A 401 (k) can best be described as an employer sponsored plan where employees save for their retirement. It is a defined contribution plan with some differences compared to defined benefit plans.
While on a defined benefit plan, a retiree receives a fixed amount of money each month. This amount is based on the income, years of employment and age of the retiree. The employer essentially assumes the risk by contributing for the employee under such a plan to meet future obligations. In the defined contribution plan, the employee bears the investment risk.
In 1997, the Tax Payer Relief Act was passed and made it possible to invest in precious metals in individual retirement accounts. Silver, gold, platinum and palladium are acceptable metals. Gold is the most popular type of investment of the four metals.
There are a number of reasons why 401 (K) gold is a wise future investment. The total amount of silver in a country’s market must not exceed the country’s gold value. Gold limits the amount of silver a country can print because it is a limited resource. The advantage of a gold account is that with the loss of value of the currency and the decrease in the value of stocks, the price of gold increases.
This is the main reason why individuals decide to invest in gold in their individual retirement accounts. It offers them financial stability once they retire. Gold offers such a guarantee because its value remains high and it will continue to be a finite resource.
When funding a 401 (K) gold to invest in gold, simply transfer from your current 401 (k) or corporate retirement account. One of them receives a certified custodian to guide him through the process. Investing in gold does not necessarily mean buying gold, because as an option one can buy the available gold mining stocks.
The most important part in making an investment in 401 (K) gold is the mandatory opening of an account with an IRS accredited custodian in order to hold your investment in IRA gold. There are prohibitions on the personal handling of gold by the IRS because one is unable to provide insurance for the risks facing the gold. It should be noted that not all gold coins comply with IRA accounts.
To be sure, you have to invest in gold bars that contain 99.9% purity. You can also invest in coins like Gold Canadian Maple Leafs, Australian Nuggets Kangaroo or American Gold, Austrian Philharmonics, Silver and Platinum Eagles.