Traditional IRA rollover into TSP

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Q: What happens to IRA basis when a Traditional IRA is rolled into TSP and there was a basis of $18,000 that was put into IRA after taxes?

A: In order to transfer an IRA balance into the TSP, you must sign a statement saying that it contains no basis. If you did this, you basis is lost and all withdrawals from the TSP are taxable income.

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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

1 Comment

  1. For rollovers into some plans, the basis stays with the IRA provided the value left in the IRA is at least equal to the basis. However, TSP and 401K are not specifically listed as eligible, while 403a, 403b and 457 plans are.

    See page 23 of IRS Pub 590.

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