By Doug Young

Why Consider a TSP Rollover To Gold?

Many pre-retirees had their fingers burnt in the 2007-2008 financial collapse when they saw the value of the stocks and paper assets within their retirement plans tumble. This included TSP participants and many have since realised the benefits of holding assets which traditionally hedge their investment savings from future collapses, with physical gold being the most common and popular example.

More information: Why Invest In Gold?

TSP funds do not give you the opportunity to diversify in such a way.

The good news though is that once you move or retire from federal service you can transfer or rollover your TSP to an individual retirement plan (IRA). This will give you the opportunity to include gold and other precious metals in your fund henceforth. This is why the TSP Rollover to Gold IRA concept has taken off and become increasingly popular in recent years.

How Can Gold Protect Your Retirement?


Which Type of IRA For Your TSP Rollover To Gold?

A Roth IRA will give you the opportunity to invest in gold indirectly through paper gold – gold stocks , gold ETFs and gold derivatives.

If you want to invest in physical gold (coins or bars) however, you’ll need the vehicle of a self-directed IRA.

As well as giving you the opportunity to invest in physical precious metals, a self-directed IRA will allow you to select which assets to invest your retirement funds in. This will allow you to set up a diversified and personally chosen retirement portfolio which can also offer you tax benefits.

A Gold IRA, the specific type of IRA that you will need for your TSP rollover to gold, is a self directed IRA (as opposed to a regular IRA – traditional or Roth) which has a precious metals company as its custodian. Within this account you will be able to buy and sell bullion. You can see what types of bullion you can include in your Gold IRA here.

Physical Vs Paper Gold

The advantage that physical gold holds over paper gold is that there will only ever be one factor determining its value: the prevailing COMEX price of gold.

The value of paper gold is influenced by that, but is not determined by that alone. It is also influenced by such factors as the strength of the individual mining company’s management, their exploration costs, local labour costs and geo-political conditions and regulations local to the mine.

Plus, physical gold has retained value for thousands of years without ever hitting zero.

These factors together tend to make it more risky to own gold stocks than physical gold.

Your Eligibility For a TSP Rollover To a Gold IRA

All the information here is relevant to you if you’ve worked as a Federal employee or as a member of the military, and all of your retirement income is tied up in the Thrift Savings Plan (TSP). If you require more information about the TSP click here: TSP Overview

If you are unsure about whether or when you are entitled to make withdrawals from your TSP account and you want clarification about that plus information about the full range of withdrawal options available to you (including but not limited to TSP Rollovers), click here: TSP Withdrawals

Why Consider Moving Funds Out of the Thrift Savings Plan?

Within the Thrift Savings plan your investment options are very limited when compared to other retirement plans because your choices are confined to just the TSB Funds. In short, the only opportunities open to TSP participants are to invest in the Lifecycle Funds (L Funds), the individual funds that make up these L Funds, or a combination of these.

For more detailed information about these funds click here: TSP Funds

You can see from the above why you cannot leave your funds in the Thrift Savings Plan and at the same time take advantage of precious metals to protect and hedge those funds against stock market and economic volatility or high inflation.

All the time your savings are invested in the TSP they are out of your control. Basically they are controlled by the government rather than you. This might suit you if you have a hands off approach, but if you prefer to be pro-active and have more investment options then rolling over your TSP funds into an IRA will give you much more personal control and flexibility.

Important Information About Rolling Over Your TSP

It’s an important consideration after leaving federal employment to roll your Thrift Savings Plan to another tax deferred account in order to make continued contributions. Should you transfer it into a regular or Roth account you will be obliged to declare your account value as part of your income for the current year. The implication is that it then becomes taxable.

Even more importantly, if you transfer your TSP to an IRA you get the opportunity of owning physical precious metals in a tax deferred account and you will not have to pay any taxes on those metals until you eventually withdraw them from your IRA.

The TSP Rollover To Gold IRA Process

You have 2 options for converting your TSP into a retirement fund that will permit the inclusion of precious metals in their physical form.

1. TSP Transfer
Here, your current IRA custodian (this may be for the TSP or for a different IRA) sends a distribution check to the new custodian. There is no limit on the amount of times this can be done. Many, many people have already done this successfully and are now enjoying the benefits that a self directed IRA offers.

2. TSP Rollover
With this method your existing custodian sends your retirement funds to you and it is then your responsibility to place the funds into one or more IRAs within 60 days. If you exceed that deadline the IRS will consider the transaction to be a withdrawal and you will be liable to pay taxes on it.

The same funds can only be rolled over once per twelve month period for the tax deferred status to be maintained. You can however rollover different parts of your fund in different stages with no limit on the amount of times that can be done.

It is essential that you mark each deposit as a rollover as opposed to a contribution. This is because a contribution is restricted to $5,500 per year if you are under 50, or $6,500 per year if you are over 50.

How Many IRAs Can You Own?

You can own multiple ones. This gives you the opportunity to split your retirement savings between a Gold IRA and a conventional one. The percentage that you invest in gold and other precious metals is up to you. Experts are divided on the amount and it tends to vary between 10% and 30%.

I recommend that you take independent financial advice to help you decide what is the most appropriate percentage for you, in accordance with your own personal circumstances and your overall risk adversity.

Getting Started

The first (and most important) step is to choose a trustworthy and reliable company to work with. To help you with this and particularly if you are new to this type of research, I recommend that you read my 10 Top Tips For Comparing Gold IRA Companies… and For Identifying Ones You Can Really Trust

Read Analysis

EXPOSED! The Truth About Retirement


About the Author: Doug Young
Doug YoungDoug is a highly experienced professional and widely trusted authority in financial investing, commodity trading, and precious metals. With over 20 years of expertise, he helps others make informed decisions by sharing a combination of personal experience, extensive knowledge and meticulously researched information on gold IRAs, precious metals investing and retirement planning. He regularly writes news items on these topics. He has considerable experience of evaluating Gold IRA and Precious Metals Companies, gained over a period spanning more than a decade.

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