How to Convert a 401(k) to Gold Investment

Gold is considered a stable investment when the stock markets and economy experience a lot of turbulence. You can invest in gold in a number of ways. These include buying the precious metal directly in bullions or coins, purchasing shares of gold mining companies, and buying mutual funds that invest in the gold sector. You might also be able to find gold investments as part of your 401(k) retirement account, though your options might be limited. If so, look into unconventional means to convert your 401(k) to gold investments.

Step 1

Evaluate your existing 401(k) investment options. Each plan usually offers a choice of investments, including stock and bonds, mutual funds, and money market or cash reserve investments. If your plan offers a mutual fund that invests in gold, this is the easiest way to convert your 401(k) plan to a gold investment. You can devote all or part of your plan to the gold fund, depending on your investment needs.

Step 2

Speak with your plan administrator if your plan does not offer a gold investment option. Plan administrators are responsible for providing the investment choices the plan offers. You might be able to convince your plan administrator to offer an investment option in a gold mutual fund, particularly if other employees want and request the same option.

Step 3

Check to see if your plan offers a self-directed investment option. According to the Plan Sponsor Council of America, one in five companies offer this arrangement, also called a brokerage window. Using a self-directed option, you can direct the trustee to invest in the investment choices you want, including gold mutual funds or gold bullion or coins. If you are investing in bullion or coins, you might need to pay for storage and insurance for these assets.

Step 4

Roll over your 401(k) into an IRA if you no longer work for the company. You can roll your 401(k) plan into a traditional IRA or convert it to a Roth IRA by paying the applicable taxes. You will then have more control over the investments, and can choose to invest more of your money in gold. Some 401(k) plans might offer an option for your to roll over your account even if you still work for the company, particularly if you are over age 59 1/2.

Tip

  • Make a case for gold investing when you talk to your plan administrator about adding investment options. Many people prefer gold as a way to reduce risk in troubled markets.

Warning

  • Be careful of the extra fees you might incur by investing in a self-directed 401(k) or IRA. These fees can cut into investment gains quickly.

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About the Author

Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.

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