CSRS Voluntary Contribution Program & TSP Roth


Q. I’ve been reading your archives for CSRS Voluntary Contributions Program (VCP) and the strategy of rolling its balance over into a Roth. Since TSP offers such low management rates, a TSP Roth is my intended destination for these VCP funds. But as of your 2012 guidance, the VCP cannot be directly into a TSP Roth, as the VCP is not a “designated Roth account.”

Has this guidance changed? If not, then can this still be done by transferring the VCP funds twice – from the VCP into a generic non-TSP (commercial) Roth and from that non-TSP Roth into the TSP Roth?

Semi-related to the above, a question on the Roth’s “Five Year” rules: I understand that withdrawals of earnings from a Roth don’t become tax free until the account is at least five calendar years old (and after age 59.5). With this in mind, it sounds like a strategic move would be to “start that clock” today by creating a Roth, such as by putting $100 to set up a TSP Roth this year. But it doesn’t sound like there’s any minimum contributions or balance requirement or other factors – am I missing something?

A. The TSP will not accept an in-bound transfer from a Roth IRA. The five-year Roth IRA clock starts ticking as soon as you open a Roth IRA. The initial balance is not a factor.


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 fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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