Q. If I contribute to the new TSP Roth, would I still receive the agency matching contributions? A. Yes, but the agency contributions go into your tax-deferred account.
Browsing: Roth TSP
Q. I am considering a Thrift Savings Plan loan of $40,000 to fully fund a Roth TSP for the next few years. I am in the Air Force and plan on staying in the service for at least six more years until retirement. I’m just not sure that the benefits of a fully funded Roth TSP will outweigh the tax I will pay on the loan payments, not to mention the tax I will pay on the interest from the $40,000 as it sits in the bank waiting to be deposited into my Roth TSP, and the gains that $40,000…
Q. Our 22-year-old son is in the Navy. He is an E-5, so his earnings are fairly good. He is not married and has very few bills besides an apartment, vehicle and cellphone. He is contributing to the Thrift Savings Plan, but soon he will have option to contribute to the Roth TSP. I would like to know what your investment advice would be for him. A. He shouldn’t be as concerned about where he saves his money, as he is about how much he saves. The TSP, traditional or Roth, should be his first choice for retirement savings. If…
Q. I am a federal employee, age 52. I established a Roth IRA several years ago and contributed to it until my income became too high. If I start contributing to the Roth TSP, can I roll over the discrete amount of my Roth TSP contributions at retirement to my existing Roth IRA, or do the rollover amounts follow the prorate distribution rule? A. You will be allowed to rollover the Roth money to your Roth IRA.
Q. Will you be allowed to withdraw the principal (not the interest earned) from your Roth TSP account after the five-year seasoning period and without any retirement age restrictions? Do the Internal Revenue Service’s rules on Roth 401(k) or a Roth IRA apply to Roth TSP? A. The early withdrawal penalty covers Roth distributions prior to age 59½.
Q. I will become a 49-year-old federal employee this August. I currently contribute the Internal Revenue Service maximum of $17,000 annually to the Thrift Savings Program via bi-weekly payroll deductions. I plan to begin making catch-up contributions Jan. 1, 2013. Once the Roth TSP is available, can I designate beginning Jan. 1, 2013 catch-up contributions to the Roth TSP while maintaining the IRS maximum contributions to the Traditional TSP? A. You may split your pay deferral, including your catch-up contributions, between the traditional and the Roth TSP accounts.
Q. I haven’t seen any discussion on the employer contribution portion as it relates to the new Roth Thrift Savings Plan option. Is their contribution also part of the Roth TSP, or will it continue to be placed in the regular TSP? A. Employer contributions will flow into the traditional TSP.
Q. I am a Defense Department employee under CSRS, and am eligible to retire in two years at age 55. I have been making contributions to the Voluntary Contributions Program for many years. Under VC regulations, upon withdrawing the account (among other options), I can roll over the interest portion of my VC balance direct to my Thrift Savings Program, and receive my contributions portion back as a cash refund, from the Office of Personnel Management. On the upcoming Roth TSP, will there be an option to roll my VC portion, direct to the Roth TSP, in addition to rolling the…
Q. I deposited a little money into my Thrift Savings Plan, tax free, about five years ago, when I was in the military serving in Iraq. Since this money is in effect post tax, would it be possible to transfer it from my traditional TSP account to a Roth TSP account, thus allowing it to accrue tax-free interest? A. It is possible. Consult a competent tax adviser for advice about if, when and how you should do it.
Q. I am planning on rolling over my voluntary contributions account in the very near future. Can I roll my contributions to the new Roth Thrift Savings Plan once it is operational? I understand that any earnings I have from my VC account can roll over to my regular TSP account. A. Based on the guidance provided by the TSP so far, this should be possible. We’ll have to see how things develop to be sure.