Q: I understand that when an federal employee, through a rollover, transfers funds from an individual retirement account to the Thrift Savings Plan that the money transferred can only be pre-tax. My wife has both pre-tax and post-tax contributions in the same IRA. The IRA has grown for 20-plus years, so a lot of its value has had no tax has paid on it. Most of what I have read on the issue seems to indicate that because the IRA has some after-tax money in it, none of the money can be transferred into the TSP even though the amount to be transferred is either before-tax money or earnings that have accumulated without taxes paid on them.
Is it proper to transfer money from an IRA which contains pre-tax contributions and after-tax contributions so long as the amount rolled over does not include the after-tax contributions?
A: I refer you to Page 18 of IRS Publication 590, which allows for rollover of only the taxable portion of an IRA account into a plan like the TSP. The logistics of accomplishing this can be tricky, however. You should be careful and consider seeking professional help if you do this.