered a great way to protect a retirement fund.
This is not the only benefit to rolling over a 401(k) into a gold IRA, but it is one worth thinking about.
Advantages at a Glance
- Account-holders have more control over how their money is invested, so they can potentially make bolder moves, diversify their portfolios, and increase their returns.
- The fees involved are more straightforward and generally cost less in the long run. There are various lower-cost ways to run and manage this type of account.
- Withdrawal flexibility is far better, particularly if the account holder takes advantage of the Roth IRA option. Available with any gold IRA, the Roth option allows for tax-free withdrawals after retirement and has no minimum amount. There are also more loopholes for early withdrawal.
- Investing in gold can have tax advantages. Beneficiaries inheriting gold saved in this type of IRA do not have to face the same taxes as they do with a 401(k).
- The dollar is, like any currency, volatile and open to fluctuation. A sudden drop in value could see a person lose a good chunk of what they have saved. Gold does not have this same risk involved.
- It is up to the account holder what trustee platform they want to run their gold IRA account. Choose from a range of excellent platforms that offer great rates, expert investment aids, and round-the-clock customer service, should it ever be required.
What Is the Process?
First of all, it is important to understand the difference between a rollover and a transfer of funds. Put simply, a transfer means the funds are sent from custodian to custodian without personal involvement from the account holder. A rollover requires them to receive a payout and deposit it into the new account themselves. A transfer is also commonly referred to as a “direct transfer,” so remembering what each means is important.
The result is the same, although there are a few more rules involved in a rollover. The primary consideration is the 60-day rule. If, for whatever reason, someone has the need or desire to roll over their 401(k), they must deposit the funds into the new gold IRA within 60 days or face tax penalties and deductions. If they fail to do so, it is considered a withdrawal and is taxed as such.
Overall, the process is simple. It essentially follows four simple steps:
- Choose and set up an IRA account
- Request a transfer or rollover from the current 401(k) plan
- Deposit money into the new account within 60 days or wait for confirmation from the 401(k) custodian
- Set up investments and begin increasing a retirement fund
Visit this link for a full guide on gold ira tax rules, and find out if you can protect your retirement savings with a precious metals backed IRA plan.
The Bottom Line
Planning ahead is always advisable, especially when it concerns your comfort and stability during a hard-earned retirement. Opting for a gold 402(k) rollover is a pragmatic decision on several fronts.
The stock market is a volatile place, now more than ever. A retirement fund is not something to be gambled away lightly, which is all the reason in the world for anyone to want more control over and better access to their money.