Q. I understand there is a way to roll over a Thrift Savings Plan account to a Roth IRA so the funds transferred are not taxed. Can you point me to guidelines on how to do that? I am preparing to retire as a CSRS annuitant. A. This is only possible with a Roth TSP balance.
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Q. I retired from the Air Force Reserve last January and was transferred from Arizona to McChord Air Force Base, Wash. I also continue to work for the Defense Department. I plan on retiring as soon as possible from civil service. I contributed to a military Thrift Savings Plan and a civil service TSP. I cashed in both in December as I thought I was going to be able to retire this February. I planned to use the proceeds to purchase a home in Arizona. Now it looks like I have at least nine more months until I can retire. I spent some…
Q. A recent question read in part: “I have more than four years until military retirement (April 2018). At that time, will I be able to transfer all Roth TSP contributions to my Roth IRA? I have no plans of transferring the traditional TSP balance. The goal is to combine Roth TSP/Roth IRA contributions and pay cash for retirement home.” I agree that if you take a monthly withdrawal from the Thrift Savings Plan, they take from both traditional and Roth accounts. But I thought the TSP 90 form allowed transfer of Roth TSP contributions to a Roth IRA fund or…
Q. I’m 66 and contributed money to a Roth IRA. I would like to withdraw all of it. Do I have any tax consequences? A. Not as long as you’ve had the Roth IRA for at least five years. The rules are a little tricky for figuring this out, so you should consult Internal Revenue Service Publication 590 and/or a tax adviser before proceeding.
Q. I am a CSRS employee. I have decided to take the Voluntary Separation Incentive Payment and should be off the rolls by March 31. I am told that I can put in 10 percent of my basic total federal wages (could be in excess of $200,000) into the Voluntary Contribution Program and I should withdraw all of it when I retire. I am also told that I can deposit this withdrawn VCP money into a Roth IRA, which is the main reason I want to do this. Are my assumptions true? If it is, how can I open a…
Q. Can I roll over a Thrift Savings Plan distribution that I received last week to a Roth IRA? A. Yes, as long as it’s not a required minimum distribution. Your tax preparer is responsible for making sure that you obey the applicable rules, however. Self-preparation of all but the simplest tax return can be hazardous to your financial health.
Q. For the past five years, I’ve been contributing the maximum to the traditional Thrift Savings Plan (balance north of $127,000). In 2014, I plan to switch all contributions ($17,500) to Roth TSP. I have more than four years until military retirement (April 2018). At that time, will I be able to transfer all Roth TSP contributions to my Roth IRA? I have no plans of transferring the traditional TSP balance. The goal is to combine Roth TSP/Roth IRA contributions and pay cash for retirement home. We don’t want any debt, including mortgage upon retirement. A. You may not selectively…
Q. I am confused about the five-year rule for Voluntary Contributions Program funds rolled over into a Roth IRA. If a Roth IRA has been funded for five years, is there still a five-year withdrawal waiting period for funds transferred from a VCP account into that IRA? A. The five-year clock applies to each conversion, but how it will affect you isn’t clear from the information you’ve provided. The answer depends upon your age and how much you withdraw. I suggest that you read Internal Revenue Service Publication 590 and consult a CPA before proceeding.
Q. This is a follow-up to a prior question. I had asked whether converting my Voluntary Contributions Program account to an existing contributory Roth IRA would be taxable in light of the fact that I had pretax money in the Thrift Savings Plan. You had advised that it appeared to be a nontaxable event but that I should check with my CPA. I do not have a traditional pretax IRA. My CPA didn’t know anything about it, so I asked an expert in the field. The expert cautioned me not to roll over my pretax TSP into a traditional pretax…
Q. I am really confused over the Roth IRA and Roth TSP. I have an individual Roth IRA through Vanguard. I have a Thrift Savings Plan account that I max every year, and because I’m over 50, I also max my TSP catch-up contribution. I’m thinking of changing the catch-up contribution from the regular TSP to the Roth TSP. If I contribute the max to a Roth TSP, can I still contribute the max to my Vanguard Roth IRA ($6,500 to Vanguard and $6,500 to Roth TSP for a total of $13,000). Or do I need to choose just one…