I start a new job November 19. The new company has a 401k plan. My current 401k is at $5600. Would it be a good idea to cash it in and purchase gold and/or gold mining stocks? I want to diversify my investments. I do not currently own gold. What would my total taxes and penalties be if I withdraw?
The taxes and penalities would be heavy, works out to around 40% I think all told, depending on the type of account. There are gold based IRAs you can roll it into I believe, if that’s what you want to do. That would allow you to keep the full amount, have a gold based IRA, and use your current company’s 401k and match if they have one to build a second retirement account, which you can also roll over when the time comes, or do whatever else you’d like to do with it.
Ah. I don’t know why I completely forgot about gold-backed IRAs. I think I’ll do that. My current 401k is with Wells Fargo. What companies should I consider for the gold-backed IRA? Thanks.
Here is what I do:
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Add the minimum to your 401K that will include a company match.
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Open a Roth IRA some place and focus on miners and other commodities.-This is the dubious part as there is an ENORMOUS risk of government who authorized this CAN AT ANY TIME start taxing these accounts.
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Takes whats left and buy gold and silver. Please be careful about paper gold and silver as there could be huge counter party risks and be careful about stroring gold or silver in the banking system.
Yeah, I just realized that I would like to be in control of the gold rather than pay someone else to take care of it for me. I could only buy maybe two ounces so it’s certainly manageable on my part. It would be nice to have gold in my possession should it hit the fan one day.
Cash in your current 401k and buy gold.
do what Bogart said with the new company 401k.
do what Bogart said and buy gold and silver with the rest of your savings.
if I recall correctly, storing physical gold in an ira or 401k is onerous and complicated. Obviously if this were true you would find out when you went to do it, so this isnt advice as much as conversation. I heard it sucks, dude.
Yeah, I came to that decision. I’ll just set aside 40% for potential taxes for next year. You have to find a boullion supplier and then arrange everything with the 401k or IRA provider.
Apparently, I can redirect my current Wells Fargo 401k balance. Any recommendations? I can adjust it by percentage.
Wells Fargo Adv MMarket Fund - Service (default fund)
Wells Fargo Adv Total Ret Bond Fd - I
Loomis Sayles Strategic Inc A
Wells Fargo Adv Asset Alloc Fd Admin
Oakmark Equity and Income Fund (II)
T Rowe Price Retire 22 (R Class)
T Rowe Price Retirement 23 (R Class)
Davis New York Venture Fund (A)
Wells Fargo Enhanced Stock Market Fund N
Thornburg Value Fund (R3)
Delafield Fund Inc ‡
Davis Opportunity A
Thornburg Core Growth/R3
Aston/Tamro Small Cap/N
Federated Kauf Sm Cap A
Wells Fargo Adv Global Opp Fd - Admin
EuroPacific Growth Fund (Class R-3)
Wells Fargo Adv International Equity I
Franklin Floating Rate Daily Access Adv
Lord Abbett Short Duration Income A
PIMCO Total Return Fund (Admin)
Russell Emerging Markets E
Harding Loevner Emerging Markets
I would not start a new 401k at all, and in fact I refused to open one myself. This may be dependent on your age, however. If you can retire in the next few years, it may be appropriate to at least get the company match. If you are 30 years old, though, I wouldn’t open it at all. As has been eluded to previously, the government can and will change the rules on you before you turn 60. They will tax it, they will confiscate it and replace it with treasury bills, whatever…Just don’t expect 30 years from now for things to be the same.
If you are going to cash your current 401k in, do all your research. There are a few instances you can cash them in without getting penalized. For example, payment of student loans or down payments on a first home, I think. Perhaps you could knock out a 5000 dollar student loan and then use the money you would have used to make monthly payments on that loan to buy silver. That would bypass the 40% hit.
I’m 28. None of the penalty-free early withdrawal situations apply to me. If I cash in my 401k, I’ll be paying 25% in fees and taxes. I would immediately buy gold with that. I don’t think I shouldn’t open a new 401k, especially if the company matches it. If I don’t, how else should I plan for retirement? Are the Wells Fargo emerging market funds any good?
5600 is probably enough to consult a specialist on your options.
I was actually criticized by my older brother because I refused to open a 401k account (I am 23 years old). My reasons for this is because when I pointed out to him the savings would be inflated away in value. Also I pointed out about how 401ks were confiscated by the Govt in Argentina some years ago.
Nonetheless he continued to encourage me to open a 401k especially that “I’m young” and sucks his teeth at me in a very vexing manner when I point out my concerns for someone my age. Also, I would be wary around gold/silver stocks. As Doug Casey explains in his videos most minin companies are crappy and fail. Lol I have little experience around stocks but it’s my experience so far that most don’t actually produce the precious metals. I most cases this is because of Govt regulations and R&D related problems.
With $5600 you would not be able to buy hardly any physical Gold (could have back in like 2000). I would instead go for physical Silver, I am of course assuming you don’t have the means to stockpile a significant amount of Gold, most people don’t. Fortunately Silver is a viable alternative.
No one on an internet forum can know the specifics of your situation and offer specific advice. That would be reckless to do so. From my personal point of view, and I am 30 years old, it is not wise to lock up my money for 30 additional years. The reason I believe this is because I think with 100% certainty that the dollar will collapse before I turn 60. What does that mean for our 401k? Your guess is as good as mine. I don’t think it will be pretty though, and for that reason, I value liquidity, immediate access to my money, to be a higher priority than a company match.
How am I planning for retirement? First, I am paying off my student loans because those are non-discharable upon bankruptcy. I will owe the gov. for the rest of your life. Second, I have physical precious metals. You can also open an account at Scottrade and buy any stocks you want for $7. So you can still plan for retirement without a 401k. You are just sacrificing that company match for the security of liquidity.
As for Wells Fargo funds, I have no idea. I would have to read the prospectus and see what is held in the fund. Emerging markets are extremely risky with the way global markets are now.
aiser - i would disagree with the last part. It really doesnt matter how much gold you have. you arent any wealthier holding 5600$ in silver over 5600$ in gold. the real question is what is the demand levels going to be and production possibility of the metals. I think the production of silver can grow a lot faster over the production of gold (i havent done anyresearch…so correct me if im wrong in assuming silver is a less scarce resource). therefore you will have higher returns with your gold investment simply from the inflation of silver hitting the market. Though i asked in my thread opinions on ‘should someone invest in silver over gold’. but investing in silver simply because its ‘sexier’ to hold more ounces would be a wrong reason to invest.
A quick note on mining stocks. Remember, the reasons we expect for gold to increase in value, such as inflation or hyperinflation, are also reasons that cost mining companies more money to extract gold. What I’m saying is if we have hyper inflation, you can bet that the energy required to mine gold, the wages paid to labor, etc.. are also increasing. It may not be as profitable as some believe. Not saying it is bad by any means, but just because gold shoots up doesn’t necessarily mean the mining companies will be as successful.
Well, I too expect it to hit the fan one day. I think we will live in an entirely different world when we’re both in our 60s. Right now, I would like the ability to jump ship in a relatively short amount of time to go somewhere else if and when it gets bad enough. If I do my own investment in stocks and such, I can cash that in much easier and more quickly than with a 401k or IRA. However, if I focus primarily on precious metals, I don’t think that I would lose any money by retirement. I guess I need to look at the long-term trend of precious metals, and gold in particular.
@Grant.W.Underwood Perhaps its a taste of quantity I believe. While true that $5600 in Silver would not make you any wealthier in $5600 of Gold. the gold price last I checked is $1,723.00 and silver $32.56 http://www.monex.com/liveprices. Back in 2000 it was around $250. I would rather buy 170 pieces of Silver, as opposed to 3 pieces of gold with just $5600 dont you agree?But that’s relative to $USD which has an intrinsic value of 0 due to being fiat?
Edit: At some point $5600 wont be able to buy any Gold perhaps. ut perhaps some amount of Silver. Also, yeah Silver is harder to come by since it is a less commoly found resource. Then there is the fact that Silver has more industry related uses then Gold. IMO I think Silver at some tipping point may sky rocket in price.
I think you’re right. However, I wouldn’t have $5600 if I cash in my 401k. I would have more like $4200. I could buy an ounce or two of gold and then the rest in silver. In the long run, I don’t expect to lose money at all. A stock can go to zero, a company can go bankrupt, etc. I would always have some value in my possession. Wealth would be secured in physical reality.
Another simple question. I can transfer my 401k into an IRA and invest in the following funds. Of course, it will be denominated in USD. If and when the dollar collapses, will my investments be worthless even if the markets remain strong and grow?
Wells Fargo Advantage Diversified International Fund – WIEVX
Wells Fargo Advantage Asia Pacific Fund – SASPX
Wells Fargo Advantage Specialized Technology Fund – WFTZX
If the dollar collapses, the purchasing power of each dollar goes down. So the question you really are asking is, will these funds accumulate dollars faster than the fall of its purchasing power?
Like another commenter before, I iniitally opted-out of my company’s 401k(-like?) program. For many of the same reasons, funds were dollar denominated, many in treasuries/bonds, I’d rather store money in gold/silver, etc. I aslo got the “are you crazy?” responses from my family, some who studied finance in college, and they all said I should invest the minimum for the company-match.
I figure, if the dollar loses half its purchasing power, it simply wipes out the “free” money given to me in the form of the company match. This personally was not enough of a warm-fuzzy to go a head and participate. So I looked closer at the terms, of contributions and withdrawls.
Appearently, in my company’s 401k program(not sure what your’s says), I can contribute on an after-tax basis. Company still matches the contributions (money that should have been mine anyway), with no penalties. The Kicker here is that I can withdrawl the after-tax contributions only, anytime, for any reason, no questions, no penalties. The only drawback, is it has to take equal percentage of gains (if any exist) on the after-tax contributions. These gains are themselves are taxable, as ordinary income.
Thus, my strategy is to contribute the bare minimum required to get the maximum company match. Yes, company match funds are tied up until I retire, and who knows how the rules will change in the future, but the alternative is a guaranteed no match money. Every couple of months, I withdrawl my after-tax contributions (w/gains if any) and then re-invest them in my own personal investment accounts. Where I can invest in foreign securities denominated in foreign currency, or into phsical gold/silver.
I pay a minimum penalty on the withdraw of the gains, and have a minimum risk of the after-tax contributions still invested in the 401k. But for the most part, I can invest the way I want, and still get the company match, which may or may not be there when I retire.
My suggestion, would be to look closely at the terms of your 401k. Can you make after-tax contributions and withdraw them penalty free? If so, that would expand your investment opportunities. Otherwise, I don’t know if the company match would be worth having large sums of your savings in a restricted numer of dollar denominated funds managed by someone your employeer choses.