What to do with my 401K?

rl
By rl on Sun, Sep 18, 2016 - 12:01pm

Hello all,

There is a lot of talk on the web these days about an impending
market/economic crash. Chris Martenson included.

Bubbles are Everywhere in Franken Markets-Chris Martenson
By Greg Hunter On September 7, 2016
http://usawatchdog.com/bubbles-are-everywhere-in-franken-markets-chris-m...

Also Robert Kiyosaki, Jim Rodgers, Bill Gross, Peter Schiff, Marc Faber, Bert Dohmen, Jim Rickards

All recommend getting into gold in some way or another.

This has me worried about my my 401K savings.

Assuming that there will be a crash soon, what is the best
strategy to protect the wealth?

So far, I've come up with a few scenarios:

1:
Withdrawl cash early from the 401K, take the penalty, pay the taxes, and then
buy gold and silver or
some kind of asset such land or a house

2:
Move the 401K into an IRA that allows me to buy gold and silver.
Then buy gold and silver.

What worries me about this scenario, is, can't the powers that be,
seize the gold from the fund anyway?

I'm sure that there have been other discussions or articles
on this. If anyone has any good links to online articles,
please send them along.

Also, are there other scenarios, that I haven't thought of?

Thanks a lot!

 

6 Comments

jonneal's picture
jonneal
Status: Member (Offline)
Joined: Dec 17 2010
Posts: 1
RE: What to do with my 401K?

In regards to your concerns about what to do with your 401K, and risk in investing in "paper" gold funds, I took the approach of creating a self-directed IRA. This approach may not be right for everyone, as there was some cost in creating this with an outside firm, but it allowed me to roll over my 401K ultimately into an LLC that I have much more freedom in how I invest it. For example, I was able to buy equity in a privately held company. I can also purchase real estate with it. Or, in your case, I can buy actual PHYSICAL gold or silver and lock it in a safe on my property. There are some restrictions in how you can invest in a SD IRA (for example, I can't buy a house that I personally live in), but you can easily find these if you decide to go down this path.

 

Hope that helps.

JN

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2832
Consider buying a boat

DennisC's picture
DennisC
Status: Gold Member (Offline)
Joined: Mar 19 2011
Posts: 310
Ah Yes, the Second Happiest Time...

...in a boat owner's life.  The first being the day he or she buys the boat; the second time is when the boat is sold (or in this case, when someone accidentally leaves something very heavy at the stern, thus causing a subsequent loss of buoyancy at the rear of the vessel).

Exsanguination's picture
Exsanguination
Status: Member (Offline)
Joined: Oct 8 2009
Posts: 15
It's a difficult choice

RL,

 

Great question.  Everyone has a unique situation and there isn't an easy answer as to what you should do.  As for me, about 3 years ago I did cash out my 401K and paid the penalty and tax.  With that, I was able to pay off our property--a small farm and a rental house.  Yeah, the penalty hurt and it went against pretty much everyone's advice (which is probably one reason why I did it wink), but being debt free and owning some modest real assets is, in my opinion well worth it.  

When the financial reset does happen, I think things will change very rapidly.  I would never want to be caught with fictitious "assets" that suddenly lose their value.  Is that alarmist?  Maybe.  

We've all been running around carrying umbrellas for the past 8 years while the sun's still shining.  I've missed a lot of potential gains that I could have had by holding my stocks and keeping my 401K intact. That's the risk you take.  Honestly, it doesn't bother me that much though.  Being debt free is just about the single best thing you can do.  It improves your whole perspective on many things.  

Bottom line--get advice, analyze, but in the end, do what you think is best.  As Chris likes to say, "Trust yourself".  

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
401K

How peculiar!  I read your title as "What should I do with my AK 47?"

rl's picture
rl
Status: Bronze Member (Offline)
Joined: Feb 9 2009
Posts: 44
Tax loads and Break Even Points

I've been doing some calculations on this question.

If you withdraw, then you have:
20% taxes withheld. Of course, your taxes may be
more or less, depending on your tax return.

Say, 2% state taxes

Which is a 22% load.
And leaves you 78% of your original value.

1/.78
= 1.28

So, for this to be worthwhile, the gold and silver
must gain 28% in value, to break even.

----

If you withdraw early, then you have:
10% early withdraw penalty (payable when you pay taxes)

Which is a 32% load.
Leaving you 68% of your original value.

1/.68
= 1.47

So, for this to be worthwhile, the gold and silver
must gain 47% in value, to break even. Wow!

---

It's better to buy with after tax cash.

Talking to my accountant, cash is never taxed,
because, by definition, it always goes down in value. :)
 

 

 

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