TSP

John Grobe

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 once while working and once (maybe twice) while retired.

The Thrift Investment Board would like it if we would stay in the TSP once we separate and roll more money into the TSP from any qualified plans or qualifying accounts we might have.

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You’re allowed to 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 (called a “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 (called a “Traditional non-deductible IRA”).

You’re allowed to 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 your TSP’s Roth balance.

However you’re not allowed to roll any of the following 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.).

Rollovers that move money into the Thrift Savings Plan do not count against the annual elective deferral limit ($18,500 in 2018).

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.

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Now, we look at rolling money out of the TSP into another qualified plan or account. Rollovers have been allowed in the TSP since its inception.

Today virtually all rollovers (both into and out of the TSP) are done as “direct rollovers”, where the money moves directly from one tax advantaged account into another.

Until the implementation of the TSP Modernization Act (expected to be September 2019), there are strict limits on the number of rollovers that can be done when you are rolling money out of the Thrift Savings Plan. You are given two opportunities to withdraw from the TSP – and a withdrawal is the method by which you roll money out of the Thrift Savings Plan.

More on TSP transfers at ask.FEDweek.com

You would use the appropriate withdrawal form (i.e., age-based, partial, or full) and elect to make a withdrawal. You would then have the custodian of the account to which you are moving your TSP funds fill in the transfer information on the form. The money should then move directly from the TSP into the new account. The TSP has a publication, Transfers From the Thrift Savings Plan to Eligible Retirement Plans, for plan administrators of IRAs or other qualified plans. This publication is available in the “Forms and Publications” section of the TSP’s website and you may wish to provide it to the new plan’s custodian.