Rollover TSP to Gold IRA
Thinking of using your TSP money to buy gold? Before you decide to invest, learn how the entire process works in this guide.
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If you're considering funding a Gold IRA with your TSP, here's what you need to know about the process, potential benefits, and key steps to safeguard your investment.
From avoiding tax penalties to choosing a reliable Gold IRA custodian, this guide will help you make an informed decision.
What is a TSP and Can I Use It to Buy Gold?
The Thrift Savings Plan (TSP) is the retirement program for federal employees and uniformed services members, just like how private employees have 401(k).
With a TSP, you are only allowed to invest in its pre-selected funds, such as L funds, individual funds, and mutual funds.[1] These funds only invest in traditional securities (such as stocks & bonds).
If you want to buy physical gold through a TSP, you must roll over your TSP funds into a self-directed Gold IRA. This gives you control over your IRA and allows you to buy gold coins and other precious metals.
If the rollover is done correctly, you don't have to pay any unnecessary taxes or penalties on the transfer of funds. And your retirement account continues to grow tax-deferred.
TSPs and IRAs are both retirement accounts, but they are not the same. An IRA is a self-managed account open to anyone with income, while the TSP is only available to federal employees and uniformed service members. TSPs often also have employer matching contributions, while IRAs don't.
What is a Gold IRA?
A Gold IRA is a type of self-directed IRA that lets you invest in physical gold and other precious metals. Similar to other IRAs, you can enjoy certain tax advantages.
However, there are rules you need to follow. You can only buy IRA-eligible gold (gold coins and bars with a purity of 99.5%
).
You also cannot store your IRA precious metals at home, or you risk paying penalties.[2] You must store your gold in IRA-approved depositories, such as Brink's.
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- Free "insider" info on gold & silver
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So, how exactly do you roll over funds from a TSP to a Gold IRA? Read on.
2 Ways to Move TSP to Gold Without Penalty
There are 2 ways you can roll over your TSP funds to a Gold IRA without tax penalties:
- Direct rollover
This is when you transfer funds directly from your TSP to your Gold IRA account without withdrawing them. This is the easiest, quickest, and most common way.Your Gold IRA provider will help with the rollover paperwork to get the funds sent directly to them.
- Indirect rollover
This is when you withdraw funds from your TSP first, so you actually take possession of the money. You must reinvest the funds into your Gold IRA within 60 days to avoid IRS penalties.This method is riskier since you may miss that 60-day window. And you must initiate everything yourself.
In an indirect rollover, 20% are withheld for taxes by your TSP admin. However, to defer taxes, you need to reinvest the full amount in your Gold IRA within 60 days. So, you'll have to cover that 20% out of pocket first, but you'll get it back from the IRS when you file your income tax return later.
Next, learn about the actual rollover process in more detail.
How Gold IRA Rollover Works
Here are the steps to rolling over your TSP to a Gold IRA:
1. Choose a Gold IRA custodian
This is an important decision because this company will be your partner in this journey. You'll be trusting them with your retirement savings. They will take care of everything from helping you purchase coins to taking distributions.
Not sure where to start? Some of the most reputable and trusted Gold IRA companies are Augusta Precious Metals, Goldco, and Birch Gold Group.
Gold IRA Company Integrity Checklist
Free report and checklist that helps consumers compare and choose a reputable gold IRA company
Free Gold IRA Kit
- Up to $10,000 in free silver for eligible customers
- Highest buyback price, guaranteed
- Endorsed by Sean Hannity and Chuck Norris
2. Choose direct or indirect rollover
There are 2 kinds of rollovers you can choose:
- A direct rollover means transferring funds directly from your TSP to your Gold IRA account without withdrawing them. This is the easiest way and has no tax penalties.
- An indirect rollover means you actually withdraw funds from your TSP. You must reinvest the funds into your Gold IRA within 60 days to avoid IRS penalties.[3]
You can roll over either all or just a portion of your TSP.
Most Gold IRA companies require a $10,000 to $50,000 initial investment to open an account. You'll also pay a one-time setup fee, usually ranging $50 - $200. In addition, the custodial and storage fee typically cost $200 - $300 per year.
3. Fill out the rollover paperwork
You'll need to fill out paperwork to initiate the rollover. But don't worry, your Gold IRA company will help you with that. They'll even talk to your current TSP admin for you, making it as hassle-free for you as possible.
4. Fund the Gold IRA account
If it's a direct rollover, the funds will go directly to your Gold IRA custodian. They'll take care of getting it to your account.
If you choose an indirect rollover, your TSP admin will send a check to you. It'll be your responsibility to deposit the funds in your new Gold IRA within 60 days to avoid taxes.
5. Buy gold
Once your rollover is complete and your account is funded, you can use the cash to buy gold. Your Gold IRA company will have a variety of IRS-eligible gold coins or bars for you to choose from.
They'll also make sure your coins are properly stored in an IRS-approved depository, where they'll stay safe until you withdraw.
While it may only take you one business day to open a Gold IRA, the rollover itself can take longer. It can take your current TSP admin up to a couple of weeks to transfer funds to your new Gold IRA account.
Are Gold IRA Rollovers Taxed?
There is no tax penalty if you move your TSP funds directly to your Gold IRA custodian without withdrawing them. Because it's not a withdrawal, it won't trigger a taxable event.
However, an indirect rollover could have tax implications if you're under 59-1/2. With this option, you actually withdraw the funds from your TSP. The IRS allows you 60 days to deposit the funds into your Gold IRA.[3] If you don't, you'll pay income tax on the amount withdrawn plus a 10% penalty.
Here are some other Gold IRA tax rules to be aware of:
- There is no maximum if you roll over funds from a TSP.
- Additional contributions will need to follow the IRS annual limits of $7,000 per year (or $8,000 for 50 or older).[5]
- Withdrawing early before age 59-1/2 has a 10% penalty.
Why Convert TSP to Gold?
Pros:
- Gold can help diversify your portfolio and preserve wealth as you near retirement.
- A Gold IRA offers the same tax advantages as regular IRAs.
- Gold is a tangible asset you can convert to cash.
Free Gold IRA Kit
- Up to $10,000 in free silver for eligible customers
- Highest buyback price, guaranteed
- Endorsed by Sean Hannity and Chuck Norris
Cons:
- Gold IRAs have more fees than regular IRAs.
- Gold can be harder to liquidate.
- Gold doesn't generate interest or dividends.
- You must store IRA gold in IRS-approved depositories (not at home).
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Best Gold IRA Companies
Here are some of the most reputable Gold IRA providers with A+ BBB ratings that support TSP rollovers. We urge you to do further research before making a decision. Take advantage of their free Gold IRA kits to learn more.
Augusta Precious Metals
Augusta Precious Metals is known for superior customer service. Before you even open an account, you get free materials & conferences just to learn about Gold IRAs (no obligation).
If you do open a Gold IRA with them, you get lifetime account support from their entire team of gold specialists.
| Minimum investment | $50,000 |
| Precious metals offered | Gold and silver |
| Eligible rollover accounts | Traditional IRA, Roth IRA, 401(k), 403(b) |
| IRA custodian used | Equity Trust (recommended) |
| Depository used | Delaware Depository (recommended) |
| Buyback program | Yes |
| BBB grade | A+ |
Gold IRA Company Integrity Checklist
Free report and checklist that helps consumers compare and choose a reputable gold IRA company
Goldco
Goldco is one of the most popular Gold IRA companies. They often offer a silver coins promo when you open a Gold IRA. And they have a highest buyback price guarantee, which can help you feel more confident about the purchase.
| Minimum investment | no minimum purchase requirement |
| Precious metals offered | Gold, silver, platinum, and palladium |
| Eligible rollover accounts | Traditional IRA, Roth IRA, 401(k), 403(b), 457, Pensions, TSP |
| IRA custodian used | All major Self-Directed IRA custodians |
| Depository used | Delaware Depository |
| Buyback program | Yes |
| BBB grade | A+[6] |
Free Gold IRA Kit
- Up to $10,000 in free silver for eligible customers
- Highest buyback price, guaranteed
- Endorsed by Sean Hannity and Chuck Norris
American Hartford Gold
Check out American Hartford Gold if you only want to roll over a little bit of your TSP to a Gold IRA. Their minimum is just $10,000. They will assist you with the paperwork for the rollover.
| Minimum investment | $10,000 |
| Precious metals offered | Gold, silver, platinum, and palladium |
| Eligible rollover accounts | Traditional IRA, Roth IRA, 401(k), 403(b), 457, TSP |
| IRA custodian used | Equity Trust |
| Depository used | Delaware Depository, Brinks Global Services, International Depository Services |
| Buyback program | Yes |
| BBB grade | A+ |
Birch Gold Group
Birch Gold Group is one of the oldest precious metals IRA companies with over 20 years in the business. It has a solid reputation and has lower minimums and fees than some competitors.
You'll be matched with a specialist for the entire lifetime of your account for personalized service.
| Minimum investment | $10,000 |
| Precious metals offered | Gold, silver, platinum, and palladium |
| Eligible rollover accounts | Traditional IRA, Roth IRA, 401(k), 403(b), TSP, SEP, annuity |
| IRA custodian used | Equity Trust, STRATA |
| Depository used | Delaware Depository, Brink's Global Services |
| Buyback program | Yes |
| BBB grade | A+ |
Free Information Kit
- Free "insider" info on gold & silver
- 1-on-1 care with a dedicated specialist
- Endorsed by Ben Shapiro and Ron Paul
Bottom Line
Rolling over funds from your TSP account is one option to fund your new Gold IRA. For a smoother process and to avoid potential penalties & taxes, we recommend a direct rollover.
It's important to find a trustworthy Gold IRA company to work with. So, research well before investing and make sure you understand the risks involved with precious metals investing.
References
- ^ Thrift Savings Plan. TSP investment options, Retrieved 09/28/2024
- ^ WSJ. A Couple Stored IRA Gold at Home. They Owe the IRS More Than $300,000., Retrieved 09/28/2024
- ^ Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions, Retrieved 4/7/2023.
- ^ Internal Revenue Service. Rollover to a Roth IRA or a Designated Roth Account, Retrived 4/7/2023.
- ^ Internal Revenue Service. Retirement Topics - IRA Contribution Limits, Retrived 09/02/2024.
- ^ GOLDCO: Better Business Bureau profile. BBB. (n.d.). Retrieved January 10, 2023
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