TSP withdrawals from traditional, Roth accounts


Q. I have already accumulated a decent amount of money in the TSP Traditional plan. I was planning to take a break from contributing to the traditional plan and to start heavily funding the TSP Roth plan instead, with the goal of eventually withdrawing those same contributions in several years when I am looking to buy a house. I understand people can withdraw contributions from a Roth IRA as long as the Roth account has been open for five years. If I withdrew all of the Roth TSP contributions at some time (after five years), would I be required to also withdraw funds from my traditional TSP account at the same time? If so, could I avoid taxes and penalties by transferring the traditional TSP funds to another qualified plan?

A. All TSP withdrawals are taken proportionately from both the traditional and Roth accounts. You could roll over your traditional account distribution (that is not part of an RMD) to an IRA or qualified plan to further defer the tax.


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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