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Many non-profit employees and those who work for state and local governments are familiar with 403(b) retirement plans. It makes sense for an employee to sign up for whatever retirement plan their employer provides.
Many people use a 403(b) plan as their first retirement account.
Eventually, they will reallocate into diversified assets, which may include precious metals, and then deposit these assets into a self-directed IRA.
Before we get started, investing your savings is a serious task. When it comes to adding precious metals to your portfolio, how do you know which companies to trust?
That is why we have researched every company in the industry and selected the very few with the highest customer service standards.
This way you can easily compare the best companies in the business, and choose one that fits your needs and investment goals.
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Investing in precious metals, like gold, is an excellent way to diversify a retirement portfolio and protect retirement assets. Gold is also an asset that can help an investor weather an economic crisis. This article will discuss the fundamentals of a 403(b) plan, then talk about how someone saving for retirement can use their 403(b) to buy precious metals through an IRA.
Discussing what a 403(b) is before describing how people can use 403(b) assets to fund a gold IRA is important. Employees of 501(c)(3) tax-exempt organizations can open a 403(b) plan for their retirement savings. It is comparable to a 401(k) account, which private sector employers frequently provide their employees.
Government workers, medical professionals, librarians, self-employed clergy, and staff members of public schools like teachers and administrators typically use a 403(b). A 403(b) account, like a 401(k), allows an individual to set aside a portion of each paycheck for retirement. In some cases, the employer may match a portion of their contributions.
Two Types of 403(b) Plans
Traditional and Roth are the two types of 403(b) plans. However, the main difference is how they are taxed. An investor funds a Traditional 403(b) plan with pre-tax money, and the money grows tax-free. Pre-tax contributions can lower an individual's taxable income. Plus, the individual will only pay taxes on the funds once they withdraw in retirement.
However, individuals contribute to a Roth 403(b) with after-tax money, so the contributions will not lower their taxable income. Yet, the money they put in grows tax-free, and they will not pay taxes on withdrawals in retirement.
There are several benefits to having a 403(b) plan. First, the same tax benefits of 401(k) and IRA accounts apply to 403(b) accounts. Whether you select a Traditional or a Roth 403(b), you can reduce your tax bill this year in exchange for taxed distributions in retirement.
However, an individual who makes after-tax contributions can have tax-free distributions at retirement. As of 2023, individuals can contribute up to $22,500 to their 403(b) plan if they are under 50. Individuals who are over 50 can contribute up to $30,000.
Second, employers offering 403(b) plans may offer to match some of their employees' contributions like corporations that provide 401(k) plans. Each organization has a policy regarding matching employee contributions, so individuals must speak with their HR department regarding this information.
Finally, 403(b) plans allow individuals who have worked for the same employer for at least 15 years to contribute up to $3,000 more per year to their accounts, in addition to the standard catch-up contributions allowed to persons 50 and older.
403(b) plans have some limitations. First, individuals are limited to investing in an annuity contract from an insurance company and mutual funds. Investors cannot purchase individual stocks, bonds, or other investment assets.
A second drawback is the fees and penalties. 403(b) plans can have high costs that can reduce an investor's profits. There is a 10% early withdrawal penalty plus taxes if the investor takes money out of their 403(b) before the age of 59 1/2. However, they can avoid the penalty if they have a valid reason, such as a significant medical bill.
However, IRAs and 401(k)s also have these fees and penalties. Investors should learn about the 403(b) plan's administrative expenses and any investment-related costs and work to keep these as possible to maximize returns.
Buying Precious Metals for Retirement
403(b) plans are a good way for state and local government employees, educators, and non-profit employees to save for retirement. Unfortunately, they are limited to investing in annuities and mutual funds.
As a result, they cannot take advantage of the wide variety of available investment options to help them grow their retirement savings and withstand economic swings.
One of these investment options that 403(b) owners cannot invest in is precious metals. Gold, silver, platinum, and palladium are precious metals that can add value to a retirement portfolio. Unlike paper money and related assets, precious metals have inherent value, with gold being the most well-known precious metal with strong material value.
Societies have historically used gold in various ways, from backing currency to being used in jewelry. Silver and platinum, two examples of precious metals with many industrial uses, are effective as trade and economic tools. Globally, investors monitor changes in the price of precious metals to indicate economic trends.
Precious metals can benefit a retirement portfolio in several ways. First, precious metals like gold can diversify a portfolio to protect it from economic swings. Gold can operate as a hedge to protect an individual's retirement savings even during financial crises or market collapses should strike.
For example, the government may print excess money that can lead to inflation. As a result, assets in a 403(b) account can temporarily lose value. Investors can preserve the value of their retirement portfolio by including alternative investments like gold. Diversification is a great risk management strategy for a retirement account.
Second, a limited quantity of gold and other precious metals enables them to retain their high value. Third, gold's historical record of being a source of security and stability compared to other assets makes it a haven that countries and individual investors can rely on.
Finally, having gold in a retirement account has tax benefits. Investors know that IRAs have tax advantages and can choose a plan that allows them to pay taxes by making contributions to an IRA or at the time of distribution in retirement. However, investors can incur additional fees, such as capital gains taxes, when the price increases and they try to profit by selling their gold outside of an IRA.
Buying Precious Metals with a 403(b)
Employees will typically take advantage of the first retirement savings plan available even though their employer may only provide a few options. However, employees must remember that a 403(b) plan is not the only available retirement option.
Depending on their unique situation and retirement objectives, many people reallocate all or part of their 403(b) plans into another retirement plan.
One choice is to transfer money from a 403(b) into a self-directed gold IRA that can provide stability and diversification advantages that someone will want for their retirement savings.
In addition, an IRS-approved retirement account like a gold IRA enables individuals to store alternative assets like precious metals instead of being limited to the mix of securities that investors can have in a traditional IRA, like mutual funds, stocks, and bonds. Thankfully, the rollover procedure from a 403(b) to a gold IRA is easy when the investor understands the eligibility requirements.
Each 403(b) plan can have unique rules and conditions, provided that it complies with IRS rules and regulations. Therefore, a case-by-case analysis is necessary to determine eligibility. Thankfully, many companies specialize in opening gold IRAs for customers.
They also have precious metal experts who can assist individuals in deciding whether their 403(b) qualifies for a rollover. Individuals should talk to their tax professional about rolling over their 403(b) to a gold IRA to ensure it is the right decision for their retirement needs.
Opening a Gold IRA
There are a few steps individuals must take if they want to roll over their 403(b) plan to a gold IRA. First, individuals need to work with a precious metal specialist who will discuss their options and walk them through the rollover procedure.
These are the procedures when rolling over assets from a 403(b) plan to a gold IRA:
Open a New Gold IRA
Investors may hear the terms self-directed IRA, precious metals IRA, gold IRA, and silver IRA. These names refer to the same kind of IRA. For example, a gold IRA is a self-directed IRA with gold bullion. In addition to gold, this IRS-approved retirement account allows individuals to invest in other precious metals and traditional assets that a conventional IRA will enable investors to keep, like mutual funds, stocks, and bonds.
A gold IRA is available in several forms, including Traditional, Roth, SEP, and Simple, much like a standard IRA. Individuals should ask their tax advisor and gold IRA specialist to see which self-directed IRA is best for their needs.
Investors can buy precious metals for a gold IRA and hold them in their possession. However, they must use a custodian to keep these precious metals. Thankfully, they are free to work with any IRS-approved custodian. The IRA specialist typically has a list of recommended custodians they usually collaborate with for their customers.
Roll Over 403(b) Funds
You can fund your new gold IRA in many ways. However, if you have a 403(b), the best way to fund your new gold IRA is to roll over your 403(b) assets. In addition, the gold IRA specialist can assist investors with any necessary documentation, such as any forms the company that provided the 403(b) may require the investor to fill out.
Choose and Purchase Precious Metals
The most popular and commonly chosen precious metals people purchase for their self-directed IRA are gold and silver. However, palladium and platinum are also available, making them a great alternative to gold and silver. A specialist will confirm the investor's selections once they complete the paperwork and list the purchase options. The specialist will submit everything on the investor's behalf as soon as the investor approves the transaction.
Storing the Precious Metals
Once the investor completes the purchase, a fully insured and approved depository of their choice will store the precious metals. Of course, the investor can always contact their precious metals specialist to start any transactions or get a current estimate of how much their IRA is worth.
Gold IRA Rollover Companies
Many companies can help retirement investors transfer their 403(b) assets into a gold IRA rollover. Four of these companies include the following:
Our Top Pick - Unmatched Customer Service
Goldco: Protect Your Wealth, Tax & Penalty Free
Goldco is one of the most well-known IRA providers for gold buyers and is usually ranked among the top gold IRA businesses nationally.
Goldco has become a leading supplier of gold and silver IRAs for over a decade.
Setting up a gold IRA with Goldco is a simple process. Investors will benefit from their friendly and knowledgeable customer service team.
Investors must fund their new Goldco self-directed IRA after signing a contract to complete the purchase. Investors can use a 403(b) rollover to complete the process. Customers can benefit from Goldco's clear pricing details.
The company also has a generous promotion where customers can get up to 5% back in FREE Silver when they invest $50,000 - $99,999.
As well as get up to 10% in FREE Silver when they invest $100,000 or more.
Augusta Precious Metals
Highly rated Augusta Precious Metals has been in business for over ten years and has developed a reputation for meeting the financial needs of its customers through reasonable costs and pricing.
This company offers gold IRAs with a lifetime service warranty Plus, Augusta Precious Metals has a large assortment of educational resources for investors.
Augusta Precious Metals provides individuals with many benefits for using their services. They offer transparent pricing with reduced charges and no additional fees.
They have a large selection of gold and silver coins, bars, and bullion with no risk during the shipping or transferring process. Plus, the company has an easy setup process and return policy.
American Hartford Gold: Best for Bullion Investors
Many clients choose family-owned companies like Southern California's American Hartford Gold because of their dedication to long-term stability and family financial security.
This business has consistently been among the best in the precious metal IRA industry for the past six years. American Hartford Gold has grown its clientele and elevated its trust with customers despite being relatively new.
The company has online customer support, offers a buy-back program, and insurance and shipping are free. These companies can assist investors with everything they need to start converting their 403(b) funds into a gold IRA.
Red Rock Secured
Southern California-based Red Rock Secured is a privately held company. Their goal is to safeguard their clients' retirement by educating them, supplying them with high-quality precious metals, and offering superior customer support.
They want their customers to become knowledgeable investors and to advise them on the best ways to protect their retirement savings through diversification in gold and other precious metals.
The company's free educational webinars, free shipping, insurance, and up to $5,000 in free silver can benefit investors.
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