Q. I am currently working, have both a Traditional and Roth TSP but will be subject to required minimum distribution upon retirement. The five-year Roth requirement will not be satisfied by the time I retire. I would like to transfer the entire Roth account, both qualified and nonqualified, to an outside Roth IRA before I retire to avoid paying RMD on the Roth portion. Can I do this without penalty, or am I limited to transferring the qualified portion only? A. Rolling money over from the TSP to an IRA should be free from any penalty, if you do it…
Browsing: Roth IRA
Q. When I retire, if I use the funds from my Roth TSP to buy an annuity, are the monthly proceeds tax free? A. If Roth funds are used to buy a life annuity, and the annuity is designated a Roth IRA annuity, the payments will be tax free.
Q. In your May 7, 2018, “Money Matters” blog you provided information concerning the rollover of CSRS Voluntary Contribution Program (VCP) funds into a Roth IRA. Can the contribution portion of such funds (non-interest, after tax portion) be rolled over into the Roth TSP? Form RI 38-124, referenced in your earlier column, suggests not, but the most current version of that form predates the creation of the Roth TSP. Such a rollover would be particularly attractive in light of the ability to designate TSP withdrawals as traditional, Roth or a proportional amount of each, with the new withdrawal flexibilities coming to…
Q. Some employees are in disagreement over the minimum required distributions of TSP accounts. We are discussing retirements beginning five years or more from now, so the new TSP rules would apply. Would moving the Roth TSP funds to an outside Roth IRA account avoid the need for minimum required distributions on this Roth portion of a TSP account or would those particular funds still be a part of the funds subjected to MRD?
Q. A co-worker inadvertently put $4,000 into each of their Roth and Traditional IRA TSP accounts this year (they misunderstood the IRA limit laws). What is the best, simplest, and/or most efficient, method for them to rectify this situation with TSP?
Q. I am a federal employee with a TSP (Traditional). In addition, I currently own a Traditional IRA and a Roth IRA, while my wife owns a Roth IRA. This year, it looks like our combined income (MAGI) will likely exceed the threshold for the standard approach to contribute to our Roth IRAs. I have seen strategies to use the backdoor approach, but it will require smartly transferring my traditional IRA to TSP to avoid a large conversion taxes. My traditional IRA has a nondeductible basis of $12,000 and $78,000 of earnings. As I understand from research, I could transfer the $78,000…
Q. I work for the Department of Interior and I have accepted a VERA Early Out. I would like to take my whole TSP account and rollover to an IRA. Some say there is not a 10 percent penalty for simply rolling over to an IRA and some say there will be one. I am age 50. I do understand if I make withdrawals from the IRA, they are subject to the 10 percent penalty.
Q. I am retired from the U.S. Postal Service. I have a Roth, TSP, some old brokerage accounts and too much cash. I’ve been trying to find a fee-only advisor, but the offered services are far more that I want to start out with; I only want advice on re-positioning my investments for today. Do you have any suggestions?
Q. My wife and I contribute 18 percent to TSP (Roth) but also have five outside funds (1 mutual fund, 2 Roth IRA’s, 2 traditional IRA’s) that we no longer contribute to. I am retiring soon; however, my wife will work another three years. Would you recommend rolling them into our TSP (L2030)?