TSP rollover to IRA


Q. I have funds in my TSP account, turn 70 ½ in 2015, and have recently been furloughed from federal service but have not resigned or been separated. I am eligible to return in 2015. I understand that if I return to federal service in 2015 without separating, I can resume TSP contributions and do not need to take RMD until I separate.

However, I understand that if I am separated from federal service in 2015 and do not choose either an annuity or a monthly distribution plan, I must accept full distribution. In that case, can I call the appropriate percentage my 2015 RMD and roll the remainder into an existing IRA with no penalty, even though I am no longer eligible to contribute to an IRA? If I can’t do that, how can I achieve the same or similar result?

A. Your understanding is incorrect. You will not be required to take full lump-sum distribution after you separate. The only requirement is that you meet the RMD amounts under the IRS rules.


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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