Q. I am in FERS and I am planning to pay in full my CSRS redeposit service balance for my 17 years of prior CSRS service. I want to pay via direct transfer of a check sent on my behalf from the Thrift Savings Plan to the Office of Personnel Management. TSP tells me it is permissible, and all I need OPM to do is to fill out TSP Form 75 and have OPM check that it is an eligible retirement plan and include the address where to mail the check. This would be a trustee-to-trustee direct transfer. Three different people at TSP told me this was permissible.
When I finally reached OPM’s deposit branch, they told me no; that OPM is not set up to receive transfers or rollovers even though TSP and CSRS are both considered by the Internal Revenue Service to be eligible retirement plans. OPM told me that they can do direct transfers to another eligible plan but not the other way around and that their computer system has no way of distinguishing pretax or post-tax monies.
They tell me this provision falls under 5 USC (but I do not see any specific reference prohibiting a check coming from a third party like TSP on my behalf. 5 USC just states a person can write a check or make payments through their federal agency; and OPM staff said you can now also pay online and via a bank transfer (but, of course, these would be after tax funds).
Is OPM correct? Or is TSP correct? Do you know of any specific prohibitions from TSP sending a check for me as a transfer to pay redeposit services? How should I proceed?
A. You cannot transfer or roll over funds from the TSP to CSRS. You may be able to withdraw funds under TSP’s age-based or hardship in-service withdrawal provisions to make the redeposit, if you are eligible. You may also consider taking a TSP loan to obtain the funds. Of course, you should consider the costs and benefits of your options before proceeding.