Roth TSP taxes

[cswift01]

I thought some might find this an interesting read. I didn't think about paying taxes on the Roth account, but apparently there is a way that could happen:

https://www.fedsmith.com/2017/03/12/can ... -be-taxed/

[mjedlin66]

This is a good discussion for someone who may fall into this trap without realizing it. Your roth account does not mature until 59.5. Even if people know that, they may not have considered the exact implications mentioned here. However, the TSP has gone on record stating they are looking at withdrawal options that would allow you to withdraw the balances separately rather than proportionately.

[evilanne]

I agree that you need to be careful when you start withdrawals, especially if part or all of it is in a Roth; but there are ways to avoid any taxes or penalties
--There is an optional section on the withdrawal paperwork that will allow you to direct your Roth portion of the payment to go directly into an outside Roth IRA.
--Since Roth was introduce in 2012, 2017 is the 1st year you can have any money in your Roth TSP for at least 5 years.
--If you have contributed consistently to your TSP over the years, when you start to draw against it you should only be withdrawing your contributions. The proportional nature would make it really hard to actually dip into the Roth earnings in 3-5 years or before age 59.5 unless you withdraw all or a substantial portion of your account within the 1st few years after you retire. Those with earlier retirement ages like LEOs may need to be a little more careful.
--If you withdraw your TSP in the manner it was intended (to supplement your income over the rest of your life), taxes or penalties should never be an issue.
See http://www.rothira.com/roth-ira-withdrawal-rules