Can You Hold Gold in a 401(k)? Plan Options Explained

Many people who like the idea of gold have most of their savings in a 401(k). So a common first question is whether the 401(k) itself can hold gold. The short version: it depends on your plan, and physical coins and bars are rarely on the menu. This page explains why, what a plan might offer instead, and how money can move to an IRA. For background on how a metals IRA works, see what is a Gold IRA? How precious metals IRAs work.

Can I buy physical gold in my 401(k)?

In most cases, no. Two separate things stand in the way.

First, your plan decides what you can buy. A 401(k) is not a brokerage account you control on your own. The U.S. Department of Labor says some plans, "such as most 401(k) or profit sharing plans, can be set up to permit participants to choose the investments in their accounts (within certain investment options provided by the plan)." It also says the plan fiduciary (the person or committee legally responsible for running the plan in participants' interest) "is responsible for selecting the investment providers and the investment options, and for monitoring their performance" (DOL, What You Should Know About Your Retirement Plan). If coins and bars aren't among those options, you can't buy them in the plan.

Second, the tax code limits collectibles. Section 408(m) of the Internal Revenue Code covers more than IRAs. Its first paragraph says the acquisition "by an individually-directed account under a plan described in section 401(a) of any collectible shall be treated... as a distribution" equal to its cost (26 U.S.C. 408(m)(1)). A 401(k) is a type of 401(a) qualified plan; the IRS rollover chart lists 401(k) plans among qualified plans.

How the collectibles rule reaches a 401(k)

The IRS explains the rule on its page about collectibles in individually directed qualified plan accounts. It lists collectibles as including "any metal or gem (with limited exceptions)" and "any stamp or coin (with limited exceptions)", along with art, rugs, antiques and alcoholic beverages.

The IRS says: "A plan participant whose account acquires a collectible is deemed to receive a distribution in the year the collectible is acquired. The amount of the distribution is the cost of the collectible." That amount is reported on Form 1099-R and is "generally taxed as ordinary income."

The same IRS page lists exceptions for:

• "Certain gold, silver, or platinum coins described in 31 USC Section 5112"
• "Any coin issued under the laws of any state"
• "Any gold, silver, platinum, or palladium bullion of a certain fineness if a bank or approved non-bank trustee keeps physical possession of it"

The IRS adds that these collectibles restrictions also apply to IRAs. Our collectibles rule guide covers the exceptions in detail.

A point to check with a professional

The statute's exception paragraph, 408(m)(3), begins with the words "In the case of an individual retirement account" (26 U.S.C. 408). The IRS page on qualified plan accounts lists the exceptions without drawing that distinction. How the exceptions apply to a particular 401(k) account is a question of interpretation. If a plan ever offered physical metal, that question would be one for the plan's administrator and a tax professional, not something to assume.

What gold options might a 401(k) plan offer?

Even if physical metal isn't available, some plans give access to gold in other ways. Here's what that can look like, in general terms. What your plan actually offers is set out in its investment materials. The DOL says its rules are designed to make sure participants have "sufficient information on their investment options so they can make informed decisions," including "investment goals, risk, and return characteristics" and "fees that may be charged to your account when you change investment options or buy and sell investments" (DOL).

Funds on the core menu. A plan's menu might include a fund that holds commodities or shares of mining companies. This varies widely by plan, and many menus have nothing gold-related.

A brokerage window. The DOL describes this feature: "Some 401(k)-type plans offer participants access to brokerage windows in addition to, or in place of, specific investment options chosen by the employer or another plan fiduciary." These windows "can enable or require individual participants to choose for themselves from a broad range of investments" (DOL, 2014). Depending on what the plan and its provider allow, a window may include exchange-traded products tied to gold.

Exchange-traded products. The SEC's Investor.gov defines exchange-traded products (ETPs) as "investment products that are listed and traded on national securities exchanges." One type, the exchange-traded commodity trust, is "typically structured to hold assets which consist primarily of commodities, currencies, or derivative instruments." Investor.gov notes these trusts "are not registered as investment companies under the Investment Company Act of 1940, even if they have the term ETF in their name" (Investor.gov). Read the prospectus before buying any of them.

With any of these, you own shares of a fund or trust, not specific coins or bars. For a closer look at that difference, see Gold IRA vs gold ETF.

Your options at a glance

Moving money from a 401(k) to an IRA

If you want physical metal, the usual route is a rollover to a self-directed IRA whose custodian holds metals. The IRS rollover chart shows that pre-tax money in a qualified plan can roll to a Traditional IRA, and Roth 401(k) money (a "designated Roth account") can roll to a Roth IRA (IRS rollover chart).

The full process, including steps, tax forms and Roth and after-tax money, is on our 401(k) to Gold IRA rollover page. A few points matter here.

Can you move money while still working?

That depends on your plan. For elective deferrals (the money you chose to put in from your paycheck), the IRS says distributions generally can't be made until you "die, become disabled, or otherwise have a severance from employment," the plan ends without a successor plan, or you "reach age 59½ or experience a financial hardship" (IRS 401(k) resource guide).

Those are outer limits. Your plan's own terms may be narrower. The IRS also lists hardship distributions among payments that can't be rolled over (IRS). Ask your plan administrator what it allows, and read its summary plan description. See in-service rollovers for more.

Why a direct rollover avoids the 20% withholding

The IRS says you "can ask your plan administrator to make the payment directly to another retirement plan or to an IRA." That's a direct rollover. If the plan pays you instead, the IRS says the distribution "is subject to mandatory withholding of 20%, even if you intend to roll it over later." You then have 60 days to deposit it (IRS).

Example (illustration only): a plan pays you a $50,000 distribution directly. It withholds $10,000 and sends you $40,000. To roll over the full $50,000, you'd have to add $10,000 of your own money within 60 days. Any amount you don't roll over is generally taxable (see the IRS rollovers page). The direct vs indirect rollover page walks through this.

What about a solo 401(k)?

Some self-employed people use a solo 401(k). In that case, the business owner is the one making the plan decisions, not an outside employer. The collectibles rule in 408(m)(1) still applies to individually directed accounts in 401(a) plans. Custody and plan-document questions are covered on our page on solo 401(k) and precious metals.

What about the TSP for federal workers?

The Thrift Savings Plan (TSP) has its own set lineup of funds. It lists five individual funds: the G Fund (Treasury securities), F Fund (government and corporate bonds), C Fund (500 of the largest U.S. companies), S Fund (small and medium-sized U.S. companies) and I Fund (companies in foreign countries) (TSP). It says each of its Lifecycle (L) Funds "is a diversified mix of the five individual funds" (TSP). None of these is a gold fund.

The TSP also has a mutual fund window, which it describes as "an option designed for TSP participants who are interested in greater investment flexibility." It comes with eligibility rules and its own fees. Check the TSP's fact sheet for what's available.

On moving money out, a TSP fact sheet lists "a distribution of part or all of an account after the participant separates from service" and "an age-59½ withdrawal" among distributions eligible for rollover (TSP fact sheet). See TSP to Gold IRA rollover.

Common mistakes

• Assuming a "gold fund" is the same as owning gold. Fund shares carry fund risks and fees. You don't own specific coins or bars.
• Taking a check made out to you. The 20% withholding applies, and the 60-day clock starts.
• Rolling over money you may need soon without checking the tax effects first. The 401(k) rollover guide covers the tax effects to check first.
• Thinking metal can be kept at home. The bullion exception requires a bank or approved non-bank trustee to hold it (IRS). See who owns the gold in your IRA and home storage Gold IRAs.
• Overlooking costs. Compare your plan's fees with the custodian, storage and dealer costs of a metals IRA. See Gold IRA fees.

Gold prices can fall as well as rise, and metal pays no interest or dividends. Whether gold belongs in your savings, and in what form, depends on your situation. A tax professional or fee-only fiduciary adviser can help you weigh it.

Related questions

Can I buy gold in my 401(k)?

Only if your plan offers a gold-related option. That could be a fund on the menu or a product available through a brokerage window. Check your plan's investment list or ask the plan administrator.

Does my employer have to add a gold option if I ask?

Nothing in the sources above requires it. The DOL says the plan fiduciary selects the investment options (DOL). You can ask, but the decision is the plan's.

Is a Gold IRA better than a 401(k)?

They do different jobs and have different costs. See our Gold IRA vs 401(k) comparison for the trade-offs.