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Gold IRA vs 401k Comparison

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Investors can save money in any number of accounts for retirement purposes. In the past, employers offered pensions. Most employers today, however, provide 401(k)s for their employees.

There are limitations to 401(k)s, however, which means investors look elsewhere for other opportunities. Gold IRAs or Individual Retirement Accounts are tempting additions to any portfolio.

Take a close look at a gold IRA versus 401(k) right now to make better investing decisions tomorrow. 

Before we get started, investing your savings is a serious task. When it comes to adding precious metals to your portfolio, how do you know which companies to trust?

That is why we have researched every company in the industry and selected the very few with the highest customer service standards.

This way you can easily compare the best companies in the business, and choose one that fits your needs and investment goals.


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Gold IRA VS 401K

Defining a Gold IRA

Gold IRAs are also known as self-directed IRAs. They're retirement accounts that work roughly like traditional IRAs. Investors add funds to the account, purchase specific assets and watch the savings grow over time.

The key feature of gold IRAs is the asset type. Investors purchase actual gold to hold at a secure location. It might be in the form of IRS-approved coins or bars. Unlike other assets, precious metals tend to gain value over time. They can fight off inflation and stock market dips.

Understanding Self-Directed IRAs

The terms self-directed and gold IRAs are used interchangeably in the financial industry. They both allow the investor to buy assets other than paper types, such as stocks and bonds. 

Aside from gold, investors can purchase silver, real estate, and other approved assets in a self-directed IRA. Every investor knows that a diversified portfolio is the main goal. They might have both traditional and gold IRAs, which allows them to buy paper and tangible assets.

This investment mixture provides the best odds of protecting retirement savings in the event of a major downturn in the economy. In fact, most accounts overall should see at least moderate gains.

Learning About 401(k)s

These retirement accounts are only available through an investor's employer. Generally, employees allocate a certain percentage of their paycheck to the 401(k).

Its main advantage is the pre-tax contributions. Investors aren't taxed on those funds right now. When they withdraw them in retirement, the taxes are then due.

Employers may also match employee contributions, which is a real benefit. Employees end up with double the contributions that are invested into stocks, bonds, or mutual funds. Some paper assets may even be associated with the employer's business, such as shared stock.

Looking at the Advantages of a Gold IRA 

Anyone can open up a gold IRA. No employee plan is necessary. As a result, investors can shop around for an account manager or custodian to start the process.

Investors can also choose any IRS-approved precious metals for that gold IRA. An employer has no say over the investor's choices. This freedom is often the reason why investors choose self-directed IRAs in the first place.

In addition, holding physical gold in a secure depository is a clever way to hedge against inflation. Gold and other precious metals don't lose value like currency does in the marketplace. Physical gold has a tangible value. As a result, inflation and deflation have no impact on a gold IRA.

Exploring Gold IRA Rollovers

The best way to fund a gold IRA is with a rollover. This term refers to a transfer of funds to a gold IRA from another retirement account, such as a 401(k). A rollover can also come from a traditional or Roth IRA.

A rollover allows funds to move between retirement accounts without any tax implications. If an investor withdraws funds from a retirement account otherwise, they may be taxed and penalized for the transaction.

A rollover tells the IRS that the funds were never taken out as income. They've been simply moved to another account where they can grow tax-free for the moment.

Knowing About Gold IRA Rollovers Versus Transfers

Investors may use the terms rollover and transfer interchangeably, but there's a stark difference between the two. Rollovers occur between traditional retirement accounts and new, self-directed IRAs. In contrast, gold IRA transfers refer to transactions between new and established self-directed IRAs. 

As investors familiarize themselves with these financial terms, it's easier to fund and purchase new assets for retirement. Investors end up with a diverse portfolio to serve them in retirement.

Getting Familiar With Gold IRA Types

Investors can break down gold IRAs even further by looking at different types. The most common type is the traditional gold IRA. Investors add pre- or after-tax funds to the account. At retirement age, investors take distributions in the form of physical gold or cash. They pay for any taxes at this point.

Roth gold IRAs operate a bit differently. All funds added to the account are after tax. After age 59-1/2, investors can withdraw the assets without being taxed or penalized. Investors have already been taxed on the income before it entered the Roth gold IRA, so there's no reason to tax it again.

The final gold IRA is the Simplified Employee Pension or SEP type. These accounts are geared toward self-employed individuals or small businesses. They operate with the same taxation process as the traditional IRA. Any withdrawals in retirement are taxed accordingly.

Rolling Over Funds to a Gold IRA

Starting a gold IRA takes a few more steps than traditional accounts. Begin with research into a gold IRA custodian. These individuals will be the overall managers of the account.

They work with investors to fund the account, purchase precious metals and ship them to a secure depository. Some online research can result in a handful of reputable names.

Once investors select a custodian and open an account, it's time to move funds into the new gold IRA. Either the investor or custodian can contact the 401(k) administrator to start the rollover process. Investors typically fund gold IRAs with 401(k) money, but it can be rolled over from other IRAs too.

A direct rollover of some or all of the account's funds will support the investor's next steps in buying precious metals. Ideally, the custodian guides this decision by pointing out the proper metals for investment.

These chosen metals should ship from a mint to the investor's depository. This secure location should be IRS-approved so that investors can take advantage of the tax benefits. Investors cannot take personal ownership of these metals until retirement.

Otherwise, they pay taxes and penalties. A reputable custodian should guide the investor through the years to optimize all purchases and shipments.

Analyzing Details of Gold IRA Rollovers

Rollovers aren't possible with all retirement accounts. As a result, investors should be aware of which accounts they own and if they're eligible.

These accounts typically qualify for a gold IRA rollover, including traditional IRAs, 401(k)s, 403(b)s, and 457 plans. 

Investors with other account types should check with their financial consultant for verification.

In addition, there can only be one rollover per year for a single investor.

How to Invest in Gold with a SEP IRA-SEP IRA

It's simply an IRS rule. Keep this fact in mind when rolling over any amounts into a gold IRA. Any other rollovers would have to be performed next year.

Investors who want to roll over funds from a current employer's 401(k) may not be able to do so. Verifying the rules on individual plans is necessary here. Most employers want employees to keep their funds in the 401(k) until they leave the company or retire.

Overall, rollovers from existing retirement accounts are attractive because they're always tax-free. They're simply moving from one account to another.

Pointing Out Gold IRA Rollover Drawbacks

Some of the main drawbacks to a gold IRA rollover involve fees. This type of account doesn't involve paper assets that are often reduced to a digital value on a computer screen. Gold IRAs require the physical shipping and storing of tangible assets. For this reason, investors will incur certain fees.

Primarily, the custodian charges account setup and maintenance fees. Investors should also expect storage fees charged by the depository. These charges are commonplace for any gold IRA, so investors should consider their impact on the overall returns as the gold matures.

Another gold IRA drawback involves liquidity. Storing and benefiting from precious metals requires time. Gold and silver rise in value over decades, not months. If an investor wants to liquidate the account before retirement, they may lose out on capital.

A gold dealer, for example, will cash out the precious metals at a lower cost than the current spot price. The key to gaining capital from a gold IRA is keeping the precious metals in the depository for many years. Cashing out at that point can offer lucrative results.

Managing Risks and Rewards of Gold IRA Rollovers

Every investment has some risk involved with it. Historically, gold and silver have risen in value over the years. This time frame, however, is measured across many decades. Investors should approach this type of investing as a long-term solution to market volatility. It's not a "get rich quick" scenario.

With this fact in mind, investors should invest part of their portfolio in precious metals. A percentage of around five to 10 percent is customary, for instance. Its main purpose is to diversify a portfolio.

When the stock market hits a low point, investors may see losses with their paper assets but not with tangible assets. The gold and silver support the portfolio in difficult times.

Managing the risks and rewards of gold IRAs also involves choosing the right custodian. With a reputable custodian and insured assets within an IRS-approved depository, investors have no worries about theft. They simply watch the assets gain value as they remain safely secured.

Examining IRS Rules For Gold IRA Rollovers

The IRS pays careful attention to IRA rollovers because of the tax implications. Investors can roll over funds from a 401(k) or other IRA into a gold IRA once a year. It's referred to as a direct rollover because no funds are ever actually withdrawn. As a result, no taxes or penalties are due.

If investors actually withdraw funds from a retirement account to fund the gold IRA, the IRS imposes a 60-day rule. As long as those funds are deposited into the gold IRA within 60 days, there are no IRS taxes or penalties. This scenario is called an indirect rollover. Most investors, however, seek out the direct rollover for peace of mind.

The Benefits of Investing in a Gold-Related IRA

As investors look at precious metals to buy for the gold IRA, there are additional rules to follow. The IRS only approves of high-quality coins and bars as investment choices. Purity levels are typically higher than 99.0 percent, for instance. A reputable custodian can help with these choices. 

Collectibles aren't allowed in a gold IRA. They may be valuable to the investor, but they don't qualify for tax purposes. Alternatively, secure these collectibles in a safe at home. They can be valuable outside the gold IRA.

Breaking Down the Differences Between Paper Gold and Physical Gold

Investors will encounter variations with gold investments. A gold IRA involves physical gold in a storage facility, whereas paper gold revolves around gold-backed assets.

For example, a gold ETF or Exchange-Traded Fund requires an investment in a mining company or other precious metals association. Investors receive some of the benefits regarding precious metals, but the funds are still reliant on the stock market. 

ETFs are traded on the stock market, which makes them just as vulnerable to economic instability as traditional stocks or bonds. Physical gold investments in a gold IRA won't be influenced by these financial dips. 

Another issue arises with paper gold regarding its financial backing. These assets can lose significant value if the company behind them has troubles. For example, a gold mine with several lawsuits against it might declare bankruptcy. Those gold ETFs will then lose value too.

Keep these facts in mind as investors compare physical and paper gold opportunities. There are important differences, which can negatively impact retirement portfolios.

Working on Main Considerations

As investors consider a gold IRA, they should look at certain characteristics. There will always be more flexibility with a gold IRA in regards to asset choices.

Precious metals can never be part of a 401(k), but they're an integral part of the gold IRA. Investors deserve flexibility with their retirement because every part of the portfolio translates into a secure future.

The 401(k) does have an advantage with the pre-tax dollars being funneled into the account, however. Investors must take this fact into consideration as they diversify with a gold IRA.

Their contributions might be a mixture of pre- and after-tax monies. Regardless of the funding type, any withdrawals from the gold IRA during retirement will be taxed accordingly.

One consideration that's quite apparent after opening the gold IRA is the fees. There will always be more fees for a gold IRA than a traditional IRA. At times, gold IRA fees might be nearly equal to the costs associated with 401(k)s, however. In the end, it all depends on the account.

Ultimately, investors have a chance to add to their wealth with a gold IRA. Researching the top companies in the industry is now the challenge. Take a look at some of the best gold IRA companies today.

Top 3 Companies to Work With

Our Top Pick - Best Customer Service

Goldco: Protect Your Wealth, Tax & Penalty Free

Goldco is a precious metals dealer that's been in business for over a decade. 

They have several celebrity endorsements as well as media exposure. In fact, Goldco has an A+ rating with the Better Business Bureau. 

This company offers a free kit about building wealth too. It appears to have a lot of insightful information. Alternatively, investors can read all about precious metals investments through the company's online articles. 

Goldco offers consultations regarding gold IRAs, but they don't provide custodians or depository storage. Contact them through the listed hotline to start any transaction, from opening a gold IRA to buying products.


Goldco has a lot of detail regarding precious metals pricing. From current pricing to historical data, this information informs investors and encourages future sales.

This company has also been in business for many years. Their experience shows as the company grows its customer base.


Goldco sells precious metals including platinum and palladium, but investors cannot browse through the platinum and palladium products online. A phone call is the only way to start a transaction. Some investors may want more transparency on the website. In fact, they may need to buy products over the phone without seeing them beforehand.

This company has a few complaints listed on the BBB website.  If investors are really interested in Goldco, a small investment to start with might be a good idea. They can see how the transaction goes before investing any further.

Augusta Precious Metals - Best Educational Webinar

Augusta Precious Metals is a dealer with plenty of celebrity endorsements. Investors are met with familiar faces on the homepage, which tells them that it's a legitimate site.

The dealer offers both gold and silver products as well as account consultations. 

Click on the "Gold IRA" link to find a process breakdown. It's refreshing to see both the preferred custodians and depositories listed on this page too. Augusta walks investors through the process so that they don't have to work with multiple people.

Most of the site has a lot of detail surrounding precious metals investing, purchasing, and market news. Additionally, they add links to their reviews across the Internet. This feature is helpful for anyone looking to research the company any further.


 Investors who want a personalized experience with Augusta will appreciate the hotline number listed on nearly every page. Aside from a live chat feature, contacting Augusta is largely through the phone.

The products may not have any pricing, but they have highly detailed descriptions. Investors will know what they're getting when they call to place an order.


Reading Augusta's "About" page leaves investors with many questions. There's no clear mission statement or founding story. Although investors can read about the CEO and other professionals at Augusta, that information doesn't provide much insight into the company's core values.

Augusta does have a precious metals price chart, but it's unclear how often it's updated. It doesn't appear to have a live feature either. Presumably, investors must search for this information on their own.

American Hartford Gold - Best for Bullion Purchase

This company has been highlighted on many media platforms, including Fox and Bloomberg. It's mainly a precious metals dealer and IRA consultant.

They stress the importance of saving for retirement and protecting those assets. 

Investors click on the "Gold IRA" tab to see information about account setup. AHG makes it clear that they don't perform custodial or depository duties. In fact, they list the companies they work with, such as Brinks and Equity Trust. These disclosures provide transparency for every investor.


AHG has a simple website that lists mostly IRA-approved coins and bars. For beginning investors, this simplicity is a welcome sight. This dealer encourages everyone to call for pricing and other information. It's the best way to learn more about their services.

This dealer has an A+ rating with the Better Business Bureau and several positive reviews. Although there are a few complaints, they're met with a response by AHG.


AHG has industry news on its website, which should empower the investor with current information. However, most articles are designed to instill fear in the investor. These articles use emotion to encourage precious metals purchases.

As a result, some investors may be turned off by this feature. Investing in precious metals is a legitimate retirement tool. There's no reason to create fear about the economy otherwise.

Additionally, AHG mainly relies on phone calls, email, and a contact page for customer correspondence. There doesn't appear to be a live chat option.

Investors who want to see online pricing must call or email the company with any questions. This process takes time away from precious metals research. Some price ranges would be helpful additions to the site.

Final Thoughts

Comparing gold IRAs with 401(k)s gives every investor an edge with their savings. Continue with portfolio diversification so that any market changes will be met with some financial protection. Retirement is the time to enjoy those savings.

Remember to read our list of the Top Gold Companies.

>> Click HERE to read our Best Precious Metals IRA Companies list <<


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