Investing in Gold and Other Precious Metals With Solo 401(k)s

Physical metals are:

• Tangible, maintenance-free investments you proudly own
• Outperforming stocks and bonds over the last two decades
• Doing well in uncertain markets when other asset classes do not
• Portable, but immune to theft or ransom by hackers
• A private way of accumulating and storing wealth
• Preceded by a 3,000+ year history of retaining value
• Available without specialized knowledge or training required for purchase
• Able to retain value over time, making them the perfect asset to pass on to heirs

There is no single “perfect” investment. Potential downsides of precious metal investment include:

• Coins contain intricate designs that are more expensive to make than bars.
• You have to store your coins somewhere – meaning costs for space and security.
• Physical metal is not immediate liquid unless you have an online storage account.
• You could end up paying a capital gains tax up to 28% if you hold metal for more than a year.
• Holding onto gold, silver, and other metals does not pay dividends or interest.

According to IRC 408 (m), a Solo 401(k) plan owner may invest in:

• Gold

  The value of gold used in jewelry, dentistry, electronics, and currency is determined 24 hours a day, 7 days a week, and changes based on hoarding. People tend to buy up gold during times of economic uncertainty, inflation, war, or political crisis.

• Silver

  The value of silver fluctuates in a more volatile way than gold, determined by industrial supply and demand. Innovations, emerging markets, production, and new applications can drive up the value.

• Platinum

  The value of platinum is driven by demand in the automotive sector, jewelry, chemical refining, and computing. Cartel activity in the platinum mines of South Africa and Russia can artificially drive up prices, making platinum the most volatile of the precious metals.

• Palladium

  The value of palladium depends upon its use in electronic and industrial product manufacturing. Mines are located in the US, Russia, South Africa, and Canada.

In addition to buying up the physical metals, you can also invest in:

• Commodity ETFs
• Common stocks and mutual funds
• Futures and options
• Bullion
• Certificates

The precious metal you invest in must have a fineness equal or exceeding at least 995 parts per 1,000. Most gold coins meet this standard, but several types of coins are disallowed, including:

• Rare or Collectible Coins
• British Britannia
• Austrian 100, 20, and 10 Corona
• Dutch 10 Guilder
• Italian 20 Lira
• Belgian 20 Franc
• Swiss 20 Franc
• Hungarian 100 Korona
• Columbian 5 Peso British Sovereign
• Chilean 100 Peso
• Mexican 50, 20, 10, 5, 2 1/2 and 2 Peso
• South African Krugerrand

These coins are considered “collectibles” and are therefore not able to be held in a 401(k) or IRA.

Precious metal bars must be stored in a bank, credit union, or depository-taking institution. Coins can be stored at home in a personal vault, in a bank safety deposit box, or at a third-party storage firm like Brinks. Your choice will depend upon how much security you need and how much access you want to have.

Ubiquity is a top Solo 401(k) plan provider for entrepreneurs and the self-employed. Contact us to inquire about starting a Solo 401(k), which allows investment in gold and other precious metals. We never charge AUM fees, instead relying on the industry’s most affordable monthly flat-fee model.