A 403(b) is a type of retirement plan specifically for public school employees and certain tax-exempt organizations. It operates like a 401(k), allowing you to contribute a portion of your pre-taxed paycheck to the account until you retire and cash it out. Unfortunately, 403(b)s come with relatively limited investment options, so many choose to roll them over to other retirement accounts.
A 403(b) to gold IRA rollover can help effectively diversify retirement savings and help protect against inflation and market volatility. If these benefits sound appealing to you, you’re going to need to learn the rollover eligibility requirements, precious metals storage options, IRS-approved gold criteria, and more to ensure you set your transfer up for success.
Below, we discuss everything you need to know about a 403(b) to gold IRA rollover. For personalized support, we recommend scheduling a consultation with a financial advisor.
What Does a 403(b) “Rollover” Mean?
A 403(b) rollover is a tax-deferred transfer that allows you to move your retirement funds into another account, like a self-directed IRA. By choosing a gold IRA, you move the funds into the self-directed account and then purchase your chosen precious metals accordingly so you can diversify your retirement savings and enjoy numerous other benefits.
Direct vs. Indirect Rollover
You can choose between a direct or indirect rollover when completing this process:
- Direct 403(b) rollover: A direct rollover moves funds directly from your 403(b) to a gold IRA custodian of your choosing.
- Indirect 403(b) rollover: An indirect rollover allows you to “cash out” your 403(b). You will then have 60 days to open your gold IRA and fund it using your previous 403(b) funds to avoid tax penalties.
You may choose either option, though direct rollovers typically offer heightened convenience.
What Are the Eligibility Requirements for a 403(b) Rollover?
To roll over your 403(b), you must meet various requirements to avoid tax penalties. You can qualify for a tax-deferred rollover if you:
- Change employment
- Are at least 59.5 years of age
- Become disabled
- Experience severe financial hardship
The most common options are to roll over funds upon changing jobs or reaching the threshold age. If you’re ready to maximize your savings and avoid early withdrawal penalties, you may want to roll over your funds once you qualify for one of the above criteria.
Why Should You Rollover Your 403(b) to a Gold IRA? Looking at the Benefits of Precious Metals Investments
A 403(b) to gold IRA rollover offers numerous advantages, including the following:
Investment Diversification
With a standard cash-invested 403(b), you will likely lose money over time as the U.S. dollar inflates. A gold IRA allows you to diversify your assets into a physical commodity so all your eggs aren’t in one basket.
Inflation Hedging
Gold is generally considered a historically safe-haven asset because of its ability to hedge against inflation. In poor economic periods with high inflation rates, gold excels, allowing you to save for your future, even during uncertain times.
Protection Against Market Volatility
Other asset classes, like stocks and bonds, typically perform poorly during periods of market volatility. Precious metals are physical commodities with strong demand rates from various sectors, so they usually do not have the same counterparty risks. With a gold IRA, you can hedge against market volatility, allowing you to enjoy a heightened sense of security in your retirement savings plan.
Tax Advantages
With a 403(b) to gold IRA rollover, you can defer your taxes until withdrawal, allowing you to invest in precious metals without facing the penalties of an early retirement account withdrawal. Assuming you meet all rollover requirements, you should not need to pay taxes until you’re ready to cash your precious metals out.
How To Complete a 403(b) to Gold IRA Rollover
So, what does the 403(b) to gold IRA rollover process entail? Here’s each step you’ll need to take:
- Gold company selection: First, you need to select a trusted gold dealer. We suggest looking into company reviews and product offerings to see if they are the right fit for you.
- Custodian selection: Your chosen company has most likely partnered with a few IRS-approved custodians to manage your gold IRA. When reviewing your options, we recommend comparing experience, credentials, and fees.
- Rollover initiation: Next, initiate your 403(b) rollover, your dealer and custodian will help you fill out all of the necessary paperwork to transfer your funds to your new account.
- Funds transfer: You can now transfer funds from your 403(b) to your new account by authorizing a direct or indirect rollover. Depending on the method you choose, the transfer can take a few weeks.
- Precious metals purchase: Finally, you can choose to use your gold IRA funds to purchase gold bars or coins on your behalf to fund your IRA. You must purchase IRS-approved precious metals, which must be stored according to IRS requirements. Your dealer will usually offer storage facility recommendations, providing guidance on delivery insurance, storage costs, and more so you know what to expect.
Upon establishing your account, you can continue making contributions to it as you please, following similar requirements as you’d need to meet with any IRA. A financial advisor can help you understand how much you need to contribute to adequately save for retirement.
What Fees Should You Expect With a 403(b) to Gold IRA Rollover?
A 403(b) to gold IRA rollover comes with numerous advantages and can provide long-term growth, but still, it behooves you to consider all aspects of this transfer through an objective lens. Upon initiating the transfer and moving forward, you should expect fees that can add up, especially if you aren’t investing a healthy amount. Fees typically include the following:
- Setup fees: You’ll face account setup fees when establishing the Gold IRA. This might include a one-time account creation fee, rollover fees, wire fees, and more. Depending on your custodian, initial account creation fees can range from $50 to $300.
- Maintenance fees: Maintenance fees are ongoing costs the custodian charges for managing your account. The account maintenance fee may range from around $80 to $300 per year, depending on which provider you choose.
- Storage fees: You will also need to pay an annual fee for your precious metals vaulting service and the associated insurance. Depending on your security preferences and the value of your assets, you can typically choose between segregated and non-segregated storage facilities. Storage fees may be a flat rate of $100 to over $500 per year, or they may be charged as a percentage of your total asset value.
- Other fees: Some custodians charge additional fees relating to your transactions or other administrative actions. Be sure to evaluate all costs in your contract in advance so you understand all the fees involved up front.
Because these fees can seem intimidating at first, many recommend initiating your gold IRA with a minimum investment of $10,000. Some custodians set even higher minimums, so you may need to look into minimum requirements when comparing options. To help offset some of these costs, your gold dealer may have special promotions, make sure to ask and see what offers may be available.
Tips on Avoiding Issues With Your 403(b) Rollover
A 403(b) to gold IRA rollover should be relatively simple, especially when working with a trusted gold dealer. Still, you need to prepare well. Use these tips to avoid common issues during the process:
- Meet rollover deadlines: If you choose an indirect rollover, you must open and fund your gold IRA within the required 60-day timeframe to avoid unnecessary penalties.
- Avoid penalties: You may face unnecessary tax penalties if you attempt a 403(b) rollover without meeting eligibility requirements. Ensure that you’re eligible in advance.
- Purchase the correct precious metals: You can only fund a gold IRA with IRS-approved precious metals, so be sure to choose items that meet the purity requirements.
- Adhere to storage requirements: To comply with regulations, your gold must be stored in an IRS-approved facility, so ensure you select a reputable vaulting service.
Working with a trusted custodian can help you avoid common pitfalls and enjoy a smooth rollover. A good gold dealer will have vetted out custodians for you and narrowed it down to a few select partners. You can also meet with a financial advisor for more personalized support regarding your investments and financial future.
DiversifyYour Retirement by Opening a Gold IRA Today
A 403(b) to gold IRA rollover allows you to maximize your long-term savings while enjoying investment diversification benefits, helping protect against market volatility, and inflation hedging.
We recommend seeking professional advice so you can carefully plan your rollover and maximize your benefits. As you’re comparing dealers, consider Preserve Gold for your trusted gold IRA provider. We can ensure a smooth rollover process, delivering expertise and customer-focused services from start to finish.
Call Preserve Gold today at (877) 444-0923 to learn more about your 403(b) to gold IRA rollover options.