VCP transfer to Roth IRA


Q. I will have 40 years with the IRS in 2012 and plan to retire either this year or in 2013. I have been contributing to both the TSP and the Voluntary Contributions Program. I plan to leave the TSP contributions to the G Fund alone and just let it grow. The VCP is another matter. I have a Roth IRA with Vanguard and would like to transfer all of the VCP to the Vanguard Roth IRA.I know I am required to pay tax on the interest the VCP has earned in the year received. The question is how do I do this transfer? There seems to be a lot of information about the TSP, but I am finding it difficult to find information about the VCP.

A. You can convert the post-tax money in your VC account to a Roth and have the earnings rolled over to your TSP account. Use form RI 38-124 to request a split distribution and follow the advice of your tax adviser for converting the contributions to a Roth IRA.


About Author

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 and view his blog at


  1. VCP Transfer to Roth IRA

    I did this in 2010, and while the result was OK, getting there was not easy. Two complicating factors:

    1. The actual rollover on the government side can take some time. I was not retiring in 2010, but OPM staff seemed to assume I was, which complicated matters.
    2. I use Turbotax to file my taxes. TT had some issues with how I would pay my taxes. I wanted to pay the entire tax on the roll-over in the 2010 tax year- but TT would not allow that- it just assumed that I wanted to take advantage, in 2010, of the option to pay that tax over 2 years, and made me do so. Had I not, I would have had to do my entire tax return over. As a result I will be paying the 2nd half of the tax resulting from the roll-over in the 2011 tax year- a “benefit” I did not want!

  2. I understand that the Roth cannot be a pre-existing Roth and you must open a NEW Roth IRA account to transer your VCP too.

  3. Yes, Conversion of a VC to a ROTH requires a lot of thought and paperwork. The problem is that moving it to a “Roth” is viewed as a taxable event if you have other existing IRAs.
    The amount taxed depends on the value of all your IRAs which can get get rather complicated to compute.

Leave A Reply