In the wake of the financial crisis, more and more people are thinking about diversifying their retirement portfolios with precious metals. While IRAs are normally centered on stocks, bonds, mutual funds, and other financial instruments, precious metals like gold and silver can also be part of an IRA. With an old employer’s 401k account, you may already have a source for precious metal investments. But are you aware that your retirement account is not limited to company stock options? With a few simple steps, old 401k accounts can be diversified into a Precious Metals IRA. Here are ways to converting 401k to a precious metals IRA.
How to Convert 401K to Precious Metals
The process of converting an old employer’s 401k to a precious metals IRA is fairly straightforward, and there are no special requirements for who can do it or where the money must come from. Most people never consider moving their retirement investments because they are afraid of being penalized for overstepping the limits imposed by the Internal Revenue Service.
The main requirement is to have an old 401k account with an employer who no longer has a matching program. Suppose you still have money in your current company’s 401k plan. In that case, it can be moved into your Precious Metals IRA without penalty, regardless of whether or not there is a matching program associated with the funds. Your only responsibility is to ensure that any disbursements from these accounts are reported on your annual income tax statements.
For those currently working who might want to put their retirement nest egg back into precious metals, there are other options besides converting your old 401 accounts.
One way to make this transition is to rollover old 401k accounts into your new company’s plan. Since most companies allow for this transfer, there should be no problem with the transaction, and you will still have the option of diversifying your investment options.
Take a Loan
The other alternative is to keep funds in your current 401k account and instead take out a loan from your retirement savings that you pay back without penalty. This strategy has its own unique set of risks and benefits, so it would be best for you to consult an expert financial planner before moving forward with any deal.
Withdraw the Money and Deposit on IRA
If neither of these options meets your needs, then there is always the possibility of withdrawing money from an old 401k account and putting it into a Precious metal IRA. The important thing to remember is that any withdrawals from a 401k account must be reported on your annual income tax return.
Since a Precious Metals IRA can hold different kinds of financial instruments, you will want to make sure the bank, broker, or other financial institution you choose for this process allows you to deposit precious metals into an IRA with no penalties. In addition, it is important to remember that before precious metals can be deposited into several IRAs, there are reporting requirements and taxes due, which vary from state to state.
Anytime you are doing something with your retirement account, consult an expert financial planner to help ensure that your money is well-managed and secure during the entire process. There are many questions you will need to ask the people providing services for your precious metals IRA. It’s possible that they won’t be able to give you all the answers because of legal restrictions across state lines. However, your financial adviser can answer all the questions.