Record rollovers to IRA's

[jimcasada]

Interesting article this morning about the record number US retirees rolling out of 401K's into IRA's. Even though the article is about 401K's, I suspect same is true for TSP accounts (maybe even more so).

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IRAs hold trillions more than 401(k) plans — yet people hardly save in them

https://www.cnbc.com/2026/06/28/ira-mon ... idappshare

[Scarfinger]

With all the changes to TSP, I am considering only transferring my ROTH money to Fidelity and keeping my traditional in TSP.

[jimcasada]

With all the changes to TSP, I am considering only transferring my ROTH money to Fidelity and keeping my traditional in TSP.

I've been rolling over about $75~100k every year into my Schwab traditional IRA. Then near the end of the year, after do a I crunch of all our estimated numbers for our Federal tax return, with a few clicks I can quickly transfer from that IRA account into my Schwab ROTH just what we need to max out my distribution for the year, without going over the Federal adjusted income I need (being careful not to lose child dependent credit on our Maryland tax return. Last year that limit was a little under $150k AGI). So far I've been rolling over about $50k/yr to my Schwab ROTH account since I retired 3 years ago. My goal is to roll over as much as I can to ROTH while these kids are still in college, and we can still claim them as dependents.

[JimB]

I’m retired and in the TSP. I’m getting married soon am being forced out of the TSP and going to Fidelity because I don’t want anyone to have anything to say about my money. I have to say I’m so unhappy I’m leaving the TSP and the C S and I funds. They are simple and super easy to reallocate. Oh and I’ve made a lot of money with the TSP. I want to mirror what I’ve done in the TSP and it seems like a lot more work. Yes I’m rolling over my TSP to Fidelity and going to mirror what I did with the TSP… I hope!

[Jimmyk65]

Jim C. Thanks for the rollover info. I just retired a year and a half ago and will have some roth conversion to do. I was looking for a practical way to get it done. So do you have Schwab take out the taxes directly for the Roth Conversion or do you have that come from a separate source?

[jimcasada]

I’m retired and in the TSP. I’m getting married soon am being forced out of the TSP and going to Fidelity because I don’t want anyone to have anything to say about my money. I have to say I’m so unhappy I’m leaving the TSP and the C S and I funds. They are simple and super easy to reallocate. Oh and I’ve made a lot of money with the TSP. I want to mirror what I’ve done in the TSP and it seems like a lot more work. Yes I’m rolling over my TSP to Fidelity and going to mirror what I did with the TSP… I hope!

If I remember right, I thought you had to be married for over 10yr before your wife was automatically entitled to part of your TSP, or maybe I'm thinking of pay & benefits? My ex-wife missed having any claim to my military stuff by just a couple of months. I think I better keep number 2, as long as she is willing to put up with me.

[jimcasada]

Jim C. Thanks for the rollover info. I just retired a year and a half ago and will have some roth conversion to do. I was looking for a practical way to get it done. So do you have Schwab take out the taxes directly for the Roth Conversion or do you have that come from a separate source?

I think Schwab withholds 10% for each ROTH transfer. I don't know if I could chose not to withhold, but I prefer that they do it.

[evilanne]

Jimmy65,
With a conversion from IRA to Roth they do not withhold anything but you are responsible for the taxes. You can make a quarterly payment directly to IRS or withhold more from other sources like your pension, TSP/IRA distributions to avoid penalty at tax time for not withholding enough throughout the year.

[Jimmyk65]

Thank you Jim C. and Evilanne!

[jimcasada]

Thank you Jim C. and Evilanne!

You bring up a good point. The IRS likes to see you withholding evenly throughout the year, and not just putting in a large lump sum at the end of the year. If you do that, they will make you fill out another form breaking your income down quarter by quarter, in order to avoid a penalty fee. It's usually no deal, just more paperwork.

[evilanne]

The paperwork won't avoid penalties if you don't pay at least 90% of the current amount due. If you pay quarterly lump sum January 15 for prior year and you made withdrawal at beginning or midyear, you could still end up with a penalty. It is best to make a payment in the quarter you do the conversion to make sure you withhold at least 90% during the year. Per AI:

To avoid underpayment penalties, you can pay at least 90% of the tax you owe for the current year or 100% of the tax you owed for the previous year. If your adjusted gross income was over $150,000, you must pay 110% of the previous year's tax instead of 100%.

If your withholdings are already over the 100/110% of prior year tax due you should be OK other than having a large payment due on 4/15. Even if you have a tax refund, you can still get a penalty if the payments were not made timely. Per AI:

Yes—your refund doesn’t automatically eliminate an underpayment of estimated tax penalty. The IRS can still charge a penalty if you didn’t pay enough tax during the year via withholding and/or timely estimated payments, even if you end up getting a refund when you file.

Common ways to avoid that penalty are the IRS “safe harbor” rules:
You owe less than $1,000 after subtracting withholding and refundable credits, or
You paid at least 90% of your current-year tax (or 100% of the prior-year tax, whichever is smaller; 110% if your prior-year AGI was over $150,000—$75,000 if married filing separately).
https://www.irs.gov/taxtopics/tc306
https://www.irs.gov/payments/underpayme ... ls-penalty

So far I haven't gotten any penalty but if you are doing conversions, the 90% rule is easier to follow and it isn't difficult to make a one payment to the IRS at https://www.irs.gov/payments. Finding were to put it in the tax software was more challenging.

[jimcasada]

Is anyone familiar with Webull? The last few days, I have been shopping around for a possible better deal than what I have with my current Schwab traditional & Roth IRA's, and I have discovered that there are several investment organizations that offer matching funds for rollovers into their accounts. One that has really caught my attention is this Webull.com. I talked to one of their customer service representatives earlier today, and he tells me that I could roll over up to $250k and get a 3% match in return deposited in my new account within a few days. The catch is that I would also have to sign up for their "premium" service for at least 12 months at $40/year, and that I could not withdraw any more than my original deposit for 5 years (but I could withdraw any earnings over that amount at anytime). This 3% match applies to both traditional IRA or Roth IRA accounts. But he also said, that if I had both a traditional and a Roth IRA account, I could convert any amount from the traditional IRA over to the Roth IRA at any time, and that wouldn't count as a withdraw because they treat both IRA's as the same. Currently, they seem to have most all of the same investment options as Schwab, including a fixed rate 3.35% high yield Federally insured savings account option. Maybe this is something I have been looking for, but I'm not really familiar with Webull? They seem to have some good reviews, so what do you all think?

https://www.webull.com/ira-match

[evilanne]

This 3% match applies to both traditional IRA or Roth IRA accounts. But he also said, that if I had both a traditional and a Roth IRA account, I could convert any amount from the traditional IRA over to the Roth IRA at any time, and that wouldn't count as a withdraw because they treat both IRA's as the same. Currently, they seem to have most all of the same investment options as Schwab, including a fixed rate 3.35% high yield Federally insured savings account option. Maybe this is something I have been looking for, but I'm not really familiar with Webull? They seem to have some good reviews, so what do you all think?

https://www.webull.com/ira-match

I have issue with statement that they treat tIRA and Roth the same as you still have to pay taxes though it technically isn't a withdrawal but you will have to pay taxes on any conversion.
Per Google AI

Webull is a digital investment platform providing commission-free trading for stocks, ETFs, and options alongside advanced charting tools. To explore the platform or sign up, visit the official Webull Brokerage Site. [1, 2, 3]
Key Features and Offerings
Commission-Free Trading: $0 trades for U.S.-listed stocks, ETFs, and standard options contracts.
Investment Selection: Stocks, fractional shares, options, ETFs, futures, and crypto (via Webull Pay).
Account Types: Cash and margin brokerage accounts, plus Traditional, Roth, and Rollover IRAs.
Extended-Hours Trading: Access pre-market (4:00 AM–9:30 AM ET) and after-hours (4:00 PM–8:00 PM ET) sessions. [1, 2, 3, 4, 5]
Pros and Cons
Pros: Professional-grade technical indicators, paper trading for strategy practice, and strong mobile/desktop app usability.
Cons: Does not offer mutual funds. Users on Reddit have a consensus that crypto trading via Webull features high markups compared to dedicated crypto exchanges. [1, 2, 3]

So they are offering up to $7500 for you to transfer up to $250K to them for $200 in annual fees. Sounds good except for restrictions for withdrawing funds.
Is that bonus amount reported as taxable income?
Per AI:

Yes, the asset transfer bonus you receive from Webull is considered taxable income.The IRS treats brokerage incentives, cash promotions, and free stocks as ordinary income rather than capital gains.

[evilanne]

They have been in business for 10 years and are traded under the ticker BULL
https://finance.yahoo.com/quote/BULL/

[evilanne]

Reading further down on tax impact, it looks like you have to keep the money in to avoid taxes on the bonus transferred in:

How the Tax Reporting Works
Taxable (Standard) Brokerage Accounts: If you transfer assets into a standard taxable account, Webull will report the bonus value. You must report this amount as "Other Income" on Schedule 1 (Form 1040) of your tax filing. [1, 2, 3]
The Tax Forms You Will Receive:
If your cumulative promotional bonuses for the calendar year are $600 or more, Webull will issue a Form 1099-MISC.
If the total is under $600, they may not generate the form, but the IRS still requires you to self-report the income.
In some promotional structures, it may instead be categorized as interest and show up on a Form 1099-INT. [1, 2, 3, 4, 5, 6]
Retirement Accounts (IRAs): If you received a bonus for transferring a Traditional or Roth IRA, the tax rules are unique. Often, these bonuses are treated as earnings inside the tax-advantaged shell or as interest. This keeps them from triggering immediate income taxes, provided you fulfill the strict holding period requirements (often 1 to 5 years depending on the specific Webull tier rules). [1, 2, 3, 4, 5]

Q: Within the IRA will the bonus eventually be taxed if you comply with the holding period requirements?
Answer: Within a Traditional IRA, the bonus will eventually be taxed as ordinary income when you withdraw the money in retirement. Within a Roth IRA, the bonus will never be taxed, allowing it to grow and be withdrawn completely tax-free. [1, 2, 3, 4, 5]
Because the bonus is credited directly inside the retirement account structure, it mimics the native tax rules of that specific account type once you fulfill Webull's holding period requirements. [1]