TSP

John Grobe

Though separated employees cannot make contributions to the Thrift Savings Plan (which can only be done through payroll deductions), they are still allowed to roll money into their existing TSP account and continue to manage it. Rollovers from qualified accounts are not treated as contributions to the TSP. You’re allowed to roll qualified money into your TSP account even if you have begun taking distributions. However, not all IRAs and employer plans are considered qualified for the purpose of rolling them into the Thrift Savings Plan.

If you have a Roth balance in your TSP, you are allowed to roll a Roth plan from a prior, or subsequent, employer into the TSP. But, you are not allowed to roll a Roth IRA into your Roth TSP balance. Don’t ask me why; it’s in the law, even if it doesn’t make sense.

If you have a traditional balance in your TSP (and we all do), you are allowed to roll pre-tax money from IRAs and employer plans into the TSP. That would include everything in a traditional deductible IRA (where you were able to deduct your IRA contributions from your income for federal income tax purposes) as well as the earnings portion of a traditional non-deductible IRA (where your IRA contributions were not deductible). You would also be able to roll over any pre-tax money in an employer sponsored plan from a prior or subsequent employer.

If you’ve left the TSP, can you get back in after you’ve separated? No. Not unless you become re-employed and establish a new Thrift Savings Plan Account. If you return to federal employment as a “re-employed annuitant”, you may or may not be allowed to contribute to the TSP. A FEDweek article from a few years ago gives advice on this topic. The TSP website also has some information for rehired employees.

I wish I could get back into the Thrift Savings Plan. I rolled my account into an IRA a few years ago because the TSP’s withdrawal choices were so pathetic. Now that the TSP Modernization Act has allowed all the withdrawal flexibility that most of us need, I feel I would be better off there. But I’m retired and have absolutely no desire to return to federal service, so there’s no way I could get back in. I suspect that I’m not the only one who is in that situation.