TSP and after-tax contributions


Q: Mike Miles gave this answer recently: “The [Thrift Savings Plan] is a better investment environment than any retail IRA account I have ever seen, and I generally recommend that eligible investors move their IRA money into the TSP whenever possible. You are eligible if your IRA account contains no after-tax money — money from non-deductible contributions. Check with your IRA custodian to determine what, if anything, they will charge for liquidating your account.”

You say that the individual is eligible if his IRA contains “no after-tax money.” Isn’t it true that even if the IRA contains both before-tax and after-tax money that he can still transfer the before-tax money to the TSP, leaving the after-tax money in his IRA? Thanks.

A: You’re right. I should have been more clear. The amount that you transfer into the TSP must contain no after-tax contributions.

— Mike Miles


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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