In-Service Rollovers: Current Employer 401(k) to Gold IRA

An "in-service" rollover means moving money out of a retirement plan at your current employer while you still work there. People ask about it when they want to put part of a 401(k) into a self-directed IRA that can hold gold or silver. This page explains what the IRS says about when a plan may pay you, and what to ask your plan. For the full picture of moving money into a Gold IRA, see the Gold IRA Rollover Guide. For a plan from a job you've already left, see 401(k) to Gold IRA.

Can I roll my 401(k) into a Gold IRA while still working?

Sometimes. It depends on your plan, not on the Gold IRA.

A 401(k) isn't a bank account. Federal rules limit when it can pay money out, and each plan's written document says which of those events it actually allows. The IRS says: "The plan document must clearly state when a distribution will be made" (IRS).

An in-service rollover has two parts, and both must work:

1. Your plan must allow you to take a distribution while employed. If it doesn't, nothing can move.
2. The distribution must be one the IRS allows to be rolled over, and the receiving IRA custodian must be ready to accept it.

The IRS rollover page makes the same point from the other side: to roll over, "you have to meet the plan's conditions for a distribution, such as termination of employment" (IRS).

Nothing here is specific to gold. A "Gold IRA" is a self-directed IRA that lets you hold approved precious metals. The same plan rules apply if the IRA will hold silver instead.

When can I roll over my current 401(k)?

The IRS says that, generally, distributions of elective deferrals "cannot be made until" one of several events occurs. Elective deferrals are the amounts you chose to have taken from your paycheck. The events the IRS lists include:

• You die, become disabled, or otherwise have a severance from employment.
• You reach age 59½ or experience a financial hardship.

(IRS 401(k) resource guide)

For someone still working, that leaves two possible doors: reaching 59½ or a hardship. IRS pages say a plan may permit distributions at these events. Whether yours does is up to your plan.

Sources: IRS 401(k) resource guide, IRS: When can a retirement plan distribute benefits?, IRS rollovers page, IRS hardship snapshot.

Is there a set age for in-service rollovers?

For the 401(k) elective deferrals discussed above, the IRS names age 59½. But your plan's document controls. The IRS says other money in a plan can follow other rules. For profit-sharing and matching contributions, it says a plan may permit a distribution when you "reach the age specified in the plan (any age)," among other events (IRS). For defined benefit and money purchase plans, it says a plan may permit earlier distributions when you "turn age 59 1/2 (even if still employed)" (IRS).

We haven't found an IRS source that says what ages most plans use, so we don't guess. The practical step is to read your plan's Summary Plan Description (the plan's plain-language summary) and ask the administrator in writing.

Does one 401(k) have different rules for different money?

It can. Your balance may include your own deferrals, employer matching money, profit-sharing money and possibly Roth or after-tax money. The IRS pages above describe different payout events for elective deferrals than for profit-sharing money, so you could be allowed to move some of the balance but not all of it. Ask for a breakdown by source. For Roth money, see Roth 401(k) to Roth Gold IRA Rollover.

Can I roll my 401(k) into gold while still employed?

If your plan allows an in-service distribution and the IRA custodian accepts the money, the rollover itself works the same way as any other. The IRS explains that you can "ask your plan administrator to make the payment directly to another retirement plan or to an IRA" (IRS). This is called a direct rollover.

The money lands in the IRA first. Buying metal is a separate step that happens afterward, inside the IRA, and only metals that meet IRS rules qualify. The IRS treats an IRA's acquisition of a collectible as a distribution equal to its cost, with an exception for bullion "of a certain fineness" kept in the physical possession of "a bank or approved non-bank trustee" (IRS). See Gold IRA rules.

Here is how the steps differ while you're still working:

Step 3 is a plan-specific question. We can't tell you how any one plan treats contributions afterward, so ask.

Why a direct rollover matters

If the plan pays the money to you instead, the IRS says it is "subject to mandatory withholding of 20%, even if you intend to roll it over later." The IRS says "You have 60 days from the date you receive an IRA or retirement plan distribution to roll it over" (IRS). The portion you don't roll over, including the withheld 20% if you don't replace it, is taxable, and the 10% additional tax may also apply. See direct vs indirect rollover and the 60-day rule.

What are the tax risks of taking money out while still working?

The risk is not the rollover. It's what happens if part of the money doesn't get rolled over.

• Age under 59½. The IRS early-distribution chart lists the exception "After participant/IRA owner reaches age 59 ½" as available in both 401(k) plans and IRAs (IRS chart). Before that age, a distribution you keep may face the 10% additional tax unless another exception fits.
• The age-55 exception does not help here. The chart's "Separation from service during or after year employee reaches age 55" exception is tied to leaving the job. It is marked "Yes" for 401(k) plans and "No" for IRAs. If you are still employed, it doesn't apply.
• Hardship money can't be rolled over. If your plan pays a hardship distribution, you can't send it to an IRA. The IRS says "Hardship distributions cannot be rolled over to another plan or IRA" (IRS 401(k) guide; also listed on the IRS rollovers page).
• Withholding. Money paid to you, rather than directly to the IRA, has 20% withheld.

Taxes depend on your age, income and the type of money. A CPA or enrolled agent can run the numbers before you ask for a distribution.

What to weigh before moving money out of a current plan

An in-service rollover is not a free option. Some trade-offs to consider:

• You may give up features of the plan. Plans differ on matching, loans and investment choices. Ask what you lose, and read your plan's documents.
• Costs. A Gold IRA can have custodian, storage and dealer costs. Get every fee in writing. See Gold IRA fees.
• Price and concentration risk. Gold and silver prices can fall as well as rise, and no one can promise a result. Putting a large share of savings in one asset adds risk.

These choices depend on your age, health, taxes and other savings. A fee-only fiduciary adviser or tax professional can help you weigh them.

Common mistakes

• Assuming your plan allows it. The plan document decides. Ask before opening an IRA.
• Asking for a check payable to you. That triggers 20% withholding.
• Treating hardship money as rollover money. The IRS says it can't be rolled over (IRS).
• Not asking which money types are eligible. Match, profit-sharing and Roth balances may follow different rules.
• Rushing because of a sales call. Pressure to "act now" is a warning sign. See Gold IRA rollover mistakes.

Related questions

What if my plan doesn't allow in-service distributions?

According to the IRS, a plan's document must state when a distribution will be made (IRS), so you would generally wait for an event your plan allows, such as leaving the job.

Does this work for a pension?

Pensions follow their own plan terms. The IRS says defined benefit plans may permit distributions at age 59½ even if you're still employed, depending on the plan. See pension Lump Sum to Gold IRA.

Who do I ask?

Start with your plan administrator or HR benefits office. Ask for the Summary Plan Description and the plan's distribution rules in writing. Ask the IRA custodian what paperwork it needs.