Put your gold in the right 401(k) to maximize returns

Keith Fitz-Gerald
Chief Investment Strategist Money Map Press

Editor's Note: Many people put off consideration of retirement planning to the end of the year. They only think of such planning as a result of the year-end tax implications associated with annual contributions.

Of course, Keith Fitz-Gerald is not your ordinary person. Keith is always looking forward. That's one of the reasons we look forward to his ideas and analysis on a regular basis.

And, in an effort to help you Keep What's Yours, we are happy to share them with you today...

--Rich Checkan

Many people put a lot of energy and effort into picking the right precious metals investments... which is great. But few put anything more than a passing thought into the type of account that will best "house" what they buy for maximum returns.

That's too bad because the threats of inflation and fiscal mismanagement in Washington are one and the same these days.

I get asked about this a lot...mostly by savvy investors who realize that owning gold in their 401(k) can go a long way towards preserving and even growing their wealth.

My suggestion is to begin by looking at your plan documents carefully if you haven't already.

Not a lot of 401(k) plans have offered precious metals historically. Most, in fact, remain limited to mutual funds, which the retirement industry continues to favor despite the widespread proliferation of more fee-effective exchange-traded funds, or "ETFs."

Those that do have typically done so via a smattering of very expensive brokerage-like options that broaden the available choices to instruments including SPDR Gold Shares (NYSEArca:GLD), one of the more popular gold ETFs.

And if you want to own physical gold?

In most cases, your options are even more limited. Not impossible, mind you, but limited. So it's important to do your homework.

For example, if you're willing to pay early withdrawal penalties, you could take money from your 401(k) directly and use it to buy gold coins, bullion, or jewelry. The downside, of course, is that creates a real drag in terms of returns but also potentially creates an unintended tax liability, too.

Or, you could simply switch administrators and find one that offers precious metals. Many times this is a great option if you've left one employer and are faced with a situation requiring you to "roll over" to another provider, or if you are old enough to be considered eligible for a rollover in the first place.

Another route is to set up a self-directed IRA using either a trust company or an administrator that works with a trust company. I cannot understate, though, how important working with a financial professional is if you go this route.

That's because the government (and you knew this was coming) wants to limit the types of precious metals and coins that can be purchased using IRA funds via Internal Revenue Code Section 408(m). There are twists depending on the type of metal, whether you're talking about bullion coins or bars, and who has physical possession, just to name a few. A simple safe deposit box may not cut it despite the common perception that it will... by the way.

My favorite choice is to consider something like the Perth Mint Certificate Program pioneered by Asset Strategies International, my hosts for this column.

I like the fact that ASI has a lot of experience in this arena, that they charge low fees, and that the underlying assets - meaning your gold - are insured for 100% of current value at the Perth Mint's expense. There's also the convenience of having your gold stored offshore and the convenience of worldwide redemption through a global network of approved dealers. Plus, you can add to your account any time you want.

At the end of the day, there's no question in my mind that most investors can double their gold allocation right now and still not have enough, especially when it comes to retirement assets.

It used to be that this was an "optional" investment, but with global banks now $100 trillion in debt, I submit that it's mandatory.

Just be certain you've got it in the right account so you maximize returns in precious metals just as you would with any other asset class.

That way, you can have more of what you need when you need it.

Here's to great investing and even greater returns,

--Keith

**Disclosure – I am not paid to endorse ASI products nor services. However, Money Map Press, my publisher, does maintain a marketing relationship with ASI.

Keith Fitz-Gerald is Chief Investment Strategist for Money Map Press. A seasoned market analyst with 33 years of experience, he is a regular fixture at prestigious investment conferences around the world, as well as financial TV and radio programs on Fox Business, Bloomberg, and CNBC. He shares specific investment recommendations with subscribers of his Money Map Report newsletter. They have consistently scored double- and triple-digit gains in the most difficult markets to navigate in history.