Q. I plan to retire in nine years (at 63). I have $176,000 in the Thrift Savings Plan. I add the maximum to the TSP every year ($22,500) and will continue that until I retire. Then, my strategy, once retired, is to withdraw a monthly income from my TSP, and I will then start adding that money to a Roth IRA (e.g., a Vanguard fund) until I max out the Roth for both my husband and me. My thought is that I am getting a tax break by adding the max to the TSP during my high-income years as a GS-13; then, since I am FERS and I will only have 20 years in service, my income (and my husband’s) will drop to a 15 percent income bracket in retirement. The taxes I pay on the withdrawals will be less in retirement, since our income is reduced, but adding money to the Roth where it will grow tax-free will be great for us later in life and for our heirs. Am I thinking correctly? Does this sound like a plausible strategy?
A. I don’t see any advantage to converting TSP money to Roth IRA under those circumstances, and you’re not allowed to make Roth IRA contributions if you have no earned income.