Last Updated on November 14, 2023 by Ben
Investing in Gold Through a Solo 401k
Investing in Gold in a Solo 401(k) is an excellent opportunity for investors who are looking to broaden their portfolios. This is also advantageous because it’s tax-deferred. This can be accomplished by buying shares of physical bullion or ETFs (Exchange Traded Funds).
Top 5 Gold Companies of 2023 at a Glance
#1 American Hartford Gold: Editor’s Choice – Best Price for Bullion (4.9/5)
American Hartford Gold is the Editor’s Choice for the Best Bullion Price, with a 4.9/5 rating. This organization provides competitive Gold and silver bullion pricing and strongly emphasizes customer service and education.
- Competitive Gold and silver bullion pricing
- Excellent client service and assistance
- Resources for comprehensive investor education
- Better Business Bureau (BBB) A+ rating
- A $10,000 minimum investment is required.
- Transactions may take several days to clear.
- There is no online price list.
- Cannot ship outside of the United States
American Hartford Gold distinguishes itself by providing reasonable Gold and silver bullion pricing, ensuring customers get the most bang for their buck. Furthermore, their outstanding customer service and assistance, including a 24-hour hotline, demonstrate their commitment to assisting customers in achieving this.
Furthermore, American Hartford Gold emphasizes investor education, offering a wealth of materials to help clients understand Precious Metals IRAs and make sound investing decisions.
#2 Augusta Precious Metals: Runner up – Great Gold IRA Company Overall (4.8/5)
Augusta Precious Metals is a top contender for the Best Gold IRA Company, with a 4.8/5 rating. This family-owned business has gained recognition for its transparent fee structure, money-back guarantee, and exceptional customer service.
- Clear fee structure
- Money-back guarantee
- Wide range of gold and silver products available
- BBB A+ rating
- Price protection policies for first-time Gold IRA owners
- Limited options for palladium and platinum alternatives
- The significantly high minimum investment required
Augusta Precious Metals distinguishes itself with its transparent pricing structure, ensuring clients know what charges to expect when opening a gold IRA account. The organization’s money-back guarantee highlights its commitment to customer satisfaction.
In addition to these benefits, Augusta Precious Metals offers a diverse range of gold and silver products and price protection programs that assist first-time gold IRA owners in navigating the market with low risk.
#3. Goldco: Outstanding Buyback Program (4.6/5)
Goldco receives 4.6/5 for its Great Buyback Program, which allows customers to sell back their precious metals assets at attractive prices. The organization is notable for its vast investor education resources and top-notch customer service.
- Extensive investor education
- Transactions are processed quickly.
- Best Gold and silver prices
- Excellent buyback program
- Better Business Bureau (BBB) A+ rating
- Customer Service in White Gloves
- Fees vary according to the bundle selected.
- Minimum investment of $25,000
Goldco distinguishes itself by its Great Buyback Program, which provides clients with competitive pricing when it comes time to sell their precious metals investments. Additionally, the organization provides substantial investor education materials, such as webinars, eBooks, and blog articles, to assist clients in making informed investing decisions.
The white-glove customer care provided by Goldco guarantees that clients receive customized attention and support throughout the investment process, resulting in a favorable overall experience.
#4 Red Rock Secured: Best Gold IRA at Home (4.5/5)
Red Rock Secured’s Best at Home Gold IRA receives a 4.5/5 rating for its personalized investment consulting, education, and excellent customer service that helps clients achieve their financial goals.
- Prioritizes client satisfaction through individualized services
- Excellent customer service and assistance
- Tailored investing advice and education provided
- Focus on client success and long-term financial objectives.
- Transactions and shipping are limited to the United States only.
- Fees are not disclosed on their website.
- No pricing information available on their website
Red Rock Secured’s Best at Home Gold IRA stands out for its commitment to personalized investing consulting and education, offering clients specialized guidance and resources to make informed decisions.
Moreover, the company’s exceptional customer service and dedication to client success make it a credible option for anyone interested in investing in a Precious Metals IRA.
#5 Birch Gold Corporation: Excellent Overall Staff (4.2/5)
Birch Gold Corporation earns a 4.2/5 rating for its Excellent Overall Staff. The company is well-known for providing easily accessible information, particularly on fees, and offering a vast product library.
- Readily available information, notably regarding fees
- Large selection of palladium and platinum products
- Flat-rate pricing suitable for frequent and bulk buyers
- Accepts custodians and depositories not affiliated with them
- Lengthy transaction clearing process that could take up to a month
- Flat-rate pricing is not optimal for infrequent buyers.
Birch Gold Corporation is committed to providing easily accessible information, including charges, enabling potential clients to make informed investment decisions. The company’s extensive product library, encompassing palladium and platinum alternatives, and flat-rate pricing structure cater to frequent and bulk buyers.
What is a Solo 401(k) Plan?
As the IRS website says, a Solo 401(k) is not a different type of 401(k). Instead, it is a plan anyone can use who owns a business and has no other employees. You can still get tax benefits with this Solo 401(k). Before 2001, self-employed people were limited to three types of retirement plans: profit-sharing plans, Keogh Plans, or Individual Retirement Accounts.
The Economic Development and Tax Relief Reconciliation Act of 2001 introduced a specific type for those self-employed workers known as Solo 401(k)s.
A solo 401(k) is a retirement plan for people who have their own businesses. It has the same rules as retirement plans for other jobs, but there are two differences. One difference is that an employer/owner and his business are not subject to the expensive rules of ERISA. Second, there can’t be any other company employees who are full-time (1,000+ hours worked per year).
Contributions to Solo 401(k) plans are a little different from other retirement accounts. The only account owner is the employer and not the employee. This means that as of 2014, employee beneficiation can only be $17,500 ($23,000 for 50+ year old). Any additional contributions must be considered “employer” contributions. In the end, these distinctions are important. The IRS says that you can’t have more than $52,000 in employee and employer contributions combined.
With a Solo 401K, you do not need to use a specific person or bank as the trustee. Instead, you can select any bank or financial institution. This is good because it means that you can invest in other things like real estate, precious metals, and more. In addition, under some circumstances, Solo 401(k) plans can invest in life insurance. This is something that IRA plans cannot do.
Solo 401(k)s are a sort of retirement plan. It is easy to use and has high contribution limits. There are two major drawbacks: it can be hard to find qualified professionals, and Solo 401(k)s cannot accept rollovers. A lot of people do not have access to the 401(k) retirement plan. It can be hard to get information about this plan, and it might take a lot of paperwork to figure out what you need.
A Solo 401(k) is a retirement account designed for people who are self-employed and have no employees. A Solo 401(k) has many of the same benefits as other types of 401(k). The difference is that it only allows one person to be the owner, not a group like other plans.
A traditional 401(k) is offered by a company that allows employees to save for retirement. The company will contribute to the employee’s account, and sometimes the employee will also contribute. With an Individual 401(k), business owners can contribute both as an employee and as an employer, maximizing retirement savings and business deduction.
If you are married, you can contribute to your retirement account. If one of you works for the company, then the other can also get a contribution from the company if they contribute as an employer. Additionally, if you have a business with more than one owner, then you can also use the plan. All the owners will follow the same set of rules.
Solo 401(k) Plan Rollover Rules & Limitations
A Solo 401(k) is a retirement account. It can both accept rollovers from other accounts and be rolled over or transferred into another type of retirement account. Plans that allow rollovers are not all the same, so it’s important to have a plan set up before you start using the Solo 401(k).
There are no tax penalties if you do it according to IRS guidelines:
- After you do the Solo 401k rollover, you have only 60 days to finalize the process. You will not be able to take out any of your money from retirement funds if you do not finalize it in 60 days and go over the 59 1/2 year age limit.
- You can rollover one IRA to another in a calendar year. This is called a rollover IRA. It applies to separate all the IRAs that you own in your name, and it starts when you get money from an IRA and you put it into another IRA.
- You cannot use the money in your IRA to buy investment assets until you have it in your account. This is because you are not allowed to invest during a period of time, such as when a distribution is being processed.
When considering a retirement account, it is advisable that one only selects “direct rollover.” When a direct rollover is selected, the money never enters your hands. Instead, the finance is sent straight to the receiving account itself, and, therefore, errors are much less likely. Direct transfers are often considered safer and more efficient than indirect ones.
If money is in your retirement account and you want to take it out, you don’t need a reason. You can just take it out. If the money was in another retirement account before it came to your account, then that isn’t a contribution by the participant or employer. It’s just money that was brought into this plan from somewhere.
Most of the time, when you are old, people take your money. But a Solo 401k plan lets you save some of that money and then have it taken from your account later on without any age requirement or plan service rules.
There are ways to get money out of your 401(k). For example, you can do a rollover into another 401(k), a governmental 457(b) plan, or into a 403(b) plan. You can also pull the money out of an IRA (except for Roth IRAs) and put it into your Solo 401(k).
There is no obstruction to how much you can roll over or Transfer.
The solo 401k contribution deadlines depend on your self-employed business type and your business tax return due date. Solo 401ks usually have a deadline of the last day of the year plus any time extensions you file for yourself.
Solo 401(k) Plan vs. 401(k) vs. IRA vs. Other Retirement Accounts
Retirement is one of the foremost things we need to save for. Moreover, it is a goal that we should try to achieve. The type of account you choose can help you with this goal. There are two ways to save money for retirement.
One is a 401(k) that your employer can give you, and the other is an IRA that you establish on your own. If you have one of these ideas, the benefits will help make sure that you have enough money in your golden years.
When employers want to give people a way to save money for the future, they might offer people a 401(k). This is a type of account that saves money. Typically, people contribute a percentage of their salary to their 401(k), and the employer might also offer matching contributions up to a specific limit. Sometimes an employee can contribute to SEP or SIMPLE IRA accounts if they work for a company with 100 or fewer employees.
If you want to set aside money, you can open an IRA. But IRAs don’t have matching contributions from your employer. They also have different limits for how much money you can put in and what tax advantages they have.
Both IRAs and 401(k)s grow tax-free. This means that there is no tax on the interest or earnings over the years. But when you withdraw from these accounts, you will probably be taxed at your then-income tax rate in retirement. There are IRAs where withdrawals are not taxed in retirement. You cannot take out money from a 401(k) or IRA until you are 59½ years old.
If you do, then the IRS will charge you a tax penalty. Unless there is an exception to this rule for your financial situation, this law will apply to the specific retirement account you have and how much money is in it.
Types of Precious Metals Eligible For Inclusion in a Solo 401(k) Plan
A financial institution is a person that will keep your money. They should be able to choose which investments you can use your money for. The limitations they put on you may not let you buy all types of gold, so make sure the one you select has the right investment options for what you want.
In theory, a Solo 401(k) can invest in the following:
- Individual stocks
- Individual bonds (corporate and government)
- Certificates of deposit (CDs)
- Mutual funds
- Exchange-traded funds (ETFs)
- Life insurance
- Real estate
- S corporations
- Precious metals
You can fund in gold bullion through a Solo 401(k) plan, along with many other investments. But some trustees are not able to do these agreements. So if you have a Solo 401(k) and don’t have a trustee who can make the purchase, you should either roll over into a self-directed IRA or open one.
If your Solo 401k or Individual 401k invests in precious metals, precious metals may be a good investment. They are especially good when you want to protect yourself from inflation. The following metals are Solo 401K investments: gold, platinum, silver, and palladium. These metals have a fineness of 995 parts per 1,000 or more.
While many gold bullion coins provided by governments worldwide satisfy the fineness standard, the succeeding does not and are therefore disallowed: Belgian 20 Franc, British Britannia, Franc 20 French, Austrian 100 Corona. These are just some of the dismissed precious metals.
Investing in Physical Gold (Bullion) vs. ‘Paper Gold’
You will own the metal bars when you buy them. They will be in a safe and secure storage site that belongs to you. You can get them any time. There is no risk of misplacing your money because only one person has the metal bars.
However, you can still obtain exposure to the gold market by buying stocks of companies that mine gold. These companies have their stocks listed on exchanges like the TSX or NASDAQ and include such companies as Newmont and AngloGold Ashanti.
There are some gold ETFs and mining index funds that dispense more diverse exposure to the latent asset, such as the Gold Miners Index (GDX) or the BUGS Index (HUI).
You can buy gold with stocks, or you can buy it with money. With stocks, they are riskier than if you have the gold. It is also more volatile and has more erratic price swings than physical gold. But paper gold is also risky because there are other risks associated with stocks apart from just volatility.
Companies involved in excavate and exploration are subject to very strict state oversight and regulatory scrutiny.
Cost of Production Risk
Mining and exploring are expensive. It can be hard to find money, which is why companies need a lot of it. There are also some problems that you might have, like equipment breaking down. That will make the company spend a lot of money on fixing things.
The company might change management. If they do, then there is a risk that the new managers will be bad, or the company will be bought by someone else who will make it worse and mess up.
Fiat Currency Risk
It is risky to trade with paper gold because it buys and sells with money. This money can change in value. If something happens after you buy or sell the money, then things will be different.
Why Roll Over a Solo 401(k) Plan into a Precious Metals IRA?
A Solo 401(k) can give you many benefits for your retirement. But there are countless other things that you have to do, like reporting contributions and making sure that the money isn’t too high. A self-directed IRA is unlike a traditional IRA. With a self-directed IRA, you can do anything with your money.
If you wish to invest in gold bullion, and your Solo 401(k) does not allow it, you can rollover your money into a new IRA. This will be tax-free and will give you more freedom in choosing what investments to make.
The Best Ways to Purchase Gold in a 401(k)
In general, you cannot hold collectibles like art, rare books, antiques, and precious metals in qualified retirement plans or IRAs. But an exception is made for certain forms of gold, silver, platinum, and palladium. To qualify, these precious metals, such as coins, rounds, and bars, must meet certain standards for size and quality.
If you want to purchase, store and sell gold and other precious metals, you need a plan trustee. The trustee will help you arrange these things. You will need a metals broker or dealer who offers self-directed 401K accounts and IRAs. It is not very normal for a qualified employer plan to make a metals broker the plan trustee.
Self-directed precious metals IRAs are a way to save money. You can open one with a dealer who is approved by the government. Once you have opened it, you can perform a direct rollover from your 401(k) to your self-directed gold IRA and use that money to buy the permitted forms of gold and other precious.
A direct rollover does not cost taxes or a penalty for early withdrawal. The IRA limit is less than the 401(k) limit, but it does not hurt to do a direct rollover if you want to save money. For example, if you want to own gold in your retirement account, it is better for you to have a precious metals IRA. You can’t have employer contributions in an IRA, which means that 401(k)s are better than IRAs.
Final Thought – Investing in Gold Through a Solo 401(k)
A Solo 401(k) is a good way to save for retirement. But there are benefits and drawbacks. You have to be attentive when you use it, or else you will get a penalty or fee.
If your Solo 401(k) does not allow you to invest in IRS-approved gold bullion, then a rollover to a new precious metals IRA would be ideal. This conversion is tax-free and lets you invest in greater types of assets than what is available if the money was left invested in the Solo 401(k).