How to Rollover a 403B into Silver & Gold Investments

403b Plans image

403(b) plans are retirement savings plans sometimes offered through state and local governments and municipalities, as well as some non-profit organizations. While it makes sense that an employee would jump onto whatever retirement vehicle their employer offers, this doesn’t mean that you have to remain with the same plan forever.

Many people start out with a 403(b) plan, then reallocate precious metals into their savings by turning their 403(b) to gold. In this article, we’ll review the essentials behind a 403(b), explore how to buy gold with a 403(b) and provide answers to frequently asked questions on 403(b) rollovers to gold.

What is a 403(b) plan?

A 403(b) plan is a specific type of retirement plan offered primarily to employees of 501(c)(3) tax-exempt organizations, public schools, and churches. 403(b) plans can come with several tax advantages depending on the plan type, such as the ability to deduct taxes or enjoy tax-free growth.

403(b)s were originally introduced in 1958 when Congress passed changes to the tax code. Public schools were the first to offer 403(b) plans to their employees in 1961, and when they emerged, they were designed to just offer one specific thing rather than a plan that could hold a diverse variety of assets.

A number of changes over the years have made slight modifications to the structure of these plans. The Employee Retirement Income Security Act of 1974 (ERISA) forced all plans that offer employee-matching contributions to meet certain oversight rules. This, in effect, created two types of 403(b) offerings: one required to follow the ERISA guidelines and one that isn’t.

In 2005, under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the non-ERISA version of 403(b)s was finally given some protection against creditors.

The 403(b) plan is more common than you might think, with about one in five U.S. employees owning one.

How to buy gold with a 403(b) plan

Initiating a 403(b) rollover to gold is similar to the process of buying gold with a 401(k). If you currently have a 403(b) plan that you’d like to roll over into a Precious Metals IRA, there are a few steps you’ll need to walk through. When working with Birch Gold Group, you’ll be paired up with a designated Precious Metals Specialist, who will be on hand to share your options, guide you through the process, and help you find the answers to any questions you may have when investing in precious metals and rolling over your 403(b) to gold.

There are a number of IRAs that may be eligible for 403(b) rollovers, such as Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. That means hard-saved money in 403(b) plans can be rolled into a Precious Metals IRA as well. If you’re interested in a 403(b) to Gold IRA rollover, here are the general steps on how to buy gold with a 403(b):

Buy Gold with 403b

1. Open a new SDIRA

As noted earlier, a Precious Metals IRA is actually the result of placing precious metals in a Self-Directed IRA (SDIRA), which is an IRS-approved retirement account that moves past what a conventional IRA lets you hold and into alternative assets like gold.

Similar to how a conventional IRA can come in different types (Traditional, Roth, SEP, and SIMPLE), your SDIRA is available in these different forms.

While you are welcome to use any IRS-approved custodian that you’d like, we typically work with our Gold IRA custodian partners, who specialize in precious metals. Our partners include Equity Trust Company and GoldStar Trust Company.

2. Roll over funds from your 403(b) and/or other eligible accounts

Depending on the accounts you hold, your retirement plan, and your eligibility, you might have many options for how to fund your new Precious Metals IRA. Again, remember that your Precious Metals Specialist is on hand to help you navigate your options and any paperwork needed, such as any forms your old custodian might need you to complete.

3. Choose your gold

Once you’ve funded your Precious Metals IRA, the next step is to make your gold investment by choosing the gold you’d like to place in your new account. A Birch Gold Group Specialist can walk through IRS-approved gold. Approved gold must be 99.95% pure, with the exception of the American Eagle coin, which has a purity requirement of 91.67%. When converting a 403(b) to a Precious Metals IRA, you have the option to choose among a selection of IRS-eligible gold coins, as well as bars and rounds from approved mints and refiners.

403b rollover into gold

With your paperwork complete and your gold selections mapped out, your Specialist will confirm your selections with you. Once you give them the green light (by approving the transaction), they will submit everything for you.

While gold might be the most well-known precious metal that many place in their Precious Metals IRA, other precious metals like silver, palladium, and platinum are also offered, making excellent choices for retaining value given their history, finite supply, inherent value, and practical applications.

4. Store your savings in a depository

Once your purchase has been made, you have several precious metals IRA storage options you can choose from. Your gold will be stored in the depository of your choice from a list of approved and fully insured options. Two popular options are Delaware Depository, America’s largest depository for precious metals, and Brinks Global Services, the global leader in providing secure logistics.

What should you do after a 403(b) rollover to gold?

When you complete your 403(b) rollover to gold, you can always reach out to your Precious Metals Specialist for an up-to-date quote on how your IRA is currently valued or to initiate any transactions. When it comes time to make a withdrawal from your Precious Metals IRA during retirement, you can choose to liquidate your gold or take physical possession of your gold, depending on your preference.

At each step, your Birch Gold Specialist can guide you through everything you need to begin turning your 403(b) savings into gold.

What are the benefits of a 403(b) plan?

403(b) can only be offered by a state or local government or a non-profit organization. This makes these plans popular offerings for employees at schools, universities, public hospitals, and libraries. There is one subtype of 403(b) designed for religious institutions as well, though it is far less common.

The 403(b) plan can offer several incentives to its owners.

  • Contributions are tax-deferred: Employees with a 403(b) plan can contribute a portion of their pretax income into it, allowing them to build up their savings faster. This also can reduce that employee’s annual tax bill, as it technically reduces their adjusted gross income by the amount contributed. This pretax savings, however, is eventually taxed upon withdrawal.
  • Roth account options: Owners of a 403(b) plan may contribute to a Roth account, which basically flips around the Traditional tax timeline; contributions into one of these accounts come from after-tax income. This means that when it is time to withdraw from these accounts, those distributions are tax-exempt. For those with significant savings and incomes that put them in a higher tax bracket, a Roth can save plenty of taxes in retirement.
  • Higher contribution limits: 403(b)s, like 401(k)s, set the limit of annual contributions at $22,500 (2023) and $23,000 (2024). An additional $7,500 (2023 and 2024) in contributions are allowed after the age of 50. While the same as 401(k)s, this limit is still significantly higher than limits imposed on most IRAs.
  • Employer matching: 403(b)s come in two distinct versions. One of these offers employer-matching contributions, making it ERISA-regulated and letting employees build up additional retirement savings—although this also brings some rules with it. While your employer can set their own matching rules, commonly, employers choose to match 50% of contributions up to six percent of the employee’s income.
  • 15-Year Rule: Unlike 401(k)s, 403(b)s offer an additional “loyalty reward” in the form of the 15-Year rule. If an employee with a certain 403(b) has worked for the same employer for 15 years, they can contribute an additional $3,000 per year up to a lifetime limit of $15,000.

You may see that 403(b)s look very similar to 401(k)s, but they do offer their own benefits and operate differently.

What are the rules and limitations of a 403(b) plan?

Congress has made slight changes to 403(b) plans over the years since their 1958 birth, including the ERISA and BAPCPA laws noted above.

Others, like the recently passed (as part of a recent appropriations bill) Setting Every Community Up for Retirement Enhancement Act (SECURE Act), have continued this trend. The SECURE Act loosened some rules about what 403(b) plans can include, as well as raised the age for required minimum deductions (RMDs).

Some of the most critical rules and limitations of a 403(b) include:

  • Coordinated contributions. Some universities and other governmental employers offer both 403(b)s and 401(k)s. While an employee can contribute to both plans, the total aggregate amount is still capped at only $22,500 for 2023 and $23,000 for 2024.
  • 10% tax penalty. 403(b)s are subject to the same 10% early withdrawal fee as 401(k)s. Meaning, if you need to withdraw savings from a 403(b) plan before the age of 59½, you’ll have to pay 10% in fees in addition to any taxes that you would normally owe.
  • Non-ERISA? No discrimination checks. 403(b)s aren’t subject to nondiscrimination testing. If an employer doesn’t match contributions, the plan is likely a non-ERISA one and doesn’t require nondiscrimination testing. This means that retirement plan benefits don’t have to be offered to all employees.

The last, but possibly the most important, point that needs to be made here is not so much a rule but a disadvantage. 403(b) plans, because of their original purpose, offer very limited asset options.

Most 403(b) plans are administered by insurance companies. 401(k)s, on the other hand, tend to be run by investment companies. This distinction is important because insurance companies have even less incentive to open up as many options for asset allocation, potentially limiting 403(b) plans further.

Why should I buy gold for my retirement savings?

Precious metals such as gold can be valuable additions to a retirement portfolio. Unlike fiat currency and associated assets, gold benefits from carrying inherent value and is perhaps the most popularly known example of material worth.

For individuals like you, here are some ways that gold can enhance your retirement savings.

  • Limited supply means value retention. Since there is a finite supply of each precious metal, they will continue to be highly valued. In fact, the limited supply of gold was one reason why the United States used to use gold to back the dollar and set its value.
  • Diversification. The saying goes, “never put your eggs in one basket”; why would you place all of your retirement savings into one asset class? Diversification is one means of risk management, since your gold can act as a hedge to protect your retirement, even if an economic crisis should hit.
  • Guard against inflation. For a wide number of reasons, the government may print more money and drive inflation, effectively devaluing your 403(b) and other retirement vehicles in the meantime. Adding alternative assets like precious metals into your retirement portfolio could help protect its worth.
  • Tax benefits. You know that IRAs carry tax benefits and that you can pick a plan that lets you pay taxes upfront or upon withdrawal/distribution. But if you tried to reap rewards from owning gold outside of an IRA, you can face additional costs like taxes on gold, such as capital gains taxes when you sell your gold.

As markets become more uncertain, the security and stability of assets like gold can offer a safe haven not found elsewhere.

Converting a 403(b) to a Gold IRA FAQs

What is a Gold IRA?

A Gold IRA is a type of self-directed individual retirement account (SDIRA) that allows you to purchase alternative assets, such as gold and other precious metals. Similar to conventional IRAs, Gold IRAs can take on different structures, such as a Traditional Gold IRA, where you can make pre-tax contributions that can be deducted from your taxes for the year those contributions were made. Or, you can open a Gold Roth IRA, where you can make contributions with after-tax dollars and make tax-free withdrawals during retirement. Converting your 403(b) to gold by rolling over funds to a Gold IRA allows you to enjoy the benefits of gold investments and the tax structures SDIRAs offer.

Am I eligible to roll over my 403(b) plan?

As long as it complies overall with IRS guidelines, each individual 403(b) plan can be written to have its own rules and stipulations. Therefore, the most accurate answer to the question of eligibility requires a case-by-case evaluation. Fortunately, Birch Gold pairs you with a Precious Metals Specialist who can help you determine whether your retirement account(s) are eligible for rollover.

One common caveat is also seen with 401(k) plans. You might not be able to roll over your 403(b) plan if you are still working for the employer who set you up with the account. And although with some retirement accounts being over the age of 59.5 gets this rule waived, this usually doesn’t happen in the case of 403(b) plans.

As you set up your retirement savings, we recommend you speak with a tax professional who can review your entire financial situation and give you up-to-date tax advice.

How long does a 403(b) to Gold IRA rollover take?

The length it takes for a 403(b) to Gold IRA to be complete varies on a case-by-case basis, with some rollovers taking a few weeks to others taking a few months. Several factors affect the length it takes for your 403(b) to gold rollover to complete, such as the rules for transferring funds between accounts and the amount of funds you’re transferring.

Are there fees associated with converting a 403(b) to a Gold IRA?

As with any rollover, there are certain fees to be aware of. Below are some of the common fees Birch Gold Group customers might pay with a 403(b) rollover to gold:

  • Custodian fees: When initiating a 403(b) rollover to gold, custodian fees can include a $50 one-time account setup fee and a $30 one-time wire transfer fee.
  • Management fees: Annual management fees are used to cover the costs of administering your account and are $125 for most Birch Gold Group customers.
  • Storage fees: When your gold is stored at a depository, storage fees most Birch Gold Group customers pay are $100 for annual storage and insurance.

What types of gold can be held in a Gold IRA?

If you’re looking to turn your 403(b) to gold, it’s important to note the IRS sets purity requirements in IRA-eligible gold. Gold coins, bars, and rounds must be 99.95% pure for them to be IRA-eligible, with the exception of the American Eagle coin, which has a purity requirement of 91.67%.

How can you convert a 403(b) to a Gold IRA without incurring penalties?

You may be subject to penalties depending on your transaction. For example, any conversion of a Traditional retirement account to a Roth retirement account may make you subject to income taxes on the converted amount.

A Birch Gold Group Specialist will walk you through the steps to successfully convert a 403(b) to gold. To avoid the potential of taxes and penalties, a direct transfer or rollover can be made. With a 403(b) transfer, funds are moved directly from your 403(b) to your new Gold IRA without taking physical possession of your funds. This process is often seamless, as it’s handled by your custodian.

Unlike a direct transfer or rollover, an indirect transfer can result in penalties and taxes. With an indirect transfer, funds that are withdrawn from your 403(b) are given directly to you. When you receive these funds, you have 60 days to transfer your funds to your new Gold IRA, and if you miss the 60-day window, you risk paying taxes and fees.

Additionally, certain types of transfers and rollovers can come with penalties when converting a 403(b) to a Gold IRA. Working with a financial advisor can help ensure you make a transfer that doesn’t impose penalties or is subject to taxes.

Key Takeaways: How to Buy Gold With a 403(b)

Converting your 403(b) to gold can be a great way to protect and diversify your retirement savings. At Birch Gold Group, our IRA Specialists will work with you throughout each step of the process, from selecting your account to finding a reputable depository to store your gold.

Call us today at (800) 355-2116 with any other questions you may have, or to start a Precious Metals IRA.

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