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Transfer from Traditional to Roth

Posted: Fri May 12, 2017 2:19 pm
by Cpayne09
Anyone know if TSP has the capability to transfer money from the traditional side to the roth side yet?

I have around 7K in my traditional from my first 2 years and over 40 in my roth. Should I even bother? Still got about 34 years to go before i'm 59-60 years old.

Re: Transfer from Traditional to Roth

Posted: Fri May 12, 2017 5:14 pm
by evilanne
I doubt there is a way to do this currently. Roth was only introduced in May 2012. Changes to TSP rules are generally a slow, drawn out process.

The President approved the American Taxpayer Relief Act of 2012, on January 2, 2013. This law allows the TSP and other qualified plans to give participants the option to convert their traditional account balances to a Roth balance. The amount converted would be taxable to the participant. The Thrift Board is currently waiting for tax reporting guidance from the IRS and they will be studying the actions required to offer a conversion option. After their review they will make a decision on whether to proceed.
...
Currently, you will not be able to transfer money into the TSP from Roth IRAs. Also, you will not be able to convert money that is already in your TSP account into Roth money. Along the same lines, agency automatic and matching contributions will always be traditional, tax-deferred contributions, even if your own contributions are only Roth. You will not be able to convert any agency traditional contributions into Roth contributions.
Source: http://www.federalretirement.net/tsproth.htm

Re: Transfer from Traditional to Roth

Posted: Fri May 12, 2017 8:35 pm
by Cpayne09
Does that mean if I separated from federal service I wouldn't be able to roll over my TSP to a roth IRA?

Re: Transfer from Traditional to Roth

Posted: Fri May 12, 2017 10:10 pm
by mjedlin66
Cpayne09 wrote:Does that mean if I separated from federal service I wouldn't be able to roll over my TSP to a roth IRA?


You can do that. There is currently no option to convert traditional TSP to Roth TSP. Apparently there is also no option to roll Roth IRA into Roth TSP, which I did not know.

But you can still pull all of your money out of the TSP when you leave and roll it over to an IRA.