401k Rollover

Hedge Against Losses

401k rolloverWatching the performance of a 401k can feel frustrating. You don’t see the growth you expected nor do you have all of the options to counter the losses of your hard-earned retirement savings.  It is ironic, because these funds were meant to be sanctuaries for the money of hard-working people. Instead, they have not beet safe-havens for retirement. Only compare accounts today to 10 years ago. Many, after 10 years, actually have less to show for. The recent economic downturns have decimated their fortunes, literally overnight. A 401k rollover may help recover what was lost.

 

Hedge Against Inflation

rolling over 401kFurthermore retirement plans perform abysmally when you take inflation into account. Many investors are fooled into thinking that everything is okay with their retirement because their 401k is keeping up with the market or nearly so. The problem is that the market’s gains are largely illusory. With inflation running away as it is, any retirement fund is basically a house built on sand. The flood of inflation comes and it will erode away the base of this house of wealth.

This is a disturbing thought when you are planning on these funds being your only source of income after you stop working. Most people think about their retirement years with leisure and relaxation in mind. If they are not careful and attentive to their investment needs, those dreams could turn into nightmares. The average 401k is simply not going to be enough for many. This is why a 401k rollover is a popular option for many.

 

401k Options

Even if it a 401k does do its job, there are much better options out there for people hoping to retire. Long-term investments in precious metals can do a great job in preserving wealth by keeping pace with inflation. One precious metal, silver, is capable of doing much more.

Thankfully, many people with 401ks have options in front of them. This is especially the case when they change jobs. The average worker changes employers as many as a dozen times in life. When these changes happen, workers with 401ks are either faced with the option of switching to their new employer’s plan or letting their old 401k hand semi-uselessly while they seek a job that has a retirement plan. These workers are in a unique position to rollover their 401k funds into accounts that will do a better job at preparing for a retirement future.

 

401k Conversion into an IRA

Most people who have had a 401k are aware of the penalties associated with deviations from their plans. The 401k was devised in an era when people were still planning in working for the same company for their entire life. For better or worse, those times are gone and people often end up with a 401k leftover from an earlier job.

When they join a new company that offers its own 401k, it is common for people to rollover the old fund into a new one. If they never plan on taking a job with such benefits, they may be tempted to withdraw the old 401k and simply take the tax hit and penalties in exchange for the chunk of ready cash. This is tempting, but it only delays any opportunity that they will ever have for retiring.

 

Investment Retirement Account (IRA)

People with old 401ks sitting around or about to merge into a new 401k can also direct their funds into an IRA. These private funds are often seen as much more lucrative than 401ks. They are not restricted to the small number of investments which 401ks use. Often, a 401k will focus a lot of investments into the company’s own stock and a limited number of other assets. This is why some have opted for a 401k rollover to a Roth IRA.

An IRA offers a much broader scope of investment that has a greater chance to perform well. Best of all, an IRA can invest in precious metals like silver. Some IRAs are very open to this kind of investment and will allow much more than the standard investment in silver coins minted by the United States.

 

Why Rollover a 401k into Silver?

Silver is an ideal target for your IRA investments once you rollover your 401k funds. Many people are more attracted to gold as an investment because it always has a higher price tag per ounce than silver. This high price tag is not necessarily an assurance of earnings, though. Even if gold does move ahead, that high price tag prevents you from making exponential earnings.

Essentially, the idea is that the higher the market value of an asset, the harder it is for it to do something such as double its own price. Silver, since it is usually worth much less than gold, can do that much more easily. Many people make more money on their low-priced investments than they do on those with unit high prices.

 

Find a Precious Metals Custodian

When you have decided that you want to go ahead with a 401k rollover, begin looking at IRA custodians. Not all of them are open to broad investment in precious metals, though almost all of them will at least offer the American Silver Eagle as a potential asset choice. If you really want to take advantage of the possibilities with silver, try to find a custodian that will allow you a lot of leeway with regard to investments in precious metals.

Do not just look at their offers. Also consider the fees charged by the custodians. These fees can hurt your earnings. You especially want to know how much it will cost to make a change in your allocation settings if you think that you might make multiple requests for such changes.

Once you have found the ideal IRA, open an  account with the custodian. Now go to your old 401k provider and request a rollover. This is not a surprising move and will not require much explanation. When they write a check, make sure that it is written to the order of your new IRA custodian. If the check is written to you, there is danger that the government might interpret this as earnings and tax you on it.

 

Investment Options with Your Silver IRA

Once your funds arrive in your silver IRA, you can decide exactly how to invest them. At the very least, your custodian will permit you to buy American Silver Eagles with your retirement savings. Some other custodians will permit a much broader scope of investment and allow you to buy various forms of physical silver as well as stocks and even exchange-traded funds (ETFs) that are based in silver.

Physical Silver

how to rollover a 401kIf you buy physical silver with your new IRA funds, then neither you nor your custodian will be able to possess them immediately. A third-party must be put in charge of the storage of these materials. There are many companies that do this. However, this will cost money and some look on this as a drawback for physical silver investment with retirement funds.

The one undeniable bonus of these investments is the result when you retire. The custodian of the account will arrange for you to receive all of the precious metal in a shipment as soon as you retire or you can have it sent directly to a storage company.  Then you can decide how you would like to leverage your investment.

Electronically Traded Funds (Silver ETFs)

Due to the inconvenience of physical silver investment, many people put their IRA money into ETFs. These have the advantage of being easy to liquidate. They also avoid taxation better than stocks. However, there is not the security of it having a direct backing of the physical metal itself.

Choosing a 401k rollover into silver is the best investment choice to make, especially in light of the historic precedence of this precious metal. No matter how dark the future may seem, there is always a silver lining in that cloud.