Q. How long does one have to maintain a traditional IRA before rolling it over into the Thrift Savings Plan? A. You may not transfer Roth IRA assets into the TSP.
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Q. I am 63 years old with 37 years in the Postal Service and still working. I plan to retire in two years. I have $250,000 in my Thrift Savings Plan. I have read about contributing 10 percent of my career earnings to the Voluntary Contribution Program, and then moving the VCP money back to Roth IRA to save the taxes. For example, if my 10 percent is $150,000, can I withdraw it from TSP and move it to VCP and not pay any taxes on my TSP withdrawal? A. No.
Q. My financial adviser is encouraging me to move my Thrift Savings Plan funds immediately to a Roth account. Is this a good idea if I am retiring in the next 12 months or earlier? A. No. It’s not a good idea unless there is a good reason to do so. I’ll bet that your “financial adviser” is nothing more than a salesperson trying to take your money. Confusing the two is usually a costly mistake.
Q. My wife and I are FERS employees. We are both considering retiring early if offered Voluntary Early Retirement Authority at ages 50+/- (both with more than 25 years of service). With children still in the picture for some time, access and flexibility with our Thrift Savings Plan accounts are crucial to any plan. I would like to accomplish two things: 1). 72(t) withdrawals until 59½ in one account. 2). Flexibility to roll over funds currently in TSP into a Roth IRA held at another institution (from an IRA as I see no method to do that while the funds…
Q. I am active-duty military and am about to open a TSP account in January. From everything that I’ve read, I understand that I cannot transfer funds from my Roth IRA to my TSP account, but I do not understand why. I Can someone explain to me why this is the case and who made this rule? A. I can’t tell you why it’s the law, but it is the law.
Q. After entering retirement from CSRS, are Thrift Savings Plan funds withdrawn classified as income in addition to the 20 percent accessed at the time of withdrawal from the TSP account. Are there ways to avoid double taxation if they are taxed twice other than rolling over into an IRA or Roth IRA? A. The traditional TSP funds you withdraw are classified as ordinary income on your tax return. They are not subject to double taxation. The 20 percent withheld from your payment(s) is a deposit against your tax liability. If the distribution is not a required minimum distribution and you…
Q. I have a Vanguard 500 Traditional IRA and Roth IRA. Can I transfer these funds into my Thrift Savings Plan? If yes, what forms should I use to make this transfer? A. You may transfer your IRA money into your TSP account, if it is all pretax money, using Form TSP-60. You may not move your Roth IRA money into the TSP.
Q. I’m 68 years old (under FERS) and have a Roth IRA that’s external to the Thrift Savings Plan and has been open and funded for more than 10 years. I started contributing to my TSP Roth IRA this year. When I retire in 2015, I want to be able to roll over my TSP Roth IRA into my external Roth IRA without any tax consequences. I understand that I’ve clearly met the age requirement (older than 59½), but I want to make sure I also meet the five-year rule. Does the five-year rule apply to the time that funds were…
Q. I’ve been making substantial contributions in the Roth TSP and plan to do so until I retire. I have a large sum in my non-Roth TSP account. I’ve read that when I begin to take TSP withdrawals in retirement, I cannot specify whether they come from the Roth or non-Roth TSP. I read that the withdrawals will be taken pro-rata from both forms of the TSP. Is that correct? If I want my Roth TSP to grow for as long as possible, is there anything I can do to preserve it other than keep delaying all TSP withdrawals until age…
Q. I realize that the withdrawal of Roth earnings have different implications. But if I understand this correctly, the withdrawal of Roth IRA contributions can be done at any time without triggering a taxable event or penalty. Is the same true for the withdrawal of contributions from the Roth TSP? A. You may withdraw Roth funds without tax or penalty if you’ve had a Roth IRA for at least five years (starting from Jan. 1 of the year you first contributed to a Roth IRA) and you are at least age 59½. The same rule applies to your Roth TSP…