Rollover to a self directed IRA

[rcevans]

Has anyone ever done a post separation rollover, either partial or full, from your traditional TSP to a self directed IRA (Checkbook IRA). And if so did it qualify as an eligible plan rollover where they did not have to with hold the 20% and the whole amount requested was rolled over?

[Ruystar]

I have done it the other way...from my IRAs into TSP. No reason why the reverse would not be allowed as long as you are transferring into an IRA-type account.

good article: https://themilitarywallet.com/thrift-sa ... -rollover/

[evilanne]

You have to have some type of custodian that does the reporting. This is one https://www.kingdomtrust.com/individual ... -solutions

I would not recommend doing a full roll over. Leave something in TSP so you can always go back.

[TSPBuilder]

Has anyone ever done a post separation rollover, either partial or full, from your traditional TSP to a self directed IRA (Checkbook IRA). And if so did it qualify as an eligible plan rollover where they did not have to with hold the 20% and the whole amount requested was rolled over?

Did a partial rollover of three-quarters of TSP account to IRA. I have a custodian that doesn't manage the account. No penalties. Moved it there to double my returns (leveraged index funds like S&P, MSCI EAFE) and have inverse funds that are leveraged also to pickup gains on at least a third of the downtrends. Go or call TSP for process to avoid them. Great video walks your through the forms. Withdrawal took place 1.25 years after separation. The other quarter I left to be a supplemental monthly disbursement until I can draw social security at 62.

Live long and prosper (in retirement
T

[Ericdelee]

Can I ask a follow up question (TSPBuilder might have the answer)

The debate I’m having about rolling over to a Roth IRA upon separation usually is solved when I look at the no taxes I’d have to pay upon withdrawing at 60 years old. But the flip side of the coin has me thinking about the ease of monthly withdrawals when the time comes. Is it easy to setup automatic withdrawals for something like 4% of your balance when you roll everything over to a Roth IRA? TSP seems fairly straight forward. But if I were to toss all of my savings into something like Fidelity (VTI), is there an added difficulty to withdraw the money on a monthly basis? Dividends would be involved as well...

[evilanne]

Ericdelee,

If you roll over a Traditional TSP to Roth you will be taxed at that time at your marginal tax rate or more, depending on how much you have. It could put you in a substantially higher tax bracket, so be careful.

If you are managing your account yourself, you just need to make sure you have enough cash when payments are made. Otherwise there may be a transaction cost to sell shares. If you don't reinvest dividends, you may have enough in cash to cover the payments. Another option would be to make withdrawals quarterly or semiannually--whenever dividends are paid. You may still have to sell shares if your dividends don't cover the amount you want to withdraw. For particulars, you should talk to the places where you are considering transferring you money to.

[TSPBuilder]

Can I ask a follow up question (TSPBuilder might have the answer)

The debate I’m having about rolling over to a Roth IRA upon separation usually is solved when I look at the no taxes I’d have to pay upon withdrawing at 60 years old. But the flip side of the coin has me thinking about the ease of monthly withdrawals when the time comes. Is it easy to setup automatic withdrawals for something like 4% of your balance when you roll everything over to a Roth IRA? TSP seems fairly straight forward. But if I were to toss all of my savings into something like Fidelity (VTI), is there an added difficulty to withdraw the money on a monthly basis? Dividends would be involved as well...

Ericdelee,
Thanks for the vote of confidence I was hoping evilanne was going to chime in. I was concerned that I had made a financial boo-boo by not getting into Roth IRA's earlier in my career so I went to a financial advisor (fiduciary) and they told me it was going to work out great by just transferring my traditional into my regular IRA at ProFunds. I believe they said we would do a Roth conversion every year for the amount desired and take equal payments throughout the year. They showed me the math and what I took away from it was that somehow I ended up only paying taxes on a third or two-thirds. Not my forte. That why we pay professionals for the things we don't (want or can't understand). When I get there in a couple years I'll let you know how it actually worked out I believe "thecollegeinvestor" has a tutorial that breaks the effects of the Roth Conversion out for you.

Food for thought...