Q: My wife, a federal employee, has a traditional IRA. Some of the contribution made to the IRA was with money that was considered a deduction when it was contributed, thus no taxes were paid on those contributions. Some of the contributions over the years were made with after tax money. She could not deduct those contributions because of our combined income. My wife would like to know if she can transfer the money from her IRA to her TSP? Can all the increase in the value of the IRA be transferred to the TSP, even if the increase occurred because of gains on the IRA? Is there a special form for this transfer if it is allowed?
A: She can only transfer the IRA into the TSP if she’s willing to say that it’s all taxable when it comes out. She can’t segregate the pre- from the post-tax money. Each dollar in the IRA is considered to consist of part of each.
