As TSP participants, we are allowed to roll money over into the TSP from qualified plans and qualifying IRAs both while employed and after separation. We are also allowed to roll money out of the TSP to a qualified plan or a qualifying IRA. This article will be about the ins and outs of rolling money into the Thrift Savings Plan, while a subsequent article will be about rolling money out of the TSP.
The Thrift Investment Board is beginning to act like any group of fund managers in the private sector, in that they want us to keep our money in the TSP once we separate as well as to roll money into the TSP if we have any money in qualified plans or qualifying accounts. As the Thrift Savings Plan is considered a “qualified plan” for tax purposes, it can accept money from other plans that are also considered qualified. The rules about what is qualified differ slightly from your Traditional TSP balance to your Roth TSP balance.
First and foremost, you can roll money into your TSP while you’re still an employee or after you have separated from federal employment.
You can roll the following into the Traditional balance of your TSP:
• Money from a Traditional employer-sponsored plan, such as a Traditional 401(k) that you had either prior to or after your federal career;
• Money from a Traditional IRA where you have been able to deduct your IRA contributions from your federal income tax (called a “Traditional deductible IRA”); and
• The earnings component from a Traditional IRA where you have not been able to deduct your IRA contributions from your federal income tax (called a “Traditional non-deductible IRA”).
You can roll the following into the Roth balance of your TSP:
• Money from a Roth employer-sponsored plan, such as a Roth 401(k) that you had either prior to or after your federal career.
You cannot roll the following into either the Roth or Traditional balance of your TSP:
• Any money that is not in a qualified plan;
• Any money in a Roth IRA;
• The contributions component from a Traditional non-deductible IRA; and
• Any money that is not yours, even if it is in a qualified plan (e.g., money in the qualified plan of a spouse, etc.).
You can execute a rollover into the TSP more than once, assuming that you have more than one qualified account to roll in.
Rollovers that move money into the Thrift Savings Plan do not count against the annual elective deferral limit ($19,500 in 2021).
The TSP encourages participants to roll money from other qualified accounts into their Thrift Savings Plan Accounts. The Thrift Savings Plan website discusses rolling money into the TSP here: Move money into the TSP.
To roll money into the Thrift Savings Plan, you would use form TSP 60 for rollovers into your traditional balance and form TSP 60-R for rollovers into your Roth balance.