Issues with dual uniformed services and civilian accounts

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fedguy
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Issues with dual uniformed services and civilian accounts

Post by fedguy »

I have uniformed services account in addition to my civilian service TSP account. My civilian account doesn't show any changes in value, however my uniformed account shows a "gain" of the exact difference between the uniformed account and the civilian account, so now both accounts show exactly the same balance and distribution. It seems like a terrible glitch in the TSP system. Has anyone ever encountered something like this?

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evilanne
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Re: Issues with dual uniformed services and civilian account

Post by evilanne »

Never heard of that happening--accounts should be totally different unless you choose to combine. Suggest you call TSP to get everything straightened out.

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Navig8tor
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Re: Issues with dual uniformed services and civilian account

Post by Navig8tor »

According to the TSP, you can't combine a Uniformed Services Account with a FERS account. Makes absolutely no sense to me. They can somehow figure out how to proportionately disburse ROTH, tax-free and taxable withdrawals, and they can figure out how to keep ROTH and regular TSP contribution separated...so I don't understand why they can't figure out how to combine a FERS account and Uniformed account.

Don't have the same issue you have; however, my buddy has two accounts and can get to both of them from the same log-on. He can actually toggle between his account after he logs into the TSP website. I don't have that option, I have two different log-on's and was never offered a different option???
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Aitrus
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Re: Issues with dual uniformed services and civilian account

Post by Aitrus »

I have a civil service account and a military account. Same ID for both, but different password to access them. Contributions from my military time go to the military account, and the same for the civil service account. The two don't cross lines at all.

I believe there is a way to roll the military account into the civil service account after retirement from the military, but I haven't looked into it.
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rcozby
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Re: Issues with dual uniformed services and civilian account

Post by rcozby »

Combining accounts is easy, but it requires a form...
https://www.tsp.gov/PlanParticipation/B ... ounts.html

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ArrieS
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Re: Issues with dual uniformed services and civilian account

Post by ArrieS »

rcozby wrote:Combining accounts is easy, but it requires a form...
https://www.tsp.gov/PlanParticipation/B ... ounts.html
I combined them, but my understanding at the time was you have to be discharged. Not currently serving anymore in any capacity.

That way you are unable to possibly contribute any more money.
Last edited by ArrieS on Wed Feb 14, 2018 4:23 pm, edited 1 time in total.
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rcozby
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Re: Issues with dual uniformed services and civilian account

Post by rcozby »

You have to be separated from either the uniformed side or the civilian side, but once combined you can continue to contribute. I combined by uniformed account into my civilian account about a year before I retired from the civilian side. Initially, I thought that it would make TSP management easier, but I sometimes miss the extra IFTs that I could have had if I had kept them separated.

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Re: Issues with dual uniformed services and civilian account

Post by fedguy »

Thanks for the insight everyone. I'm calling tsp today to find out wtf happened.

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Navig8tor
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Re: Issues with dual uniformed services and civilian account

Post by Navig8tor »

Well, that's interesting. I called the TSP several months after I retired from active duty and started a federal job. We're talking 4-5 months ago. I was told, almost without hesitation, that you can't combine a FERS and Uniformed account. "Nope, can't do it."

Reading over the TSP-90 does elude to an issue for folks with tax-free money earned in a combat zone. TSP-90 indicates tax-free monies come directly to the owner when withdrawing. That said, it's TAX FREE, so, where are you going to put it so that it remains tax free? In my case, we're talking high 5-digits. I have an outside account I can put it in, but I don't think it will remain tax free once it's been moved???
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ArrieS
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Re: Issues with dual uniformed services and civilian account

Post by ArrieS »

Navig8tor wrote:Well, that's interesting. I called the TSP several months after I retired from active duty and started a federal job. We're talking 4-5 months ago. I was told, almost without hesitation, that you can't combine a FERS and Uniformed account. "Nope, can't do it."

Reading over the TSP-90 does elude to an issue for folks with tax-free money earned in a combat zone. TSP-90 indicates tax-free monies come directly to the owner when withdrawing. That said, it's TAX FREE, so, where are you going to put it so that it remains tax free? In my case, we're talking high 5-digits. I have an outside account I can put it in, but I don't think it will remain tax free once it's been moved???
If you want it to be tax free and remain so you have a few options. Put it all on your house. Gains from a sell up to a certain amount will remain tax free and the principle you pay off is a return since you won't pay interest.

Or, put it in a savings account and use it to contribute to a ROTH account for you and your wife. If you didn't contribute to one last year and this year, you can $11,000 for yourself and spouse. That's a total of $22,000 you can contribute before the tax deadline.
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ArrieS
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Re: Issues with dual uniformed services and civilian account

Post by ArrieS »

Also, explore rolling it over directly into a ROTH ira from the TSP.
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evilanne
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Re: Issues with dual uniformed services and civilian account

Post by evilanne »

Navig8tor wrote:Well, that's interesting. I called the TSP several months after I retired from active duty and started a federal job. We're talking 4-5 months ago. I was told, almost without hesitation, that you can't combine a FERS and Uniformed account. "Nope, can't do it."

Reading over the TSP-90 does elude to an issue for folks with tax-free money earned in a combat zone. TSP-90 indicates tax-free monies come directly to the owner when withdrawing. That said, it's TAX FREE, so, where are you going to put it so that it remains tax free? In my case, we're talking high 5-digits. I have an outside account I can put it in, but I don't think it will remain tax free once it's been moved???
Call back and talk to a few different people at TSP...maybe one of them can give you a good explanation. For military Tax Free contributions, are they different from Roth? Are they not designated as Roth TSP funds? In other words do those contributions grow tax free or were the contributions made prior to 2012 before Roth option was available? If not designated as Roth account, is there any way TSP can put them in Roth account?

If not designated as Roth, it is probably similar to some older IRAs where you have a basis (typically after tax contributions--tax free in your case) where you will have to figure out the taxable amount since the earnings may be taxable when you make withdrawals and probably why you cannot combine accounts. Just make sure you keep documentation of your actual tax free contributions if you ever do roll it over somewhere else and make sure your basis is clearly documented in whatever account you have it in. You can also interview different financial advisors familiar with the military to see how they would handle a rollover.

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Navig8tor
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Re: Issues with dual uniformed services and civilian account

Post by Navig8tor »

ArrieS wrote:
Navig8tor wrote:Well, that's interesting. I called the TSP several months after I retired from active duty and started a federal job. We're talking 4-5 months ago. I was told, almost without hesitation, that you can't combine a FERS and Uniformed account. "Nope, can't do it."

Reading over the TSP-90 does elude to an issue for folks with tax-free money earned in a combat zone. TSP-90 indicates tax-free monies come directly to the owner when withdrawing. That said, it's TAX FREE, so, where are you going to put it so that it remains tax free? In my case, we're talking high 5-digits. I have an outside account I can put it in, but I don't think it will remain tax free once it's been moved???
If you want it to be tax free and remain so you have a few options. Put it all on your house. Gains from a sell up to a certain amount will remain tax free and the principle you pay off is a return since you won't pay interest.

Or, put it in a savings account and use it to contribute to a ROTH account for you and your wife. If you didn't contribute to one last year and this year, you can $11,000 for yourself and spouse. That's a total of $22,000 you can contribute before the tax deadline.
ROTH would be nice...but I've worked myself out of the ability to contribute to a ROTH. Been exploring the possibility of a "backdoor ROTH," just haven't actually done it yet.
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ArrieS
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Re: Issues with dual uniformed services and civilian account

Post by ArrieS »

Navig8tor wrote:
ROTH would be nice...but I've worked myself out of the ability to contribute to a ROTH. Been exploring the possibility of a "backdoor ROTH," just haven't actually done it yet.
I realized after I posted that. You should be able to roll it into a ROTH IRA.
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rcozby
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Re: Issues with dual uniformed services and civilian account

Post by rcozby »

Navig8tor wrote:Well, that's interesting. I called the TSP several months after I retired from active duty and started a federal job. We're talking 4-5 months ago. I was told, almost without hesitation, that you can't combine a FERS and Uniformed account. "Nope, can't do it."
Nav - when I combined my accounts, I had to go thru a hoop to cause the Army Reserve to update my record to show "separated" and then had Army send that update to TSP. Only then would TSP agree to combine the accounts.

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