Should I Convert My 401k to Gold?

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Deciding what to do with a 401k comes with a few considerations, not the least of which is what to do with it if you convert it. We wrote an article on whether to convert a traditional IRA into a Gold IRA. So we’ll touch mostly on the considerations regarding 401k accounts.

Then we’ll briefly talk about the benefits and risks of a Gold IRA. Finally, we have a few FAQs at the end, in case you still have questions.

Should I Convert My 401k At All?

This question can plague people who have a 401k. It can seem like we’re trapped in our company-based accounts, and don’t know what to do about it. Some good news, right at the top, is that everyone has the freedom to move funds from one accredited retirement account to another. That means you can move your 401k. That may, however, come with consequences.

One thing to consider is whether your 401k is officially tied to your compensation. Like any insurance program you may be enrolled in through your employer, you may face payroll or other contractual obligations if you decide to unenroll from your company’s 401k. You should contact your 401k administrator for details.

Second on your list of considerations is: have a plan. When you do have the ability to roll your 401k over, you will have a limited amount of time (usually 60 days) to move your money into another authorized account, or the IRS could tax it and penalize you.

The third thing to consider is how well your 401k has been doing. Some 401k programs are really hard to beat. Especially if you’re still employed with the company that offered it in the first place. After all, if your company is matching your 401k contributions, you probably won’t get that same match from them if you break away into your own IRA.

Whether you’re still with the company or not, you should look at the performance of your 401k. And don’t look at the last few months. Look at how your investments have done over the whole length of your holdings. Then look around at some common rates of returns for the other investments you’ve been thinking about.

A qualified financial advisor should be upfront with you about what their clients have been seeing by way of return on investments over the same period you’ve had your 401k. If your 401k is doing much better or much worse than that, your decision on whether to convert it will be a lot easier to make.

If I Want to Convert, is Gold a Good Option?

We covered this question in greater detail in another article. Here we’ll cover the broad strokes.

Among the benefits of gold are that it can protect you against inflation. Over some periods of market history, gold has done very well against inflation of currencies. This means your investments in gold could be safer than some money accounts. Another benefit is that you can invest in other metals, like palladium, platinum, or silver. All of this means you could end up with a much more balanced portfolio than you have now.

But there are some negatives to consider. For one, gold doesn’t earn money. It’s a commodity, like beef or cotton. That means to make any money off of it you need to sell it. In the case of a Gold IRA, you will also be paying custodians of your gold. The IRS does not allow you to house it or purchase it yourself. That means you could be paying fees at every stage of the investment and withdrawal process.


Offering financial advice is difficult, because every person’s situation is so different. One person may have stocks and bonds that have done very well, and telling that person to move on to gold could be disastrous. On the other hand, nearly every financial advisor recommends having diversity of assets, with everything from stocks to land to gold in your portfolio.

What we can recommend before moving on from a 401k is to track your existing accounts and see what the data says. Next, shop around with Gold IRA providers. Compare numbers, and make the right decision based on your goals. 


What if I’ve Already Left My Employer?

If you’ve already left your employer, then you’ve probably already made arrangements for how to handle your 401k. If you cashed it out according to IRS rules, then you can do whatever you want with the money. If you still have the account, you still need to contact the companies 401k administrator to find out how to convert it.

What’s the Biggest Difference Between Gold IRAs and My 401k?

The biggest difference is that your 401k is probably matched by your employer: for every dollar you contribute, your employer matches some portion and adds it to your investments. In a self-directed Gold IRA, you will be on your own.

Can I Cash Out a Gold IRA?

Gold IRAs follow the same withdrawal and liquidation rules of all other IRAs. That means if you withdraw any funds before retirement you will face penalties, unless you’re transferring those funds to another qualified account.

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