TSP tax-exempt money


Q. I have a TSP account. A portion of it is tax-exempt combat pay. When I was in combat, TSP didn’t offer Roth IRAs and, therefore, the money was combined into one account. However, the statement reflects how much of the pay is tax-exempt. I’m considering rolling over my accounts to have more options. TSP told me that they would have to send me a check for the tax-exempt portion and that they can roll the rest into a IRA. If they send me the tax-exempt money, can I deposit it into a Roth?

A. You should consult a CPA before proceeding, but I believe that this money can be “converted” to Roth IRA money, either directly, or by rolling it into a Traditional Roth IRA, first, and then converting it to Roth.




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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.

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