The Basics Of A 401K To Gold Retirement Accounts

1 June 2023
 Categories: Finance & Money, Blog

There are many ways to invest in a 401K plan. Some workplace plans make it easy to designate payroll deductions and have them automatically invested in company stock while others rely on target funds with an investment blend aligned to the decade when retirement is anticipated. For many, these default options are as deep as 401K and IRA exploration goes, but there are many ways to invest these same dollars more specifically without sacrificing the tax benefits. One method is opting in for a 401K to gold retirement plan, or a plan with a heavy emphasis on precious metals for retirement investing. 

How 401K to gold retirement accounts work

Self-directed 401K and IRA plans make it possible to invest in precious metals like gold without relinquishing the tax-advantaged status these plans provide. A 401K allows funds to be deposited pretax to reduce taxable income and both a 401K and IRA allow funds deposited to grow in value with taxation deferred until the time funds are withdrawn. For investors serious about precious metals investing, the ability to dedicate retirement funds to this area provides additional portfolio diversification.

Why precious metals? 

Precious metal investments are viewed in a few different ways. For some investors, gold and silver are an opportunity to invest in a tangible item, even when the funds are secured within a 401K account, and the idea of having a physical asset is appealing. Retirement account holders can purchase American Eagle coins as a way to invest in gold and silver. Similarly to any other retirement account investment, these funds cannot be accessed until retirement age without penalty, so the coins remain in storage until withdrawn. 

Different ways to invest

In addition to purchasing coins and other physical forms of gold and silver for an IRA or 401K, it's also possible to invest in metals by using funds. Exchange-traded funds are one of the most popular methods retirement account holders use to diversify a portfolio into new areas, such as real estate or precious metals. With an ETF, shares are purchased in a fund with a specific mixture of investments, and many are tailored to focus on in-demand opportunities. An ETF may have a blend of precious metal investments and adjust the mix periodically based on markets. With an ETF investment, the burdens of physical ownership, such as metal storage and shipping costs, are shared by the fund, reducing the overhead associated with the initial purchase and long-term storage of metals.

For more information on 401K to gold retirement plans, contact a professional near you.