Is There a Precious Metals 401(k)?

401k gold and silver coins

Americans today hold nearly $7 trillion in 401(k) retirement accounts. But despite the many advantages of 401(k) accounts, there are some definite disadvantages.

One of the biggest disadvantages is that many 401(k) accounts only offer limited investment options. When markets are booming, this isn’t necessarily a bad thing. But when markets enter a downturn, how do you protect your 401(k) assets?

Many 401(k) plans don’t offer a cash option, and may offer at best a money market fund. And for those who might want to protect their 401(k) assets with precious metals, the options are nearly nonexistent.

If you’ve been looking to protect your 401(k) account with gold and silver, you’ve probably come across a precious metals IRA, gold IRA, or silver IRA. But is there a precious metals 401(k)?

401(k) Precious Metals Investment Options

If you’re looking for precious metals options for your 401(k), your plan administrator might offer some sort of precious metals exchange-traded funds (ETF). Very often this consists of an ETF that invests in gold mining companies.

And if you’re really lucky, your 401(k) might offer you the ability to invest in ETFs that directly track the gold price. But neither one of those options is ideal if you’re looking to actually own precious metals.

The theory behind owning shares in mining companies is that, if the price of precious metals is climbing, precious metals miners should be doing better. There’s a certain logic to that, although it’s not always true that high gold and silver prices mean better performance for gold and silver miners.

For one thing, the costs to mine gold and silver are very high, and higher energy, labor, or shipping costs can offset gains in the prices of gold and silver. For another thing, precious metals mines can be subject to labor actions, government seizures, electricity shutdowns, etc., all of which can negatively impact mining companies.

With regard to ETFs, precious metals ETFs have their drawbacks too. Among them is the fact that you can’t convert your shares of an ETF into actual physical gold or silver.

While ETFs claim to own gold, the custodial and subcustodial arrangements of those gold holdings are often opaque. No one knows exactly where the gold is held, nor does anyone know if the ETF is creating more shares than it has gold backing.

Add in the fees such as management fees and exchange listing fees that ETFs are subject to, and you can see fees take a bite out of your gains. That’s why so many people prefer to own physical gold and silver themselves.

IRA vs. 401(k) Investment Options

In contrast to 401(k) accounts, IRA accounts offer significantly more options. And when you factor in self-directed IRAs, the options become almost limitless.

It’s with a self-directed IRA that you can start investing in alternative assets like real estate, private equity, and precious metals like gold and silver. With a self-directed IRA, the only assets you can’t invest in are those that are forbidden from all IRA accounts.

That includes collectibles such as wine, paintings, rugs, stamps, and coins and metals. But certain coins and metals are exempt from the definition of collectibles.

26 U.S.C. 408(m)(3) specifically exempts gold, silver, and platinum American Eagle coins from the definition of collectibles, as well as any bullion meeting the fineness requirements necessary for a futures contract.

What that means is that any gold coin with a fineness of .995 or higher (99.5% gold), or any silver coin with a fineness of .999 (99.9% silver) or higher is IRA-eligible. And since most mints today mint gold and silver bullion coins with fineness that high or higher, there are numerous IRA-eligible gold and silver coins available today.

What Is a Precious Metals IRA?

A precious metals IRA is an IRA that owns physical precious metals such as gold and silver coins or bars, instead of more conventional financial instruments such as stocks, bonds, or shares of funds. Precious metals IRAs allow you to safeguard your tax-advantaged assets within an IRA that offers all the same tax advantages as any other IRA account.

One way to fund a precious metals IRA is through a 401(k) rollover. You can roll over funds from an existing 401(k), 403(b), TSP, IRA, or similar account into a precious metals IRA tax-free, allowing you to safeguard your existing retirement savings with gold and silver.

A precious metals IRA is subject to all the same rules as any other IRA, and it can be either a Traditional IRA that invests with pre-tax dollars, or a Roth IRA that invests with post-tax dollars. And when you decide to take a distribution from your precious metals IRA, you can take that distribution either in cash or in physical gold and silver coins or bars.

The coins and bars that you choose for your precious metals IRA are administered by an IRA custodian that specializes in precious metals, and are securely stored in a bullion depository. With a precious metals IRA, you can sleep soundly knowing that your assets are safely stored and insured against loss, theft, and other potential calamities.

Is a Precious Metals IRA Right for You?

Opening a precious metals IRA is no more difficult than opening up any other IRA, and the process of rolling over assets from a 401(k) or similar retirement account into a precious metals IRA is as easy as any other 401(k) rollover.

If you have retirement savings that you want to protect against loss, and if you’re afraid that the next recession may be as big as 2008, maybe it’s time to start learning more about a precious metals IRA.

Many Americans just like you have already taken the steps to safeguard their savings with a precious metals IRA, and the price of gold remains close to all-time highs thanks to continued safe haven buying.

With over $2 billion in precious metals placements and over 5,000 5-star reviews, Goldco works hard to make sure that our customers receive quality precious metals products and top quality customer service. So if you’re looking to for a precious metals option for your 401(k), call Goldco today to learn more about how a precious metals IRA can benefit you.

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