When you are approaching retirement you might think about rolling (transferring) money out of your TSP into an IRA or other qualified account. Don’t lose sight of the fact that you can roll money into the Thrift Savings Plan as well.
With the implementation of the TSP Modernization Act scheduled for September of 2019, there will be a lot more flexibility in TSP withdrawal choices and most participants will be able to satisfy their withdrawal needs without having to roll their money out of the TSP. This might cause TSP participants to think about moving outside IRA money into the TSP to take advantage of the TSP’s low expenses.
We are allowed to roll money over into the TSP from qualified plans and qualifying IRAs both while employed and after separation. 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 between your Traditional TSP balance and your Roth TSP balance.
You can roll the following into the Traditional balance of your TSP:
1) Money from a traditional employer-sponsored plan, such as a traditional 401(k) that you had either prior to or after your federal career;
2) Money from a traditional IRA where you have been able to deduct your IRA contributions from your federal income tax (traditional deductible IRA); and
3) The earnings component from a traditional IRA where you have not been able to deduct your IRA contributions from your federal income tax (traditional non-deductible IRA).
You can roll money from a Roth employer-sponsored plan, such as a Roth 401(k) that you had either prior to or after your federal career into the TSP.
There are some things that you are not allowed to roll into either the Roth or traditional balance of your TSP:
1) Any money that is not in a qualified plan;
2) Any money in a Roth IRA;
3) The contributions component from a traditional non-deductible IRA; and
4) 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 are not limited to only one rollover into the Thrift Savings Plan. You can execute multiple rollovers into the TSP as long as you have more than one qualified account to roll in.
Any rollovers that move money into the Thrift Savings Plan will not count against the annual elective deferral limit ($18,500 in 2018).
More on TSP Transfers at ask.FEDweek.com
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.