403(b) to Gold IRA: How to Convert a 403(b) Rollover to Gold
A 403(b) can be used to purchase physical gold for retirement investment diversification. A gold 403(b) rollover allows for investors the ability to invest in gold and other precious metals with their 403(b) funds while maintaining tax benefits.
Gold IRA Planners details how the 403(b) rollover process works, steps to rolling over the funds to a Gold IRA, and best practices.
What is a 403(b) & Can It Hold Gold?
A 403(b) (Tax-Sheltered Annuity (TSA)), is a retirement plan provided by public schools, non-profit organizations, and government entities. The plan allows public school employees and others to defer part of their paychecks to the 403(b) account, often with employer matching. 403(b)s benefit from the 15-year rule, a type of catch-up contribution that allows more to be contributed to the plan. A 403(b) cannot hold gold directly, but you can convert funds to a self-directed Gold IRA to invest in IRS-approved gold.
Converting a 403(b) to a Gold IRA: How It Works
Converting a 403(b) to a Gold IRA involves moving the funds from a 403(b) retirement account to a self-directed IRA using a rollover. A SDIRA can hold gold through a 403(b) Gold IRA rollover. The 403(b) rollover process can take 1-2 weeks to have the funds invested in gold and silver. Make sure to consult with your financial advisor before starting the process.
3 Steps to a Gold 403(b) Rollover
To roll over a 403(b) to gold, the step by step process consists of three steps:
1. Open a Self-Directed Gold IRA
The first step in converting your 403(b) is to open a self-directed IRA with a trustworthy Gold IRA company who will help you with the setup forms. The self-directed individual retirement account (SDIRA) will be used to hold the physical gold and other precious metals you purchase with the funds from your 403(b). This account is required to invest in gold without penalty with your TSA funds.
2. Rollover 403(b) Funds
Next step is to initiate a rollover of your 403(b) retirement funds to the Gold IRA account. There are two options to transfer 403(b) funds to gold, either an indirect or direct rollover. Direct rollovers are more common when converting a retirement plan to gold to avoid penalties or taxes. Indirect rollovers allow you to take the 403(b) funds with a set 60-day deadline to reinvest them in the Gold IRA. Missing the 60-day rule can result in tax penalties and be seen as a withdrawal penalty in the account.
3. Purchase IRS-Approved Gold & Silver
Once your Gold IRA is funded with your 403(b), you'll work with the Gold IRA company to buy IRA-eligible gold bullion, silver, platinum, and palladium. Once the physical assets are purchased, the metals get shipped to an IRS-approved depository for storage and compliance reasons. You can hold a range of assets including gold coins, gold bars, and other variations of precious metals. Asset choices depend on your retirement planning strategy and how you want to diversify in precious metals investments. The rollover process can take 1-2 weeks, from opening a gold SDIRA, to funding it with your 403(b) and buying metals.
Costs to Move 403(b) to Gold
Fees required to convert a 403(b) to a Gold IRA varies based on the company you choose to work with, investment amount, and storage type. Costs you'll face when funding a Gold IRA with you 403(b) include setup fees, annual management fees, rollover fees, and storage fees among others. These fees in Precious Metal IRAs can be waived however, as long as you meet certain investment thresholds with some of these Gold IRA companies. Learn more about how to get no fees in our checklist guide.
403(b) vs a Gold IRA
403(b)s as a retirement vehicle offers two investments: annuity contracts or mutual funds set by the plan administrator, with its performance tied to those markets. The types of investments allowed are limited in a 403(b) and is more focused on traditional investment vehicles. Holding a physical metals like gold in an self-directed IRA allows you to diversify your 403(b) funds in more than just paper assets adding a sense of security for long-term growth.
You can do a partial rollover of a 403(b) to diversify funds in more than one asset class, allowing for the benefit of different types of investments in your retirement portfolio. Consult with your tax professional to evaluate your risk tolerance and make an informed decision before you move funds from your TSA. Other eligible employer-sponsored accounts for a Gold IRA include a 401(k) and a 457(b) to gold rollover.
Before Rolling Over Your 403(b), Plan Ahead With Gold IRA Planners
Before you roll over your 403(b) account to a self-directed Gold IRA, it's crucial you plan ahead before starting the process. Gold IRA Planners provides you easy-to-access Gold IRA resources and guides to help you plan your Gold IRA now, and enjoy retirement later. The rollover resources we provide educate beyond 403(b)s, covering options like TSP to Gold IRA strategies to plan for different accounts.