Gold IRA rollover: the steps, in order

Key points

• You can roll an employer plan, including the federal Thrift Savings Plan, into a self-directed IRA that buys physical gold or silver.
• A direct rollover means the plan pays the new IRA custodian and no tax is withheld. Pre-tax money moved this way into a traditional IRA isn't taxed that year; into a Roth IRA, it is taxable income for that year (IRS Topic 413).
• If the plan pays you instead, it must withhold 20% of the taxable part, and you have 60 days to put the full amount, including that 20%, into the new IRA.
• Rollovers don't count toward the yearly IRA contribution limit.
• You usually can't roll over a plan from a job you still have. The TSP is an exception from 59½.

Before you start

A rollover is easy on paper and hard to undo in practice. Once the money has become coins, getting back out costs you the dealer's spread and whatever account fees you've paid. Three facts to weigh first:

1. It holds one kind of asset. A gold IRA holds metal only. It pays no interest or dividends, and its price can fall and stay down for long stretches.
2. It has flat yearly fees. On Equity Trust's precious-metals schedule, $235 to $285 a year after a $50 setup fee.
3. Getting in and out costs money. If you might need the money within a few years, the spread on the way in and out can outweigh anything else.

Company minimums matter too: Birch Gold Group starts at $5,000, Goldco at $25,000 and Augusta Precious Metals at $50,000.

Direct rollover vs 60-day rollover

Why the 20% matters. The TSP's own example: on a $10,000 payment, $2,000 is withheld and you receive $8,000. To avoid tax on the whole amount you must deposit $10,000, finding $2,000 elsewhere. The withheld $2,000 goes to the IRS as tax paid on your behalf and is credited on that year's return; whether any of it returns as a refund depends on your total tax, not on the rollover. The IRS can waive the 60-day deadline in some cases outside your control; don't count on it.

Money already in an IRA at a bank or brokerage moves by trustee-to-trustee transfer instead. The IRS says direct transfers between IRAs aren't limited by the one-rollover-per-year rule, and no tax is withheld.

The steps, in order

1. Check your plan. Ask whether you can take a distribution now (usually after leaving the job; the TSP from 59½ too), what it needs from you, and how it pays. The TSP takes the request online, with no paper form.
2. Pick a dealer and a custodian. The dealer sells the metal; the custodian holds the IRA. Compare minimums and published fees.
3. Open the self-directed IRA. Roth plan money can only go to a Roth IRA. Pre-tax money usually goes to a traditional IRA; it may go to a Roth IRA instead, taxed that year.
4. Request a direct rollover to the new custodian, with its exact payee and account details.
5. Wait for the money to land. The old plan sets this pace. The TSP processes requests every business day and pays by U.S. Treasury check.
6. Choose the metal and lock the price. Get the markup on each product in writing. Augusta, for one, says it locks the price on a recorded order-confirmation call.
7. The dealer ships to the depository. Goldco's terms: "Ships 5-14 business days after good funds; may ship up to 45 business days after receipt of good funds."
8. Check the first statement. Products, quantities and storage type should match what you agreed.

What can go in a gold IRA

The IRS treats most coins and metals as collectibles, which an IRA can't buy without the cost being treated as a distribution. IRC 408(m)(3) makes exceptions for certain U.S. gold, silver and platinum coins, coins issued under state law, and gold, silver, platinum or palladium bullion of a certain fineness if a bank or approved non-bank trustee keeps physical possession of it. That last condition is why IRA gold can't be kept at home.

RMDs and gold

Traditional IRAs have required minimum distributions. For TSP money, tsp.gov puts the starting age at 73 for those born before 1960 and 75 for those born in 1960 or later. Missing one can mean a 25% excise tax on the shortfall, 10% if corrected within two years. Metal produces no cash, but the IRS doesn't require each IRA to pay its own RMD: an owner works out the RMD for each traditional IRA, then may take the total from one or more of them (IRS RMD FAQs, Q5). With another traditional IRA alongside, the gold IRA's share can come from there. A gold IRA standing alone pays it by selling metal or distributing coins. Employer plans such as a 401(k) can't be lumped in with IRAs this way. Roth IRAs have no RMDs while the owner is alive.

Common mistakes

• Taking a check made out to you: 20% withheld and a 60-day clock.
• Missing the 60 days.
• Doing two IRA-to-IRA rollovers within 12 months. Transfers avoid this.
• Buying collector coins without asking the markup.
• Storing IRA metal at home.
• Overlooking that the age-55 exception covers plans, not IRAs, when part of the money may be needed before 59½.

Gold IRA Companies Ranked has a longer rollover guide for workplace plans, with the 401(k) version of these steps and a Goldco write-up at goldiracompaniesranked.com. On this site, start from the TSP worksheet.