What Are The Best Ways To Buy Gold In Your 401(K)?

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As mentioned in the US Internal Revenue Code, the 401(k) plan is an employer-sponsored, defined-contribution retirement account for US citizens. This personal pension (savings) account gets funds from the periodical employee contributions, directly taken from their paychecks. The legal options to hold valuables like gold makes the 401(k) plans and contracts appealing to employees.

But, how do you buy gold with your 401(k)? This is where this guide comes in. Today you will discover various methods and tips for buying gold in your 401(k).

Various ways to buy gold in your 401(K)

A qualified retirement plan or IRA doesn't allow you to hold collectibles such as antiques, precious metals, rare stamps, rare books, etc. What you can do instead is to try getting a special carve-out for certain forms of gold, silver, and palladium. By meeting the standards for size and quality, you can qualify for these precious metals. However, you have to rope in a trustee to arrange to buy, sell, and store gold for you. These trustees are gold brokers who offer self-directed 401(k) accounts and IRAs. Here are a few ways to buy gold for your 401(k).

  • Employer control 401(k) Plans: Via employer control of 401(k) plans, where the employers decide which investment plans they want to make available to the employees. For self-employed professionals, one-participant 401(k) or self-directed Solo 401(k) plans can get utilized to hold gold.
  • Precious metals IRA: You can use a self-directed precious metals IRA with a government-approved gold broker as the account trustee to buy, sell and store gold using your 401(k). For selling any amount of your physical gold, you have to place an order with a gold broker, generally the trustee. The broker must recall the gold from the depository and deposit the sale proceeds in your account as they find a buyer. 
  • Additional methods: Furthermore, you can own physical gold via ETF funds such as GLD and IAU, futures gold contracts and funds, or gold-mining stocks and funds. 

Form of Gold you can Store

You can only store the permitted forms of gold in your 401(k) or IRA account according to the rules in the US Code 408. The following are the types of gold you can legally hold.

  • You can hold coins, rounds, and bars of gold, silver, and other precious metals.
  • Storing numismatic coins is not authorized.
  • While storing foreign coins you have some eligible options at hand, given they have at least 99.5% of gold content.
  • All permitted US gold coins are one, one-half, one-quarter, and one-tenth-ounce sizes.
  • When it comes to gold rounds and bars, they must comply with the purity standards, i.e. 99.5% pure. 
  • Finally, ensure that the source of the gold is either a national government mint or an exchange-approved refiner.

Factors to keep in mind before investing

Before buying gold in your retirement account, heed these factors:

1. Liquidity

Liquidity is a factor if you want fast execution of your buying and selling process. However, the problem is that the selling process mentioned above takes some time as this affects the gold's price. So, opt for the fastest execution via selling through stock or ETF shares using a brokerage account.

2. Price tracking

Remember, only physical gold can appropriately track the price of physical gold. Opting for gold substitutes can pose a price risk that can be trivial or substantial depending upon the type of the substitute and its price.

3. Mental peace via reassurance

Although these assets are not in your physical possession, they still can alleviate some of your fears regarding the financial problems, as gold's value will remain to be higher than most other amenities.

4. Beware of Fraud 

When choosing a gold broker, you can fall prey to fraudulent gold brokers who will take your money to buy gold and suddenly disappear. Hence, ensure your account's security is in place and the gold transactions transpire through tight regulation.

5. Price of holding

Storing and insuring physical gold comes at a higher price than gold substitutes. However, the rewards, in the long run, are also higher.

Final Thoughts

Finally, keep in mind that the annual IRA contribution limit is substantially less than the 401(k)'s limits, where no mechanism for employer contributions makes it a lucrative place to keep gold assets.

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.

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