Email FacebookTwitterMenu burgerClose thin

How to Buy Gold With Your 401(k)

How to Buy Gold With Your 401(k)

Investing in gold with a 401(k) involves using retirement savings to invest in gold-related assets, which may range from physical gold bars and coins to gold ETFs and mutual funds. It’s not as straightforward as buying stocks or bonds, but it can offer a valuable alternative to more well-known types of securities. Diversifying your portfolio is vital across your investments in order to spread risk and achieve a balance of returns. Investing in gold could provide a hedge against inflation and protect against economic downturns. If you’re not sure whether gold is a good investment for your portfolio, consider talking to a financial advisor

Can Your 401(k) Buy Gold?

Before delving into the mechanisms of buying gold with a 401(k), it’s essential to understand the IRS guidelines surrounding this type of investment. This is because not all 401(k) plans permit the purchase of gold. If they do, the gold must meet specific fineness requirements and should be in the custody of an approved administrator. 

Your plan administrator signs off on any gold investments within the 401(k) plans they manage. They hold a crucial role in the process, of approving or disapproving gold as an investment option based on your plan’s policies and IRS guidelines. So, it’s not merely about wanting to invest in gold, but it’s also about whether your 401(k) plan and the law allow such investments. 

The majority of 401(k)s managed at your employer don’t typically allow gold investments. If this is the case for you then you’ll likely be out of luck in buying gold within your 401(k) unless you rollover your 401(k) to an IRA or a different 401(k) plan. 

Ways to Buy Gold With Your 401(k)

Once you’ve confirmed that your 401(k) plan allows gold investments, the next step involves understanding the different methods of investing. There are several ways to invest in gold using a 401(k) or the funds in your 401(k), such as rolling over into a gold IRA, investing in gold mutual funds, buying gold ETFs and exploring other gold-related investments. Let’s take a look at each option to see if one might be right for you. 

Rollover to a Gold IRA

A gold IRA is an individual retirement account that allows for the ownership of physical gold. To roll over a 401(k) into a gold IRA, you’ll need to set up a self-directed IRA, which requires a custodian to handle the gold and the transaction. Understand that this rollover process can have potential tax implications and premature withdrawals might incur penalties. 

Mutual Funds

Investing in gold mutual funds using a 401(k) involves buying shares of a mutual fund that invests in gold and gold-related companies, if your plan allows. Remember, though mutual funds offer diversification, professional management is only a potential feature and isn’t a definitive characteristic of all mutual funds.

Gold ETFs

Gold ETFs are exchange-traded funds that track the price of gold. Investors can gain exposure to gold’s price movements without owning the physical metal, albeit with management fees and potentially imperfect gold-price tracking due to expenses and other factors.

Other Investments

Other gold-related investments can take several forms, depending on the options your 401(k) plan offers. These may include gold mining stocks, gold futures contracts or gold index funds. Each of these investments brings its unique advantages and risks, so it’s advisable to seek professional assistance from a financial advisor while choosing between these options.

Pros and Cons of Having Gold in Your Portfolio

A woman looking at how to buy gold in her retirement account

Investing in gold can bring several benefits and drawbacks that you should consider.

The way it benefits you will depend on your unique situation but here are some of the most common advantages and disadvantages. 


  • Gold can act as a hedge against inflation and currency fluctuations.
  • Gold adds diversification, typically having a low correlation with other asset classes.


  • Gold doesn’t yield dividends or interest.
  • The value of gold can fluctuate with market conditions.
  • Costs may be associated with storing physical gold.
  • The returns may not always be as high as other investment options.

This isn’t an all-inclusive list, however, as it could impact your individual portfolio in a unique way depending on what your goals are. 

Tips for Buying Gold in Your Investment Portfolio

When considering gold for your portfolio, you might not be ready to dive in with both feet. Instead, there are some things you can do to test the waters and see if gold might be the beneficial investment you’re hoping for. Here are some tips if you’re considering buying gold: 

  • Begin with a small amount
  • Understand market trends 
  • Diversify your gold investments

Don’t forget the importance of regularly reviewing and rebalancing your portfolio, including your gold investments. You want to make sure that any investments in your portfolio are actively working for you and helping you reach your long-term goals. Those results can absolutely change over time. 

Bottom Line

A financial advisor talking to a client about buying gold.

Investing in gold with a 401(k) offers diversification and a cushion against economic uncertainties. However, such an investment requires understanding IRS rules, potential tax implications and the various methods of buying gold with a 401(k). Before taking the plunge, consider this: Does investing in gold align with your financial goals and risk tolerance? A deep understanding of these aspects will help you make informed investment decisions that best suit your long-term financial and retirement goals.

Tips for Investing

  • If you want to diversify your portfolio, you may want to consider consulting with a financial advisor. Such a professional can help manage your investment portfolio or help you find the right investment choices. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now
  • You can also use a free asset allocation calculator to help find the right investment selections for your portfolio and see what might happen if you make different asset choices. 

Photo credit: ©, ©, ©