Many investors seek to diversify their retirement portfolio with precious metals investments in order to protect themselves against stock market fluctuations and provide financial security during uncertain economic conditions.
Unfortunately, the TSP does not offer physical gold and silver as investment options; rather, it provides paper-based assets such as gold mining stocks or ETFs.
What is a Gold IRA?
Gold IRAs are self-directed retirement accounts that allow investors to invest in physical precious metals like gold. Similar to a regular investment IRA, but only holding physical gold as part of your holdings; specific IRS rules must also be adhered to when opening one.
Investors can open a Gold IRA by rolling over funds from an existing traditional or Roth IRA or employer-sponsored retirement plan into it, as well as making contributions directly into it.
Precious metals allowed in Gold IRAs include gold, silver and platinum coins and bars meeting minimum purity requirements set by the IRS. Investors should select an IRA custodian who accepts these types of investments and stores them securely in an IRS-approved depository.
Gold IRAs generally incur fees for storage, insurance and other services that can add up over time; however, these fees are usually much lower than what would be charged by traditional brokers for traditional investments. Investors can lower these costs by choosing an IRA company that provides excellent customer service.
Taxes on Gold IRAs
If you’re considering the conversion of your TSP into a Gold IRA, it is crucial to find a provider who can assist with every step of the process. An established Gold IRA provider will comply with IRS rules by setting up your account with an accredited custodian/depository and selling only high-grade physical precious metals.
These companies will charge their own fees for services rendered, which can quickly add up. Investors should carefully scrutinize these charges to ensure they’re getting the most value for their investment.
An important consideration for Gold IRA investors is that physical gold, silver and platinum bullion products must be stored to meet IRS purity and storage requirements in order to avoid penalties. Paper investments like mining stocks or ETF shares do not provide as much economic protection against uncertainty as physical gold does – plus many investors want the tax benefits associated with having one in their IRA portfolios.
Rollover Method
Rollovers refer to the process of moving assets from one retirement account to another and can either be done indirectly or directly. An indirect method involves rolling over your entire distribution amount with any taxes withheld into a new account while direct methods involve only moving pre-tax amounts from your original retirement account.
Indirect rollovers can be tax-plagued events. But you can limit or avoid your tax liabilities by depositing all funds distributed from your original retirement account within 60 days from receiving either the check (for distributions paid via check) or an ACH or wire transfer (other distribution types).
Configuring your preferences for consolidation contracts allows you to choose which contracts will serve as the “driver contracts”, from which details such as settlement, schedules and MIS details will be automatically defaulted onto the consolidated contract. Furthermore, you can specify how maturity days for any rollovers will be counted.
Direct Trustee-to-Trustee Transfer
At present, the Thrift Savings Plan does not permit investors to invest in physical precious metals directly. Any attempt at holding any gold or silver from within an IRA could be seen as an illegal transaction and subject you to income taxes and significant penalties from the IRS.
Rollover your TSP into a self directed IRA that permits physical precious metal investments and you can diversify your retirement portfolio with physical precious metals as a historically reliable investment. This can give you peace of mind that your retirement savings are protected against economic uncertainties while giving you freedom to select which bullion to own and store. However, working with a reliable provider is key; Augusta Precious Metals stands out by meeting this criteria while providing excellent customer service and offering free Gold Buyer’s Guides that help make informed decisions about purchasing bullion bullion investments.