Q. I am a single FERS employee. In 2012 and prior years, I have been able to contribute the maximum amount to my Thrift Savings Plan account to bring my adjustable gross income below the income phase-out limit to be able to contribute the maximum to a Roth IRA. However, in 2013, I believe my AGI will exceed the limit and I would like to take advantage of the Roth TSP option. If I contribute the maximum $17,500 to the Roth TSP, can I still invest in a traditional IRA? If so, can I take the IRA deduction even though I make…
Browsing: Roth IRA
Q. I will retire soon and have access to a nice sum of cash that I want to invest. Does it make sense to use the Voluntary Contributions Program to a Roth vehicle to invest all or part of this money? A. Yes, as long as you can put the money away in the Roth for the required holding period.
Q. I retired in 2011 and have $50,000 remaining in my Thrift Savings Plan. Would it be wise to rollover my TSP into a Roth IRA and pay the TSP taxes now in case the fiscal cliff threat worsens? A. It’s impossible to know for sure, but you’ll need to run pro-forma tax returns for the next few years to see the effects. If you’re not sure, I’d stay put in the TSP for as long as possible.
Q. I retired in April 2008 and took a lump-sum distribution from my Voluntary Contribution Plan, with the interest going into my Thrift Savings Plan and the principal amount going into my money market fund. Is it still possible to take the entire VCP principal amount and put it into a Roth IRA four years after retirement? When I attended various CSRS federal retirement seminars in 2007 and 2008, I was never informed of the option to transfer the principal amount to a Roth IRA. A. This is not possible.
Q. I am a FERS employee contributing to the Thrift Savings Plan. At the recommendation of a pre-retirement seminar, I am looking at a one-time in-service withdrawal of $100,000 into a Roth IRA. I realize that it will add $100,000 to income for 2012, but this is the year my husband’s business is losing money anyway. We intend to pay taxes now (presumably when they are lower, though my income will drop significantly when I retire) and not pay taxes on future earnings. Smart or dumb? A. You shouldn’t make that move without a thorough analysis of the tax implications using pro-forma returns and…
Q. There is around a $5,000 annual limit to a Roth IRA based on income and age. Does that limit apply to TSP? In other words, can I put all $17,500 plus the $5,500 catch-up contributions for those age 50 and older into the Roth TSP and pay taxes on it now, rather than later regardless of my income? I am a civilian over 50 years old in FERS. A. The Roth IRA limit does not apply to Roth TSP contributions.
Q. I have a considerable amount in my Thrift Savings Plan account. I was reading Fedsmith, and it says there is a real possibility of taxes on dividends (when I retire and draw TSP) raise from 15 percent to 43.4 percent. I cannot roll over my basic TSP to my Roth portion of TSP. Do you think it advantageous for me to pull out my TSP and put it in a Roth IRA on the outside? A. Your TSP withdrawals will be taxed as ordinary income and not capital gains, so this is not an issue to be concerned about…
Q. I am a retired government worker who has contributed the maximum amount to the Thrift Savings Plan. After being retired for several years, I transferred the TSP to a traditional IRA. If I convert the traditional IRA to a Roth IRA, how do I figure my “basis” in the IRA to determine the amount that is taxable? A. If the only thing you ever put into the IRA was your traditional TSP assets, then the account has no tax basis and is all taxable upon distribution (or conversion). If you have contributed nondeductible or other after-tax money to the…
Q. I am CSRS and eligible to retire now with 30 years at age 56. My salary excludes my wife and I from funding a Roth with more than $6,000 each year (except $22,500 allowable into new Roth TSP). Let’s say I put $25,000 into the Voluntary Contributions Program with the intention of making a one-time, lump-sum withdrawal as soon as possible and roll the original $25,000 into a private Roth IRA. I am told that doing so is a way to immediately fund a Roth that is not limited to my current $6,000 amount mentioned above. Do I understand this correctly,…
Q. Are the Thrift Savings Plan and non-TSP Roth contribution limits exclusive? In other words, can I contribute the maximum to my TSP ($17,000 for 2012) and maximum ($5,000) to my non-TSP Roth IRA, so long as my adjusted gross income is below the limit imposed for the Roth? Or is the $17,000 limit imposed for both retirement vehicles combined? A. The two limits are separate.