Browsing: Roth TSP

Q. Can I maximize my Roth TSP contribution ($17,000) and also contribute to a regular Roth mutual fund up to the $5,500 limit? A. Depends upon your marital status and income. Check IRS Publication 590 or ask your tax accountant for the answer.

Q. I would like to roll over my Roth IRA into my Roth TSP. Do you see the government allowing this some day? A. It’s possible, but I can’t handicap the odds. While it would be nice to be able to do this, it shouldn’t be significant in the big picture. If it is, you’re doing something wrong. You should focus on making sure that your Roth IRA is as close to the Thrift Savings Plan in its low cost, simplicity and diversification as possible.

Q. I have been contributing to my traditional Thrift Savings Plan for the past 3½ years and have accumulated about $7,000. With the introduction of Roth TSP, I was wondering if I should stop contributing to my traditional TSP and start a Roth TSP. I plan on being in a higher tax bracket when I retire, and I also have a Roth IRA. A. If you’re confident that your tax rate will be higher on the contributions later than it is now, you should contribute the Roth TSP first.

Q. If I contribute $40,000 to my Roth TSP account, it grows to $60,000 and I subsequently leave government service and roll that Roth TSP into a Roth IRA, wouldn’t I be able to immediately withdraw up to $40,000 without tax or penalty, even though I’m less than 59½ and have not had either account for more than five years? A. Yes, it is possible to withdraw your contributions at any time without tax or penalty.

Q. I am 47 and hope to retire at my minimum retirement age in nine years. I contribute to both my traditional Thrift Savings Plan and Roth TSP. A publication I read, “Important Tax Information about Payments from Your TSP Account,” says you will not have to pay taxes for Roth contributions if you follow a two-step rule: Hold for five years + age 59½. But I think it also says that if I transfer my Roth TSP out of the TSP when I retire, the monies will not be subject to taxes. Is this correct? Can I only roll over…

Q. Can traditional Thrift Savings Plan funds be transferred/rolled to Roth TSP funds after retirement, while paying taxes on the amount transferred? I’m trying to at least save the taxes on the five-year growth. A. You may not convert your traditional TSP funds to Roth TSP funds. I’d like to see the math that convinces you that this is a good idea in the first place.

Q. I have both a civilian and military Thrift Savings Plan account because I was mobilized for part of 2011-12. Because I was in a combat zone, much of my income was tax exempt (CZTE). The military allowed me to contribute that tax-exempt income into my TSP. It is not a tax deduction because the income wasn’t taxable in the first place. However, they also made contributions from my taxable income. I thought it was all from my CZTE. When I returned to my civilian job, I began to contribute and maxed out my contributions, not knowing about the earlier…

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