Updated: July 30, 2026

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The HELPS Act provision in Internal Revenue Code Section 402(l) lets a retired qualified public safety officer exclude up to $3,000 per year of pension distributions from gross income. The distributions must be used to pay qualified health, accident, or long-term care insurance premiums for the officer, spouse, or dependents.

The mechanic was historically narrow: the plan administrator had to send the premium payment directly to the insurer. SECURE 2.0 Act Section 328, signed into law December 2022, broadened the rule so the participant can self-certify the exclusion on Form 1040.

That single change turned a paperwork puzzle into a planning lever for any pre-Medicare PSO with a governmental pension and a desire to diversify part of the balance into a precious metals IRA. If you are about to choose a custodian for the surplus, see the 2026 OPRS dealer list before you sign anything.

Table of contents show

What direct-pay-to-insurer actually meant before 2023

From the moment Section 845 of the Pension Protection Act of 2006 wrote IRC Section 402(l) into the code, the exclusion was conditioned on a direct payment mechanic. The qualified public safety officer could not take cash, pay the insurer, and then claim the exclusion.

The governmental retirement plan, in its capacity as plan administrator, had to cut the check (or send the ACH) to the health, accident, or long-term care insurer.

The participant signed a deduction authorization, and the plan administrator reduced the periodic pension benefit by the premium amount. The 1099-R issued at year end then showed the gross distribution in box 1 and zero in box 2a for the amount that flowed straight to the insurer.

The intent was anti-abuse. By routing the dollars through the plan to the insurer with no participant intermediation, the IRS could be confident the dollars actually paid an insurance premium and were not being recharacterized after the fact. The administrative cost of that intent fell entirely on plan administrators of state and municipal pension systems.

Why most plan administrators never built the direct-pay channel

Most state and municipal pension systems serve thousands of insurers (BCBS plans, regional carriers, Medigap supplements, AFLAC, long-term care issuers, dental and vision underwriters). Building an ACH origination relationship with each of those insurers, validating the policy numbers, reconciling failed payments, and processing premium changes is a back-office program that requires staff, software, and ongoing maintenance. Many systems concluded the volume did not justify the build.

The practical result was that the HELPS exclusion existed on the statute but sat unused for hundreds of thousands of retired police, firefighters, EMTs, and corrections officers. The participants did not know the rule. The plan administrators did not offer the rule. And when participants asked, the answer was often “we do not support that program at this time.”

What SECURE 2.0 Section 328 changed in 2023

SECURE 2.0 Act Section 328, enacted as part of the Consolidated Appropriations Act of 2023 (Public Law 117-328), amended IRC Section 402(l) to permit self-certification by the participant.

Effective for distributions in tax years beginning after December 31, 2022, three steps are now permitted. The officer can (1) receive the pension distribution into a personal account, (2) pay the qualified insurance premium personally, and (3) self-certify the exclusion on Form 1040. That means entering the gross distribution on line 5a, the reduced taxable amount on line 5b, and the letters “PSO” next to line 5b.

The direct-payment mechanic is no longer mandatory. Plan administrators are no longer the bottleneck. For deeper coverage of the $3,000 exclusion mechanics, the sequencing rules, and the rollover trap most retirees encounter, see our HELPS Act $3,000 health insurance exclusion explainer.

The remainder of this guide focuses on the custodian-side plumbing. Specifically, it covers how the procedural handoff works when a separating PSO wants to roll the surplus into a gold IRA while keeping the exclusion alive on the retained governmental balance.

Why a gold IRA custodian has zero HELPS role

The HELPS exclusion in IRC Section 402(l) is restricted to “eligible retirement plans” that are governmental plans, as defined in IRC Section 414(d). An Individual Retirement Account under IRC Section 408 is not a governmental plan.

Once dollars are rolled out of a governmental defined-benefit or defined-contribution plan and into an IRA, those dollars permanently lose access to the Section 402(l) exclusion. The IRA custodian cannot reactivate it, regardless of asset class (gold, silver, mutual funds, individual equities, or cash sweeps).

This is the single most expensive misunderstanding facing a separating PSO. The procedural framing in most affiliate marketing is “roll your whole 457(b) to a gold IRA for inflation protection.” The framing ignores that the rollover, executed in full, surrenders the HELPS exclusion permanently.

Bridge years to Medicare at age 65, multiplied by $3,000 per year, multiplied by the marginal federal tax bracket, is the dollar amount surrendered. A 9 year bridge at the 22 percent bracket equals $5,940 of federal tax savings forfeited. The custodian does not warn about this trade, because the custodian does not see it.

The custodian sees the rollover paperwork only, and the rollover paperwork is silent on Section 402(l). Check this dealer against the 2026 OPRS list before you accept a full-rollover recommendation.

Sizing the HELPS floor for your bridge years

The starting calculation is the number of bridge years between the planned separation date and the participant’s Medicare eligibility at age 65. For a lieutenant retiring at 56, the bridge is nine years.

Each bridge year can absorb up to $3,000 of pension distribution under the statutory cap. The nominal HELPS floor is therefore bridge years multiplied by $3,000, plus a 10 to 20 percent buffer. That buffer absorbs premium drift, Medigap supplement increases, and long-term care premium escalation if you intend to layer LTC coverage during the bridge window.

The chart below shows the cumulative exclusion value, and the federal tax savings at a 22 percent marginal bracket, across four bridge-year scenarios.

Grouped bar chart showing two series across four bridge-year scenarios for a separating qualified public safety officer using the IRC Section 402(l) HELPS exclusion at the statutory 3000 dollar annual cap: premiums covered in US dollars and the federal tax savings at a 22 percent marginal bracket. Five year bridge equals 15000 dollars premiums covered and 3300 dollars federal tax savings, seven year bridge equals 21000 dollars and 4620 dollars, nine year bridge equals 27000 dollars and 5940 dollars, fifteen year bridge equals 45000 dollars and 9900 dollars. — Figure 1. Cumulative HELPS Act exclusion value across bridge-year scenarios at the IRC Section 402(l) $3,000 annual statutory cap, with federal tax savings calculated at the 22 percent marginal bracket. Premiums covered equals $3,000 multiplied by bridge years. Federal tax savings equals premiums covered multiplied by 22 percent. Sources: IRC Section 402(l)(1); IRS 2025 tax brackets.

Precious metals IRA early-withdrawal penalty estimator

Taking money out of a precious metals IRA before age 59 and a half triggers a 10% federal additional tax on top of ordinary income tax. State add-on taxes vary; check your state. The federal penalty is estimated below.

Amount withdrawn (USD) Your age Combined marginal income tax rate (optional %)

Estimate only, not tax advice. The 10% federal additional tax applies to early distributions before age 59 and a half; specific exceptions exist. Your state may add its own tax, and ordinary income tax applies separately. Source: IRS Publication 590-B. Consult a tax advisor.

The right dealer explains every fee up front. Get Augusta's free precious metals IRA company checklist.

The HELPS floor retained inside the governmental plan should equal the cumulative premium amount across the bridge years, plus the buffer, plus a small operational reserve. That reserve keeps the plan from needing to suspend distributions if a premium escalation outruns the projection. A nine year bridge with a 15 percent buffer rounds to a $31,050 retained floor.

The split-retain handoff: governmental plan to gold IRA custodian

The procedural sequence below is the runbook a separating qualified public safety officer follows to roll the surplus into a self-directed gold IRA while keeping the HELPS-eligible floor intact in the original governmental plan. Each step has an actor (participant, plan administrator, gold IRA custodian) and a deliverable (form, wire confirmation, 1099-R coding).

Six step procedural flowchart for a separating qualified public safety officer executing the split-retain handoff between the governmental retirement plan administrator and a gold IRA custodian while preserving the IRC Section 402(l) HELPS exclusion floor: step 1 size the HELPS-eligible floor as bridge years multiplied by 3000 dollars plus a buffer, step 2 confirm the governmental plan supports partial distributions to the participant, step 3 open the self-directed IRA with the chosen gold IRA custodian and obtain trustee-to-trustee wire instructions, step 4 submit partial direct rollover paperwork instructing the plan administrator to roll the surplus to the gold IRA custodian and retain the HELPS floor in the governmental plan, step 5 verify the 1099-R issued for the rollover portion carries distribution code G to avoid the 20 percent mandatory withholding under IRC Section 3405(c), step 6 each tax year going forward request HELPS-qualified distributions from the retained governmental plan balance and self-certify the exclusion on Form 1040 line 5b with the PSO notation. — Figure 2. Split-retain handoff sequence between the governmental plan administrator and a gold IRA custodian for a separating qualified public safety officer preserving the IRC Section 402(l) HELPS exclusion. Sources: IRC Section 402(l); IRC Section 3405(c); SECURE 2.0 Act Section 328; IRS Form 1099-R distribution codes.

Size the HELPS floor. Bridge years to Medicare at 65, multiplied by the $3,000 annual cap, plus a 10 to 20 percent buffer for premium drift. Document the floor in writing before the next step.
Confirm the governmental plan supports partial distributions. Read the plan document and summary plan description for the partial-rollover and partial-distribution provisions. Some 457(b) governmental plans require all-or-nothing distribution at separation. If the plan is all-or-nothing, the split-retain handoff is not available and a single-shot full rollover surrenders the exclusion.
Open the self-directed IRA with the chosen gold IRA custodian. Obtain the custodian’s trustee-to-trustee wire instructions and account number for the rollover portion. The account must be open and funded with at least the minimum opening balance before the plan administrator will release the rollover.
Submit partial direct rollover paperwork. Instruct the plan administrator to roll the surplus (total balance minus the retained HELPS floor) directly to the gold IRA custodian, and retain the HELPS floor inside the governmental plan. The instruction must be explicit: trustee-to-trustee, direct rollover, no cash payment to participant.
Verify the 1099-R for the rollover portion. The 1099-R issued for the rollover should carry distribution code G in box 7. Code G is the direct-rollover designation and avoids the 20 percent mandatory federal withholding under IRC Section 3405(c). If box 7 shows code 1, 2, or 7 instead, the plan administrator has mischaracterized the transaction and the participant must contact the plan immediately to issue a corrected 1099-R.
Self-certify HELPS each tax year. Each tax year during the bridge window, request HELPS-qualified distributions from the retained governmental plan balance, pay the qualified insurance premiums personally, and self-certify the exclusion on Form 1040 line 5a (gross distribution), line 5b (taxable amount, reduced by up to $3,000), with the letters “PSO” written next to line 5b.

What to ask the governmental plan administrator

The plan administrator is the gatekeeper for the retained HELPS floor. The questions that matter most:

Does the plan permit a partial distribution at separation, or is distribution all-or-nothing?
If partial is permitted, is there a minimum retained balance threshold that triggers full payout?
Can the retained balance accept periodic HELPS distributions (annual or quarterly) without forcing an annuitization election?
What is the timeline between the partial rollover request and the wire to the gold IRA custodian?
How does the plan code the 1099-R for the rollover portion (code G expected) and for the annual HELPS distributions (code 7 expected, normal distribution)?
Does the plan offer a designated form for HELPS self-certification, or does the participant track and self-certify on Form 1040 only?

What to ask the gold IRA custodian

The custodian receiving the rollover surplus has no HELPS role, but the custodian’s onboarding paperwork can either help or hinder the split-retain mechanic.

Will the custodian accept a partial rollover wire from a governmental 457(b) or defined-benefit plan, or does the custodian only accept full transfers?
What are the custodian’s wire instructions (routing, account, reference) that will appear on the plan administrator’s rollover paperwork?
Does the custodian’s onboarding flow require the participant to certify that the entire prior-plan balance is being moved? (If yes, that certification language conflicts with the split-retain plan and must be edited or removed.)
What is the custodian’s storage venue for the metals (IRS-approved depositories per IRC Section 408(m))?
Does the custodian provide a year-end 5498 reporting the rollover contribution, separate from any subsequent purchases?

1099-R distribution codes that matter

The IRS 1099-R distribution codes encoded in box 7 are the audit trail for whether the split-retain handoff was executed cleanly.

Code	Meaning	Where it applies in the handoff
G	Direct rollover of a distribution to a qualified plan, IRA, or 457(b)	The rollover surplus from the governmental plan to the gold IRA custodian. No 20 percent withholding.
7	Normal distribution, participant age 59 1/2 or older	Annual HELPS-qualified distributions from the retained governmental balance once the participant is 59 1/2 or older.
2	Early distribution, exception applies (no 10 percent penalty)	HELPS distributions taken before age 59 1/2 by a qualified PSO who separated from service in or after the year of attaining age 50 (IRC Section 72(t)(2)(A)(v) exception).
1	Early distribution, no known exception	This code should NOT appear on a HELPS distribution. If it does, the plan administrator has coded the 1099-R as a generic early withdrawal and the participant must request a correction citing the HELPS exclusion or the Section 72(t) PSO exception.

Common mistakes that collapse the HELPS preservation

Full rollover instead of split-retain. The most expensive mistake: rolling the entire governmental plan balance to a gold IRA in one transaction surrenders the HELPS exclusion permanently. The IRA custodian cannot retroactively recreate access.
Indirect rollover with intent to redeposit within 60 days. An indirect rollover triggers the 20 percent mandatory withholding under IRC Section 3405(c). The participant has 60 days to redeposit the gross amount (including the withheld 20 percent, sourced from other funds) into the gold IRA or owes income tax on the shortfall.
Roll the HELPS floor by accident. If the plan administrator processes the rollover as “total balance” and the participant did not flag the retained floor in writing, the entire balance leaves the plan. Always confirm the retained amount on the rollover request form and on the confirmation 1099-R.
Use the gold IRA to pay insurance premiums. IRA-sourced premium payments do not qualify for the Section 402(l) exclusion. Even if the dollar amount and the insurance carrier are identical, the source plan determines eligibility.
Skip the PSO notation on Form 1040. The IRS uses the “PSO” notation next to line 5b to identify the exclusion. Omitting it can trigger a CP2000 notice for underreported income matching the gross distribution on the 1099-R.
Take the exclusion from a non-governmental plan. Private-sector pensions and 403(b) plans of non-governmental employers are not eligible plans for HELPS. Section 402(l) is restricted to governmental plans as defined in IRC Section 414(d).

Does opening a gold IRA disqualify me from HELPS?

No, opening a gold IRA does not disqualify a qualified public safety officer from HELPS, as long as a portion of the governmental retirement balance remains inside the original plan. The HELPS exclusion attaches to distributions from the governmental plan. As long as that plan has a retained balance and continues to make HELPS-qualified distributions, the exclusion is available.

The gold IRA is a separate vehicle that holds the rollover surplus and has no statutory relationship to the exclusion in either direction.

Can I take the HELPS exclusion from a gold IRA after rollover?

No. The Section 402(l) exclusion is restricted to eligible retirement plans that are governmental plans as defined in IRC Section 414(d). An IRA, including a self-directed IRA holding precious metals, is governed by IRC Section 408 and is not a governmental plan. Once dollars leave the governmental plan and are deposited into an IRA, those dollars permanently lose access to the HELPS exclusion. This is true even if the IRA custodian or the dealer marketing the rollover suggests otherwise.

What if my governmental plan only allows lump-sum distributions?

If the plan document requires all-or-nothing distribution at separation, the split-retain handoff is structurally unavailable.

In that scenario, the participant has three options. Option (1): defer separation until the plan permits partial distributions, since some plans amend periodically. Option (2): take the lump sum, accept the loss of HELPS, and execute a single full rollover to the gold IRA. Option (3): take the lump sum, accept the loss of HELPS, and use a hybrid allocation across a self-directed gold IRA, a traditional brokerage IRA, and a Roth conversion ladder.

Each option has tax and timing trade-offs that warrant a conversation with a CPA. Consult your tax advisor for your specific situation. Also consider the alternative covered in our public safety officer age 50 exception guide, which sometimes applies even where HELPS does not.

HELPS Act direct-pay-to-insurer + custodian mechanics: the split-retain handoff a separating qualified public safety officer runs with a gold IRA custodian