Once you make the decision to rollover your TSP funds into a gold, silver or alternative IRA, you need to make sure you do everything in the right order. If you don’t, it may take too long to complete the transaction. It is important to do this process quickly and correctly because the IRS could classify your transaction as a withdrawal if you don’t make the deposits fast enough. This may include an early withdrawal penalty and force you to pay taxes on the withdrawal amount.
It is important to note that a rollover happens when the funds are sent to you, the investor. As the investor, you need to deposit them into another qualified retirement account within a certain time frame, and according to IRS rules. This is important because it can have major tax implications if not done correctly.
Step 1: Open An IRA Account First Before You Start Any Other Paperwork
You will need to open an IRA account before you can rollover funds from your TSP balance. The best IRA program for gold, silver and cryptocurrency IRAs is a self-directed IRA through Regal Assets. You can signup for a Regal Assets IRA account by visiting RegalAssets.com and filling out their short email list subscription form. A Regal Assets associate should reach out to you within 48 hours to help you figure out which IRA plan is best for you. They will also walk you through everything needed to signup and make sure you are comfortable with your decision.
Once you have your IRA account setup, you should request that your Thrift Savings Plan write a check to you. This is an important step because simply transferring your balance to the IRA can result in withdrawal fees that can be avoided by going through the rollover process. The Regal Assets associate you speak with will be sure to remind you of this, but just keep it in mind.
Step 2: Complete Required TSP Paperwork
The next step is to start filling out the paperwork from the TSP. When you do a rollover, you can transfer some, or all, of your funds into an IRA. However, even if you want to liquidate the majority of your TSP funds, we recommend that you keep your account open if you are still eligible for TSP contributions. This is done by leaving at least $200 in your account, which is the minimum needed to remain open. By doing this, you are giving yourself flexibility of transferring funds into your TSP account at a later date if you wish to.
If you want to make transfers or withdrawals, you will need to download and fill out the required form:
- Form TSP-70 Request for Full Withdrawal (PDF)
- Form TSP-77 Request for Partial Withdrawal When Separated (PDF)
Filling Out Form TSP-70 Request for Full Withdrawal
If you decide to do a full withdrawal and close your TSP account, then you will need to fill out pages 1, 2, and 4 (Traditional Balance) and/or Page 5 (Roth Balance).
- Page 1 includes your personal information, and personal information for your spouse, if you are married. (You will need to get your spouse to sign off on the transfer and get the signature notarized. This is a security feature to make sure both parties agree with the transfer. Many banks provide free notary services to members. Otherwise check your phone book or the Internet to find a notary public.)
- In page 2, section 4, you declare how you want to take the withdrawal – as a single payment, life annuity, or monthly payments from the TSP. If you are transferring to an IRA, choose 100% for the Single Payment option. Of course, you can split this among different options if you choose. Select the Check Box in Section V to indicate you are transferring your assets to another retirement account. Section VII on page 2 requires your notarized signature to authorize the transfer.
- Finally, on Page 4 and Page 5 you indicate where you want the funds to be sent. You will need to include the address of your IRA custodian and the account number where you want the funds to be sent (this is why you need to setup your IRA account first). You will then need your financial institution to fill out the remainder of page 4 or 5 because a verifying official needs to sign the form before the TSP will process it. Then your IRA custodian will fax or mail the completed form to the TSP.
- Also, the Thrift Savings Plan can send a check directly to your custodian (for benefit of your account), and it should be deposited into your IRA.
- See instructions below if you have tax-exempt contributions – this is important because your IRA custodian fills out this section.
Filling Out Form TSP-77 Request for Partial Withdrawal When Separated
This process is very similar to the above process, but the page numbers and sections numbers are different. Read through the directions very carefully to make sure that you don’t miss anything. If you have questions, call your IRA custodian to walk you through the form.
Step 3: Transfer Traditional Funds To A Traditional IRA And Roth Funds To A Roth IRA
It may sound simple, but many fail to transfer their TSP funds to the correct type of account. It is an important step because doing so will prevent problems with the IRS. This means that if you want to convert a Traditional account to a Roth account, the best method is to utilize two separate transactions. First, complete your TSP to IRA Rollover, then perform a Traditional IRA to Roth IRA rollover. In the case of Regal Assets, you will be utilizing a self directed IRA, so make sure to communicate your plan with your Regal Assets adviser.
How Long Does A Rollover Take?
The unfortunate answer is that this is an unknown variable. It depends largely on how busy your IRA custodian is, how long it takes the TSP to process your paperwork, etc, so the time can vary. On average it should take roughly 2 weeks but it can take up to a month in some cases.
How To Utilize Your Tax-Exempt Contributions Properly
If you received contributions to a Traditional TSP while you were in a tax-free location, you will most likely have tax-exempt contributions. Note that this does not apply to Roth TSPs and only applies to funds in your Traditional TSP account. To verify that you have received tax-exempt contributions, you should see something like this on your TSP statement:
Please understand that you DO NOT want to transfer any of these tax-exempt funds into a Traditional IRA. Because these contributions are tax-exempt, it makes you eligible to roll them into a Roth IRA. It may seem like its not a big deal, but the long-term benefits of this are enormous. Here is the difference:
- When you make contributions to a Traditional IRA, 401k plan or a TSP, the contributions are considered pre-tax contributions. This means you make the contribution before your income is taxed. Because of this, it lowers your taxable income in the tax year you make the contribution. These funds then grow without taxes until you reach retirement age. This means this money is only taxed once you begin making withdrawals.
- Roth IRAs are basically the opposite of a Traditional IRA, because they are considered to be post-tax contributions. The funds are contributed after you have paid your taxes and grow tax free until you withdraw the funds. This means you will never have to pay taxes on these funds again. The law also allows military members to contribute tax-free income to a Roth IRA. Meaning you will NEVER HAVE TO PAY TAXES on either the contributions or the earnings again.
To sum it up, the funds that you transfer into a Traditional IRA will only be taxed when you make withdrawals in retirement. However, anything transferred into a Roth IRA will never be taxed again. This is why you DO NOT want to transfer any of your tax-exempt contributions into a Traditional IRA. Because transferring the tax-exempt contributions into a Roth IRA will give you years of compounding growth without ever having to pay taxes on any of the gains, which is tremendously beneficial.
How to Transfer Your Tax-Exempt Contributions Correctly
Fill out Form TSP-70 if you want to make a full withdrawal of your TSP account. You can prevent your tax-exempt funds from being transferred into a Traditional IRA and avoid unnecessary penalties by NOT checking Section X, box 40 of this form. Make sure that you do NOT check this box:
If instead, you want to request a partial withdrawal of your TSP when separated by filling out Form TSP-77, make sure that you do NOT check section X, Box 36. Make sure that you do NOT check this box:
Section X is also the section that your IRA custodian must fill out to certify that you have an open account with them. When transferring your TSP funds into an IRA, we recommend you send a cover letter to your IRA custodian explaining your wish to not check Box 40 on Form TSP-70.
Keep in mind that tax-exempt funds are sent to you in the form of a check. By not checking the box mentioned above, you are telling the Thrift Savings Plan that your custodian cannot accept tax-exempt contributions into your account. Because of this, the TSP will disburse your tax-exempt funds in a check made out to you. This money is non-taxable, so you can do anything you want with it, including cashing it and spending it. But that would be a long-term mistake since you can roll those funds into a gold or cryptocurrency self-directed IRA to earn on and protect the value of your investments.
Once you receive the check, you will need to send it to your IRA custodian with instructions that it should be deposited into a Roth IRA. When you send in your check, you can sign the back and write the IRA account number on the back. You can also include a letter stating that it is a Rollover from the Thrift Savings Plan. This is important information for the financial institution to note so they can code it correctly for the IRS and avoid problems down the road.
Tax Implications Of Your Transfer/Rollover
Most times there won’t be any issues if you transfer your funds directly from a Traditional TSP to a Traditional IRA, or from a Roth TSP into a Roth IRA. In either case, your TSP will issue you an IRS Form 1099-R at the end of the year. A 1099-R is issued for Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (1099-R pdf). A 1099-R informs the IRS that there was a distribution from your retirement account.
The company that receives the IRA will issue you an IRA Contribution Information form known as IRS Form 5498 (IRS Form 5498 pdf). This is an IRS tax form which shows your funds were deposited into another retirement account. Filling out these forms will prevent you from getting tagged with an early withdrawal penalty, taxes, or other surprises.
When you do the Rollover, you need to make sure the IRA institution codes your contributions correctly so that you can avoid any issues with the IRS. You will still receive the IRS Form 5498 if you manually rollover your funds into an IRA instead of doing a direct transfer. Make sure to get some form of confirmation letter from your financial institution which states that they received the funds and they were deposited into your IRA.
The Thrift Savings Plan has some of the lowest expense ratios in the investment industry and it is nearly impossible to find mutual funds with expense ratios as low as a TSP. You certainly will not be able to find them in a 401k plan, because the majority of 401k plans have funds with relatively high expense ratios.
But sometimes it’s best to simplify your financial life and roll your investments into fewer accounts. As opposed to mutual funds and 401k plans, an IRA gives you better control over your investment options. This includes your ability to invest in a wide variety of alternative assets such as precious metals and cryptocurrencies, that you simply can’t access with the Thrift Savings Plan or 401k plans.
Pros Of A TSP Rollover
There are many benefits to doing a TSP rollover. One of the most easy to understand benefits is account aggregation. After many people leave the military, they may find themselves struggling to manage their finances. Part of the process of getting their finances in order includes account consolidation. If you have already been contributing to an IRA, it can become very convenient to transfer your TSP account into that IRA.
Additionally, IRAs, especially self-directed precious metals and cryptocurrency IRAs offered by Regal Assets, give you a much more diverse selection of investment choices that you can not access with a TSP. There are quite a few situations where a TSP is not the right savings vehicle, but two specific examples come to mind:
- One, for people who want to have a self-directed IRA, through companies like Regal Assets, or through other IRA companies which manage real estate or a business. Because of the tax treatment of these kinds of investments inside retirement accounts, these ventures receive maximum benefit when you consolidate your retirement assets. Also, because TSPs do not allow for self-directed investments, an IRA is the only kind of investment which makes sense for these needs.
- Two, for people who may benefit from purchasing a qualified longevity annuity contract (QLAC). A QLAC is for people who are nearing retirement age for their required minimum distributions (RMDs), but do no need the income. The major benefit of a QLAC is that the account owner can choose to defer the RMDs until a later date. We won’t discuss the specifics of a QLAC here, but its important to note that you can only purchase a QLAC in an IRA and not from a TSP.
Cons Of A TSP Rollover
There are also some cons that come when rolling a TSP into an IRA. The number one con is the cost. TSPs offer some of the lowest fees in the investment industry and most IRAs simply can’t match them. The other thing to focus on is tax planning as tax-exempt contributions can have a big impact. Let’s take a more in depth look at this last point to understand its importance.
If you have significant amounts of contributions from tax exempt combat zones, then you’re most likely aware that the distribution of those tax deferred contributions are tax-exempt but the earnings on them are not. Because of this, when you transfer this account into an IRA, your IRA custodian may not know how to segregate your tax-free and taxable contributions properly. A TSP is the only type of retirement plan that accounts for tax free combat zone contributions. Most other retirement plans focus solely on pre-tax and after-tax contributions, not tax-free ones. What this means is that when you rollover your TSP to an IRA account, your IRA custodian will likely treat your account in the following manner:
- Traditional accounts will be considered pre-tax
- Roth accounts will be considered after-tax
So your distributions will have required withholding’s by the IRA custodian. This means that your tax-free distribution may have tax withholding’s, even though they’re supposed to be tax-free. You can regain the withheld money when you file a tax return, but the burden of proof now falls entirely on you. You must be able to clearly identify that the transferred money originally came from contributions that were made by you when you were in a combat zone. To do so, you must have clear records which indicate:
- Your deployments & total contributions during those deployments
- That your deployments qualified for tax-free contributions according to IRS Publication 3 (Armed Forces Tax Guide)
*You used to also need to ensure that your roll over and distributions were consistent with IRS Notice 2014-54, Guidance on After-Tax Amounts to Rollovers. This was the rule which required that when you withdraw from a retirement account plan, and you have both pre-tax and after-tax (as well as tax-free) contributions, then you must make your withdrawals in proportional amounts. However, due to the new TSP rules changes, this is no longer applicable.
Pros vs Cons Summary
To summarize, the advantages of leaving your funds in a TSP are:
- Low expense ratios
- The possibility of tax free withdrawals (if you made contributions with tax free funds)
- You won’t be charged any additional fees to leave your funds in the Thrift Savings Plan (except for the plan expenses)
The advantages of rolling your TSP into an IRA include:
- Full control of investments
- More investment options
- Ability to control fees
New TSP Rule Changes Make Now The Best Time To Rollover Your Account Into An IRA
The new rule changes that went into effect on September 15th, 2019 give TSP account holders a lot more options for how and when they can access money from their TSP account. Some of the most important points to note are:
- After you separate from service, you can take multiple post-separation partial withdrawals
- If you’re 59½ or older and still working in federal civilian or uniformed service, you can take up to four in-service withdrawals each year.
- You’ll be able to choose whether your withdrawal should come from your Roth balance, your traditional balance, or a proportional mix of both
- You will no longer need to make a full withdrawal election after you turn 70½ and are separated from federal service. (You will still need to receive IRS required minimum distributions (RMDs).)
- If you’re a separated participant, you’ll be able to take monthly, quarterly, or annual payments.
- You’ll be able stop, start, or make changes to your installment payments at any time.
- You’ll have enhanced online tools to help you make withdrawals in the My Account section of tsp.gov.
For a full explanation of how these rules effect you and more details about these points, make sure to read this: PDF.
As you can see, these new changes give you options on how to manage your TSP account that you have never had before. The result of these rules is an ability to more freely move your funds, which gives you access to investment options that you previously did not have. This is why now is the best time to rollover your account into a self-directed gold and/or cryptocurrency backed IRA through Regal Assets. At this point in time, TSP rollovers only account for a small portion of the overall IRA rollover market ($443 billion for TSP vs. $4.8 trillion for 401(k)s). However, thanks to these new rule changes, you can bet that TSP contributions to IRAs will surely rise closer to that of investments like 401k’s.
The BEST Gold And Cryptocurrency IRA Company In The World Is Regal Assets
Many people have little trouble deciding to rollover their IRA or 401k into a Gold IRA or Silver IRA. However, most are unsure which is the best company to work with. Luckily for you, we have compared the top companies and quickly came to discover that Regal Assets is truly the number 1 option.
If you’re worried about a dollar devaluation, the struggling economy or other alarming economic factors like negative interest rates, trade wars and slowing growth, a Gold IRA can be a great place to diversify your assets and protect yourself from inflation. If you’re concerned about these factors, you are not alone! Many savvy investors feel the same way and consistently choose to invest 1/3 or more of their portfolios into precious metals.
In this Regal Assets review, you will learn how to invest in gold, silver and bitcoin with the number one rated Gold IRA company in America, Regal Assets. Regal Assets offers investors IRA programs, physical precious metals, cryptocurrency, historical charts, news and more. They also offer assets like physical precious metals in the form of coins, bullion and bars.
The advantage of these assets is that they are more stable than paper based investments like stocks, treasury bonds and mutual funds. Regal Assets specializes in helping customers make smart investments in precious metals and cryptocurrencies for their IRAs and retirement portfolios. Their mission is to bring customers the best alternative assets for their retirement accounts.
Their process is approved by the IRS and has tremendous security and transparency. The company has partnered with some of the most accredited custodians and trusted trading firms which ensures that your investments are safe and secure.
Benefits Of A Gold IRA
A gold IRA offers investors many benefits that traditional IRAs simply can’t match. When you hold gold in an IRA, you have protection against a drop in the value of a traditional fiat currency. The US dollar is no longer as strong as it once was, and investing in gold can protect your wealth from dropping because of dollar devaluation. Even in times of economic crisis or collapse, gold will always hold value.
As the markets of the world are “recovering” from the economic crisis of 2008, gold has been an investment that has continued to be stable and has been trending upward. Gold has not been getting devalued, and in fact, over the past 10+ years, the price of gold has risen year to year. As most countries continue to suffer through recession or depression, gold has helped those who invest in it to feel secure that their value will be retained. Investors can be confident that investing in gold or silver won’t lead to inflation and devaluation that holding fiat currencies will.
Additionally, investing in a gold or silver IRA can help circumvent retirement caps. This is because those who make more money pay more taxes. Upper income earners also have their retirement capped at $205,000 a year. This leaves the highest income earners with a limited set of tools to fund their retirement. Investing in gold can set up a solid retirement for the future because gold will continue to be stable and will be worth reselling. This will help set up a great retirement for anyone who invests in precious metals like gold and silver.
There has also been slowing output and sales of gold, as the production of gold has slowed down since 2000. As the worldwide economy continues to slow, the lack of production of gold has pushed the price of gold upwards. Many banks and large financial institutions are not selling their gold and in fact, are hoarding it. This production slow down and decreasing gold sales have helped increase the demand for gold. This increased demand and reduced supply will keep the price rising for the near future. If you take action and invest in gold as soon as you can, you can get in on the near ground floor. In ten years or so, the price of gold should more than double what it is now. Any item that is precious and rare will increase in value when it’s not available or hard to find. Gold is no exception to this rule, and these facts make it much more valuable than holding dollars in a traditional IRA.
How Does The Gold IRA Rollover Process Work?
A Gold IRA rollover is a safe and tax-advantaged strategy of moving your retirement savings into a Gold IRA as opposed to simply transferring your funds from an IRA to a Gold IRA. The IRS has strict rules and says there is a clear difference between a rollover and a funds transfer. When you make a funds transfer, the original custodian transfers the IRA funds directly to the new IRA custodian that you designated to receive the funds. However, in a rollover, the funds being moved are paid directly to you and then you must deposit the funds into your new Gold IRA account yourself.
When you choose a Gold IRA rollover, you have 60 days from the date that you receive your funds to deposit the money into the Gold IRA company or Custodian that you have chosen. If you do not complete the transaction by that time, the money becomes a taxable withdrawal that will cause you a 10% early withdrawal penalty if you are 59 ½ years old or younger. However, if you are withdrawing your funds from a personal IRA to rollover into another IRA, there is no tax withholding charged. But keep in mind that you can only do a rollover once per year.
Regal Assets will provide you with all of the necessary paperwork and information that you need to arrange your IRA rollover. You should have this paperwork handled prior to the rollover date to ensure that the money will be successfully transferred to your Gold IRA account within the IRS’s 60 day window. Sometimes your existing IRA custodian will choose to issue you a check for the full amount of your IRA and then you will have to arrange a deposit for the full amount of your funds with Regal Assets. There may also be some fees associated with the rollover of your current IRA. These details should be covered with your IRA custodian prior to making any action or decisions.
The IRS also has strict rules as far as which types of gold that you can invest in as a part of your IRA. One requirement is that the gold needs to minted at a minimum purity level of 99.9% or better in order to be eligible. Some coins that are eligible are the American gold & silver eagle, the American gold & silver buffalo, the Canadian Gold Maple Leaf and other similar coins. It also includes certain gold bars such as the Credit Suisse gold bar.
There are many things to consider when you switch from a traditional IRA to a Gold IRA, but the advantages of adding Gold to your portfolio make it worth the time and effort. Make sure that you understand the steps required to complete your Gold IRA rollover so that the process will be simple, stress free and help you avoid taxes or fees.
Regal Assets Is The Number One Rated Cryptocurrency IRA Company In America
Regal Assets is the first company in the IRA industry to be awarded a cryptocommodity trading license. They are also one of the first in the world to offer major cryptocurrencies as a part of a retirement account (not just Bitcoin).
If you want to invest in a cryptocurrency that is not available on their page, you can contact them directly to discuss your objective because they can support literally any tradeable cryptocurrency.
Regal IRAs are the first Alternative Assets IRA, allowing you to invest in both digital assets like cryptocurrencies and hard assets like precious metals. The Regal IRA is the smart investment vehicle of the future and is one that you simply can not find anywhere else.
Regal Assets has been the market leader in Precious Metals IRAs for 9 years in a row! Precious Metals and cryptocurrencies are the only assets that don’t correlate with the price of the dollar and consistently perform well in times of economic crisis. That’s why they believe, just like many billionaires, banks and governments do, that these assets are a necessary part of wealth protection and diversification.
Many financial experts view cryptocurrencies like Bitcoin and Ethereum as the new digital versions of gold and silver. These two cryptocurrencies are decentralized, don’t correlate with the dollar or stock market, are controlled only by supply and demand and have a limited supply, just like gold and silver.
Bitcoin and Ethereum are mined by powerful computers, and because their supply is limited like gold, inflation is nullified. And like silver, Ethereum has multiple industrial uses cases aside from being a currency. Their smart contract platform and its technology is being used worldwide by investors, banks, governments and corporations.
Why You Should Join Regal Assets Today
There are so many features to love about Regal Assets. They have received a large amount of accolades from reputable financial publications like Forbes and MarketWatch. Their BBB rating is an A+, their BCA rating is a AAA and their TrustLink rating is a five, which are all the highest ratings possible.
They also have tons of positive reviews in customer review websites and articles. The company has a spotless track record. This is demonstrated by searching any search engine for Regal Assets Reviews and reading the countless praises from actual users.
Their fee structure is simply amazing for most investors. All retirement accounts are only charged $250, regardless of the amount of the purchase. Also, for the first year all fees for precious metal accounts are waived. This means investors are only charged on their second year of storage. Their low cost segregated storage is unlike the majority of gold investment companies. The majority of their competitors charge must higher rates for the same services.
Many gold investment companies don’t even offer segregated storage. This means your bullion is stored in separate storage compartments and not mixed in with other investors products. Additionally, Regal’s fee for this service is only $150, as opposed to the industry average of more than $250.
Regal Assets offers quick shipping and processing times for clients who want to get their assets out of storage. You can withdraw your funds at any time and they will safely arrive at their destination within one week. This timeframe is guaranteed by the company. In fact, if your bullion does not arrive within seven days, Regal Assets will actually give you a Silver American Eagle coin for free! Most gold investment companies take a minimum of 15 to 30 days or longer to deliver clients gold.
Regal Assets is a tremendous investment platform. They offer you services like the alternative IRA that you simply can not get anywhere else. Their service is tailored to serve corporate clients and large precious metals IRA holders. However, there are plenty of things to be excited about if you are small scale investor.
Regal Assets specializes in gold IRA rollovers and helps customers avoid simple mistakes such as not buying the correct coins that are approved for IRAs or using incorrect tax documents. Almost 95% of Regal Assets business is made through IRA rollovers of their clients. Because of this, prospective investors can feel confident that their money is in good hands.
The company also offers tremendous customer service. Regal is one of the few companies in the financial industry that realizes that customer satisfaction is the most important part of their business. The company has an excellent support staff who respond quickly to customer concerns. They are very knowledgeable about the precious metals market as a whole and can make complex topics easy to understand. Regal also offers a dedicated agent to deal with the assets of corporate clients. This service makes their response time and ability to solve problems even faster.
Regal Assets is first IRA company to be rewarded with a cryptocommodity trading license. This means they offer experience and products that are truly one of a kind. If you interested in opening or rolling over a precious metals or alternative IRA, click the link below to signup and make your first purchase today. Also, if you signup for Regal Assets free email list now you’ll receive a free 2019 investors kit, 2 free award-winning DVDs on the future of metals and cryptos + a Forbes issue.
Visit RegalAssets.com to signup for an account now!