The Gold Thrift Savings Plan to IRA Rollover
Thrift Savings Plan (TSP) Basics
The TSP was conceived as a retirement planning vehicle for federal staff – that is military personnel, civil service workers, postal service employees along with other governmental and uniformed services.
Created in 1986 under the Federal Employee’s Retirement System Act, the Thrift Savings Plan gave federal employees similar benefits to those of 401(k) retirement accounts enjoyed by private sector employees.
This intended similarity means 401(k) and Thrift Savings Plan accounts share a number of rules, ie contributions being made from pre-tax dollars, with normal distribution being after 59½ and Required Minimum Distributions becoming applicable at 70½.
There are however some significant restrictions over and above that of the TSP being strictly for government, military and federal employees only.
- A Federal Employees’ Retirement System (FERS) employee (hired on or after January 1, 1984), or
- A Civil Service Retirement System (CSRS) employee (hired before January 1, 1984 and did not convert to FERS), or
- A member of the uniformed services (active duty or Ready Reserve), or
- A civilian in certain other categories of Government service
In addition to being covered by an eligible retirement system, you must also be:
- Actively employed by the Federal Government as a civilian employee or as a member of the uniformed services,
- In pay status, in order to contribute, and
- Working full- or part-time.
| Elective Deferral Limit | $19,500 | IRC §402(g) | Applies to combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay, and bonus pay, but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone. |
| Annual Addition Limit | $58,000 | IRC §415(c) | An additional limit imposed on the total amount of all contributions made on behalf of an employee in a calendar year. This limit is per employer and includes employee contributions (tax-deferred, after-tax, and tax-exempt), Agency Automatic (1%) Contributions, and Matching Contributions. For 415(c) purposes, working for multiple Federal agencies or services in the same year is considered having one employer. |
| Catch-up Contribution Limit | $6,500 | IRC §414(v) | The maximum amount of catch-up contributions that can be contributed in a given year by participants age 50 and older. It is separate from the elective deferral and annual addition limit imposed on regular employee contributions. |
NOTE: Retirement System (CSRS) or the newer Federal Employees Retirement System (FERS). Employees covered by the CSRS system are ineligible for matching contribution, while FERS program employees (typically post 1987 hires) do receive matching contributions.
TSP Investment Options
The TSP has a selection of individual and lifecycle funds that offer broad market diversification. You can choose to have your retirement dollars invested in everything from a short-term U.S. Treasury security to index funds comprised of domestic and international stocks.
Recent collapses in value of the paper assets and stocks as held in TSP accounts, such as happened during the financial collapse of 2007-08 are still fresh in the memory of many pre-retirees and today many Thrift Savings Plan account holders are looking to diversify their investments into other assets to minimize risk.
Unfortunately TSP accounts are unable to hold assets traditionally used to protect investment accounts from market crashes, such as physical gold – which is why the Gold TSP Rollover or a Gold IRA Transfer is seeing such an increase in popularity
The Gold TSP Rollover
Converting a Thrift Savings Plan to gold or silver, a gold TSP rollover, has to be carried out carefully due to the increased complexities of a TSP over a traditional 401(k) account.
While it’s possible to do the work yourself, the tax implications and fines for botched TSP rollovers mean the majority of account holders seek professional help from one of the few Gold TSP rollover specialists.
The Process Of a Gold TSP Rollover
There are two ways of converting a TSP into a retirement account that allows the investment of physical precious metals.
The First option is carry out a transfer. In this, your existing IRA custodian (this could be for the TSP or any other IRA) makes out a distribution check to the new IRA custodian. You can do this any number of times. Tens of thousands of Americans have done so already successfully and are enjoring the greater freedom of a self-directed IRA.
The other way is through a TSP rollover.
In this, you receive your retirement funds from your existing custodian and then place the money into a new IRA within 60 days.
If the funds are kept for more than 60 days, you are liable to pay taxes on the amount withdrawn.
To maintain the tax-deferred status of your precious retirement funds, the same money can be rolled over only once in every 12 months. However, there is nothing to prevent you from rolling over a part of your retirement corpus first, and then another part, and so on.
Even if this seems like a lot of paperwork, a good Gold TSP rollover expert will be with you every step of the way, guiding you through the process.
The Benefits of Rolling Over a TSP to a Precious Metals IRA
If you’ve left your federal post and are looking to protect your retirement nest egg from potential market crashes, you should consider rolling over at least a part of your TSP funds into a self-directed IRA. This is a special kind of retirement account giving you full control over which assets your retirement account will contain.
Whereas a TSP account is strictly limited to a group of funds, rolling over your TSP assets into a self-directed IRA means you can control the exact designation of your retirement account funds giving the option to invest in “hedge” assets that perform well when financial markets are in turmoil or recession – assets like precious metals.
This way, even if your stocks are falling and the dollar becomes devalued further through more rounds of QE, gold’s typical rise will see your overall account remain stable.
It’s this hedging effect that makes gold investments one of the most popular, simple, and safe methods for diversification of your retirement portfolio.
