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?
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.