Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

May 1, 2013
How can I reinvest my 401(k) plan from a previous employer?

Q: I have a 401(k) from a previous employer, and I would like to transfer it to a financial vehicle where I would have some control of where the money is invested, such as precious metals, ETFs, etc. How can I do that? Do I need to deal with a brokerage company like Charles Schwab?

Nanette
Elk Grove, CA

A: Similar to what I mentioned in a recent response, you can rollover your existing 401(k)--$17,500/year for those 50 years and under and $23,000/year for 50 years and above, and/or contribute to a traditional or Roth IRA--up to $5,500 for those 50 years and under and $6,500 for 50 years and above. You can invest in an individual IRA account at a brokerage firm (like Schwab or Fidelity) that offers a diverse platform of stocks, bonds, ETFs, precious metals, mutual funds, etc.

However, if you are interested in owning physical gold or other precious metals in your IRA, the procedure for that is somewhat more complicated than with paper assets, but the requirements aren't overwhelming by any means.

First, you must find an IRA custodian that handles investments in metals. Specialists like the original gold IRA custodial companies--American Church Trust (acquired by GoldStar Trust in 2007) and Sterling Trust--are the most respected names in the business. You may find others, but it is a wise idea to do your due diligence before investing with them. Just like a regular custodian, it is best to choose one with a solid reputation because the physical gold will be stored at a location twice removed from you. Firms such as GoldStar and Sterling serve as your IRA's legal custodian; but for actual vaulting your IRA gold, you need a certified depository, likely either HSBC Bank USA (which is also a COMEX gold depository) or Delaware Depository Services.

You'll likely have to open another IRA for physical gold, which means yes, more paperwork and fees as well. Once your money is deposited into your account, you can then tell the custodian what to buy and you can have both ETFs and mutual funds in the one account as well. What's the cost for all this, you ask? Lots of fees for safekeeping, transaction fees and the custodian can charge either a fixed annual fee or an asset under management (much like what fee-only advisors do today), which is a percentage of the IRA's value. Bottom line: you can expect the annual costs to run $160 to $250 per year, depending on the fee structure of the custodian you choose.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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