Most 401(k) accounts offer a limited number of investment choices. Usually, you aren't going to be able to call your 401(k) administrator and request a block of American Gold Eagles. However, if your 401(k) allows some flexibility, you might be able to purchase gold through other means. If it doesn't, you may still have options.
Review your 401(k)'s list of permissible investments carefully. While you might not see an opportunity to invest in gold, you might see an investment fund that holds precious metals or that holds companies that are involved in mining and producing them. The USAA Precious Metals and Minerals Fund has at least 80 percent of its holdings in metal and mineral mining and producing companies. Vanguard's Precious Metals and Mining Fund is similarly structured.
Some 401(k) accounts offer a brokerage option that lets you take your money and invest it in a regular brokerage-style account instead of limiting you to the funds that your plan administrator chooses for you. If you have access to one of these accounts, one way to own gold is to purchase shares in an exchange-traded fund that represents gold. These funds own bars of gold and, when you buy a share, you're buying a corresponding amount of gold. Another option is to purchase shares in gold-mining companies or funds. Before doing this, carefully review your plan's rules to see what additional fees, if any, you might have to pay for taking this option.
Rollovers and Distributions
You may also be able to take out money from your 401(k) tax free and then use it to buy gold in a tax-advantaged account like an Individual Retirement Account. If you have 401(k) money in an account at an employer at which you no longer work, you can roll it over to an IRA. When your money is in a 401(k) account with a current employer, that employer has the option of allowing you to take an in-service distribution. If that distribution gets invested in an Individual Retirement Account or other 401(k) within 60 days, it is also tax-free. While you can hold funds and stocks in most traditional IRAs, if you choose to roll your money into a self-directed IRA, you can hold physical gold in that account as long as you follow the IRS's rules.
If you are self-employed, you can set up a Solo 401(k) account. As the administrator of your own 401(k) plan, you choose which investments you have available to you to buy, including gold funds, ETFs and shares of gold-producing companies. Solo 401(k) plans can also hold physical gold coins and bullion bars or ingots if you work with a trustee that allows it.
- USA Today: Can I Buy Gold Using My 401(k) to Protect Myself from a Market Crash
- USAA: USAA Precious Metals and Minerals Fund (USAGX)
- Vanguard: Vanguard Precious Metals and Mining Fund
- GoldSilver.com: Convert to a Physical Gold 401(K) and Silver 401(K)
- MySolo401k: Buying/Investing in Precious Metals with Solo 401k
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