Can You Invest in Gold in the TSP?

Pre-retirees often ask how they can diversify their retirement assets beyond stocks and bonds, with gold as a popular solution that offers protection from economic collapse and devaluation of currencies.

Federal employees have the option of moving money from their Thrift Savings Plan (TSP) into a gold IRA via either rollover or direct transfer, and this article will explain how this works and help determine which option would work best in their situation.

How It Works

The Thrift Savings Plan (TSP) allows federal employees to save for retirement through investments in various funds. Each year, eligible federal employees are automatically enrolled to contribute 5 percent of their salary into traditional TSP accounts; agencies or services may match contributions up to an agreed-upon maximum amount depending on employee category and job title.

Traditional TSP contributions are pre-tax, with qualified withdrawals tax-free if the account has been open at least five years and you are aged 59 1/2 or over or permanently disabled. Roth TSP contributions allow post-tax contributions that reduce your gross income reported to the IRS while earning tax-free withdrawals after five years if open at least five years and over or permanently disabled.

Change the way future contributions are invested by submitting an investment election form or reallocating or transferring existing money already held within your TSP account. Submitting requests before noon eastern time usually has immediate effects; later requests will take effect the next business day.

Taxes

Rolling your TSP over into a Gold IRA allows you to diversify your retirement portfolio while providing peace of mind during an increasingly volatile economy.

To convert your TSP into a Gold annuity, it’s necessary to open a self-directed IRA with an organization that follows IRS regulations and has an excellent track record. They will give you an account number, after which you contact TSP to have funds sent over. Finally, give instructions as to where and how you want the funds invested, including products, prices, and sources.

Taxes will apply if you withdraw money before reaching age 59 1/2 or leaving federal employment, in addition to sales and FICA taxes. To reduce these costs, rollover your TSP into another retirement plan such as Roth or taxable investment accounts.

Fees

Many retirees and federal employees are turning their TSPs into Gold IRAs as a hedge against economic collapse and devaluations of currencies. This can be accomplished via rollover or trustee-to-trustee transfer and gives more opportunities for investing in precious metals.

Physical gold bullion investing may involve fees that are lower than TSP fund fees; it is still important to perform your due diligence when choosing investments for retirement purposes, however.

TSPs typically provide limited options for diversifying your retirement portfolio with precious metals like gold. Your best option would be to convert to a self-directed IRA with a precious metals company and then purchase physical gold coins or bars, as well as paper stocks or ETFs that hold shares of gold mining companies. No matter which form of gold you opt for, be sure that it complies with IRS regulations regarding precious metals held within an IRA.

Withdrawals

Based on your financial circumstances, it may be possible for you to convert all or part of your TSP account to a self-directed IRA that allows physical gold investing. Doing this may help protect against market volatility while increasing prospects of a more secure retirement portfolio.

To withdraw a lump sum from a TSP and deposit it within 60 days into your new IRA, then work with a self-directed IRA custodian that specializes in precious metals to locate and purchase your investment – making sure that it complies with IRS regulations for precious metals in an IRA account.

Transferring TSP savings may not be available if you are still working or under age 59 1/2; any withdrawal would incur a 10% penalty tax, so to avoid this a SmartVestor-approved investing professional might help balance out risks and rewards related to TSP withdrawals in line with your overall retirement plan.


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