Can a 401k Invest in Gold?


With the recent declines in the stock market and many other traditional investments over the last few years, an increasing number of investors have been looking for alternative investments with which to diversify their diminishing retirement portfolios. One time tested asset that has again become popular with retirement investors is gold. Many people are not clear on what the rules are for investing in gold using 401k’s. The subsequent paragraphs discuss the ways that this can be done using these popular retirement vehicles.

Buying Gold in a 401K Via Gold Coins

The most literal way to acquire gold for a 401K is to actually purchase physical gold coins and bullion for the retirement plan. This is completely permissible, and is known as a Gold IRA. The catch to acquiring physical gold in 401K accounts is that only certain forms of the yellow meta are allowed. These are listed below, as follows:

• Credit Suisse gold – PAMP Suisse gold Bars .999
• Canadian Maple Leaf coins
• American Eagle coins
• Austrian Philharmonic
• Austrailian Kangaroo/Nugget coins
• U.S. Buffalo Gold Uncirculated coins (No Proofs)
• Certain Bars and rounds

There are a few steps involved for those investors who wish to acquire physical gold using funds in their 401K’s. The first thing that has to be accomplished is to open up a self directed IRA account. Funds from 401K’s can be rolled over to this new Gold IRA then. Without such a self directed IRA account, physical holdings of gold can not be obtained using 401k’s.

Next, the investor will pick out a dealer to perform the gold metal acquisition for the IRA. The list above should be carefully reviewed in order to make certain that the individual only buys gold in a form that is allowed by the IRA rules. Finally, a depository company will have to be engaged to store the gold coins or bars. Such metals will be kept at the chosen depository until the gold is either taken as a distribution or sold out of the account.

Buying Gold in a 401K Via Gold Money

An easier way to acquire gold directly in a 401K lies in opening an account with Gold Money was opened in 2006 to allow investors to place dollars easily into gold holdings. 401K’s and IRA’s are both allowed to purchase gold in these accounts. Entrust Group runs this site as a foremost provider of self directed retirement services during the last twenty-five years. Gold Money is actually the country’s most rapidly growing and largest digital gold currency. Funds kept in this account can be utilized to purchase things. Another benefit is that there is an equivalent amount of gold stored in the vaults, meaning that a person can easily convert the Gold Money account into the correlating gold bullion if he or she desires. This is different from many forms of paper gold holdings, as in the last option discussed below.

Buying Gold in 401K’s Via An Exchange Traded Fund

A last way to have exposure to gold using a person’s 401K is through purchasing shares in one of the gold ETF’s, or exchange traded funds. These funds operate much like stocks or mutual funds, selling shares that represent a fractional ownership in an ounce of gold. There are a variety of them to choose from now, as listed below with their stock symbols:

SPDR Gold Trust (GLD)
iShares COMEX Gold Trust ETF (IAU)
ProShares Ultra Gold ETF (UGL)
PowerShares DB Gold Double Long ETN (DGP)

Something that an investor who goes the route of a gold ETF should be aware of is that these shares are not easily convertible to physical gold. There are many restrictions placed on the conversion of the shares into gold bars, in particular if many people who own the shares attempt to do this at once. It is only really a problem if there is a great panic in the world that drives people to hold physical gold. Otherwise, this is a fine way to have gold exposure in a retirement account.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

Email  • Google + • Twitter

Comments are closed.