In recent years, changing careers has become pretty common— and being tied to a dead-end workplace is on the decline. According to a survey, 32% of professionals aged 25 to 44 explored changing careers, and 29% had previously done so. Millennials say that changing jobs offer better opportunities and higher wages. At the same time, many people are looking for a better fit in their work environment. With that said, many people see it as a smart move in their career.
However, when you change jobs, it means you’ll also be in a different employer. Having so, you’ll need to decide what to do with your 401(k) plan. Rolling over a 401(k) plan to an individual retirement account is a good option, especially if you want to keep all your retirement in one place. But if you want to diversify your retirement savings by investing in assets that aren’t as dependent on the economy, you may want to invest in a Gold-backed IRA.
All About Gold IRA
If you’re looking for a retirement option that isn’t subject to the same level of volatility as US dollars or the stock market, you should consider maneuvering your 401(k) to physical gold rollover.
Because the price of Physical Gold moves contrariwise in the market, gold IRA plans and gold-related investments, in general, can be appealing. As a result, if your security investments are underperforming, your gold investments are likely to secure your funds and portfolio.
In fact, gold is often used as a hedge against other investments and inflation by many investors. It is frequently sold to contrast the volatility and risk of other financial tools. As most investors do, you can allocate at least 10% of gold in your portfolio for the sake of diversification.
That is why gold-backed assets are seen as a safe investment. However, there is no such thing as a risk-free investment. The value of gold is still subject to its own ups and downs. And holding physical assets may expose you to the risk of theft. Though, most custodians will cover this risk.
Nevertheless, gold has competitive returns when held for the long term. At the same time, it is a liquid asset, where you can hold the metal and sell it when you want to— you can get cash in exchange for it at any time.
Furthermore, because physical gold must be stored by a custodian, you can rest assured that your investment will be safe and secure.
You might ask, “How to convert 401(k) to physical gold?”
There are two options when you roll over: direct and indirect rollover. In indirect, you’ll have to withdraw your funds first and then deposit them into your new account.
With a direct rollover, as the name implies, the funds will be moved directly on your IRA. The latter is usually much more hassle-free, and it carries a lower risk of IRS penalties. To start in a direct rollover, the simplest way is to set up a self-directed Solo 401(k) or Individual Retirement Account (IRA) with a precious metal dealer or company like Metal-res.com as trustee. After that, you can request from your current 401(k) plan for a rollover with your company choice.
Once your funds have been deposited in an IRA, you can use them to purchase bullion, coins, etc. Keep in mind that there are certain types and purity of metals that the IRS will allow on your self-directed IRA. The process may vary from company to company. In most cases, your company may sell IRS-approved metals so you can buy directly from them to avoid the hassle. Others may require you to buy from a separate dealer, and your custodian will transact on your behalf using your IRA funds.
This account can also be converted into a Roth option. In that way, the rollover amount will grow tax-free when you withdraw it in the future, particularly if you follow the rules. At the same time, you can also invest in other precious metals like silver and palladium. If you prefer investing without holding physical gold, you may do so when you invest in gold stocks and bonds.