Finding the Right Fit: 401(k) vs. Gold IRA

Every American worker dreams at some point of retirement. The thought of living according to your own schedule, doing what you want to do, and not having to answer to anyone else is incredibly tempting. But too many workers put off thinking about retirement until it’s far too late.

Thinking about retirement isn’t something that happens when you’re in your 40s or 50s and your children are growing up and going off to school. It isn’t something you start thinking about after you’ve bought a house, or after you’ve paid off a mortgage. It’s something you need to start thinking about as soon as you enter the workforce.

The longer you save and invest, the longer you can put the wonders of compound interest to work for you. That means that no matter what stage of life you’re in now or where you are in your career, you need to start thinking about retirement right now. But don’t let the numerous investment options out there get you down.

In most cases your choice of investment vehicle comes down to a 401(k) or an IRA. Each has its own advantages and disadvantages, and you can even choose to invest in both.

If you already have retirement assets that you want to invest in more productive investments, you can even look into the possibility of a 401(k) to IRA rollover, such as rolling over an old 401(k) into a gold IRA. Whatever decision you make, however, the sooner you make the decision and start saving and investing, the better off you will be financially when you finally retire.

The Pros of a Gold IRA

A gold IRA is an investment vehicle that allows investors to invest in gold coins or gold bullion. Just like a traditional IRA, funds invested in gold through a gold IRA come from pre-tax dollars and taxation is deferred until investors decide to or are required to take a distribution. This allows investors to benefit from investing in gold while still enjoying the same tax treatment as a conventional IRA.

A gold IRA isn’t available from most financial institutions, which prefer to push investors into stocks and bonds from which they can gain commissions. But a gold IRA can be a powerful tool for investors to diversify their investment portfolio and protect their assets against inflation, stock market crashes, and financial turmoil.

Gold has been trusted by investors for centuries, as it is the ultimate source of wealth. That’s why central banks, despite their creation of vast amounts of paper money, still maintain large holdings of gold bars. When paper investments lose their value, gold is still there in the vaults maintaining its value.

A gold IRA can benefit investors at many different stages of their careers. Traditionally a gold IRA has been sought after by those nearing retirement as a way to lock in gains made from stocks or bonds held in a traditional 401(k) or IRA. Because gold’s price moves upward in a much more stable manner than stocks, a gold IRA offers more stability and less risk than a stock-based 401(k) account, making it a good choice for older investors who need to grow more risk-averse as they near retirement.

A gold IRA can also be a good investment for younger investors who want to grow their assets in a more stable manner than the up and down movements of stocks. In fact, over the past 20 years gold has been the second-best performing asset around, nearly doubling the average annual growth rate of stock markets. And with stock markets on the verge of another crash, a gold IRA can offer younger investors the prospect of solid asset growth in the coming years during a time in which stocks are forecast to lose significant value.

What to Consider With a Gold IRA

A gold IRA, like any other investment, has a cost. You will have to pay to set up a gold IRA, and you will have to pay your IRA custodian to safeguard and insure your gold. But with a large enough investment in gold you can minimize the amount of fees that will eat into your returns.

Then there’s the matter of taking distributions and calculating taxes. You can choose to take distributions in cash, or you can take physical delivery of your gold. If you opt for physical delivery, then you’ll be responsible for storing that gold going forward, which introduces its own difficulties. And in either case, you’ll have to calculate the amount of taxes that you’ll owe the government once you take a distribution.

Finally, if you’re only interested in short-term gains then a gold IRA is probably not right for you. Investing in gold is not a get rich quick scheme, it’s a long-term investment that offers stable growth to younger investors and stable retirement income to older investors nearing and entering retirement.

Reasons for a 401(k) Retirement Plan

While 401(k) retirement plans are newer than some other retirement options, they are quickly becoming one of the most popular plans for many American workers. That’s because more and more companies are offering workplace 401(k) programs, allowing workers to deposit money from their paychecks directly into a 401(k) investment plan.

That ease of investment has resulted in trillions of dollars of money being investing in various 401(k) programs. It doesn’t hurt that many employers also offer matching contributions, often up to 4-5% of an employee’s salary. That’s free money that employees should take advantage of.

Better 401(k) programs offer their investors a diverse array of funds in which to invest, sometimes offering dozens of choices. That allows investors to invest in small-cap, mid-cap, or large-cap funds, bond funds, and even exchange-traded funds that invest in commodities or foreign currencies. And by deducting money before taxes, investors can put more money to work for them than if they were to invest their post-tax salary on their own.

401(k) plans work well for people who want a retirement plan that is easy and doesn’t require a huge amount of financial research. And with the tax advantages of a 401(k), the ability to transfer funds to another retirement account, and the ability to do a 401(k) to IRA rollover, 401(k) plans offer investors a significant amount of flexibility.

Challenges of a 401k Retirement Plan

401(k) plans have their drawbacks too. Many 401(k) plans don’t offer their employees a huge variety of investment options. So, if the funds you’re able to invest in aren’t the best performing, or if their management fees are too high, your investment performance will be suboptimal.

You also don’t have ready access to the funds in your 401(k) account, as you’re not able to take distributions from your account until you reach age 59 ½. With very few exceptions, such as buying a first home or paying for certain medical expenses, trying to remove funds from your 401(k) account before that age will result not only in having to pay taxes on that distribution, but also in an additional 10% tax penalty.

If you invest in a workplace 401(k) program and leave your employer, in many cases your investments will automatically be placed into a low-yielding cash or bond fund. That can leave your investments subject to the combined effects of management fees and inflation, causing you to actually lose money. If you’re going to invest through a 401(k) plan, make sure that you have a good idea of what kind of performance you want to achieve and how you plan to invest your money.

How to Start a Gold IRA Rollover

The poor performance of many 401(k) investments is one reason that many investors choose to do a 401(k) to gold IRA rollover. While the process can sound daunting, working with professionals who have years of experience with the process can make everything go seamlessly. Even better, a 401(k) to gold IRA rollover can be done absolutely tax-free, allowing you to keep investing your existing retirement assets without having to worry about additional taxes.

When you’ve decided on a 401(k) to gold IRA rollover, contact the experts at Goldco to get started. The process requires informing the existing custodian of your 401(k) assets that you intend to roll over those assets. The funds are then sent from your current custodian to the new custodian that you designate to hold the gold that you wish to purchase for your new gold IRA.

Once your new gold IRA custodian has received those funds from your previous custodian, you then decide which gold or silver coins, or gold or silver bars, you wish to purchase. Those coins or bars will then be delivered to your custodian, who will take care of all the storage and insurance needed. The whole process shouldn’t take any more than a couple of weeks, and then you’ll be able to reap the benefits of your new gold IRA.

If you have any questions about how to start a 401(k) to gold IRA rollover, contact the experts at Goldco. With many years of experience in helping people just like you to roll over retirement accounts and invest in gold, you can trust Goldco to help you bring your retirement dreams one step closer to reality.

With a gold IRA you can get the best of both worlds: the tax advantages of a traditional 401(k) or IRA retirement account combined with the stability and asset protection of gold. Don’t wait until your 401(k) account starts to lose value before you decide to protect your retirement savings. Contact the experts at Goldco today to find out more about a 401(k) to gold IRA rollover so that you can make gold a vital part of your investment portfolio.