Merging TSP Accounts

[rcozby]

For the subset of users who have both Uniform and Civil Service accounts and may be interested in combining them for ease of management in retirement, I just completed a merger and thought it might be helpful to share:

1. TSP Form 65 is easy to complete; must be snail mailed.
2. You can specify which account you want to move.
3. The merger happened exactly one week after I mailed the form.
4. I received no notification that the merger had taken place.
5. (Main Point ): The moved account will go into the fund(s) you have specified for Contributions irrespective of the fund(s) that the original money came from. In my case, the dollars in my Uniform account were in the G Fund, but in my Civilian account I had specified that all new contributions should go to the S Fund (poor man's DCA). So, when the dollars were moved from my Uniform account to my Civilian account, they went from the G Fund to the S fund...and I didn't have to burn an IFT to make the switch.

[crondanet5]

Congratulations on making a change to your TSP Account. Unfortunately I do not agree with what you have done now that you have retired from federal service and no longer contribute/get a matching contribution to your TSP 401k retirement account. The TSP Program is a terrible program because it only allows 2 IFTs a month. You just can't make the gains you can in a rollover IRA account in which you can make daily IFTs. And you can also easily withdraw money from your rollover IRA that you cannot get out of the TSP Account. For your own safety and well being I urge you to roll your account out of the TSP into a Rollover IRA account. It is the wisest thing you can do.

[rcozby]

Haven't retired yet; just getting prepared/simplifying. When I retire I'll be 56 (my minimum retirement age). Each person has their own requirement from their TSP account. Some use it for a rainy day later in life, but I've built mine to get me thru the early days until my military retirement kicks in (age 60) and the big SSA kicks in (age 70). If I roll my TSP into an IRA as soon as I retire, I'll have to wait until I'm 59.5 to access the funds without penalty, which will be fruitless because I will have starved to death three years earlier.

[Chulke]

I'm looking at the same thing but my merger will be from my Military TSP (where I wasn't matched I might add) to my civilian TSP.

I'm looking at making the merger at some point once I get out of my probationary hire status, which is in about another 4 months. But, my question would be, Do you think I should wait until I am vested with my current Civilian TSP account, which isn't for another 2 years after the probationary period?

Currently, I manage both of them the same way, when I make an IFT on one, I do it for the other also...also the same with contribution allocations. Well, except I can't make contributions to my Military TSP any longer...but you get the picture.

Would there be any disadvantage to waiting or not waiting? I mean it's just an account merger so it doesn't fall into a distribution scenario...I don't think. So, I don't see any reason to wait per se...Do y'all?


Thanks!

[rcozby]

I intentionally waited until the year before I planned to retire from civil service simply because having the additional account offered additional options. Sometimes I used my military account as a safety net while I went higher risk in my civilian account, sometimes the reverse and other times I kept them both in tandem. I found that to be useful during my investment years, whereas I'm drifting toward simplicity as I close in on retirement.

NOTE: Be sure that your military department notifies TSP that you have in fact separated from the military. I'm a gray area retiree and had to force Army to send a separation notice to TSP so that I could merge the accounts.

[STX]

I am a MILTECH Retiree and found I need to TAP my TSP for funds NOW. I am 52 and have a full regular Retirement. The issue is the rules for withdrawing your TSP funds.

1. No issue with the civilian account as there is no penalty for early withdraw.
2. You can not do the same for your Uniformed Services account.

So I am merging my uniform account to the civilian account. Then all funds will be available for withdraw penalty free. EXCEPT the Roth portion.

It appears that the is not an early withdraw loophole so you will have to pay the 10% penalty. You must take the withdraws from your account proportionally.

This is what I found yesterday as I am about to request a with draw SEEM RIGHT?

[evilanne]

I am a MILTECH Retiree and found I need to TAP my TSP for funds NOW. I am 52 and have a full regular Retirement. The issue is the rules for withdrawing your TSP funds.

1. No issue with the civilian account as there is no penalty for early withdraw.
2. You can not do the same for your Uniformed Services account.

So I am merging my uniform account to the civilian account. Then all funds will be available for withdraw penalty free. EXCEPT the Roth portion.

It appears that the is not an early withdraw loophole so you will have to pay the 10% penalty. You must take the withdraws from your account proportionally.

This is what I found yesterday as I am about to request a with draw SEEM RIGHT?

The only way you can do it without a penalty under 55 (50 for Law Enforcement) is to do it based on life expectancy unless you meet one of the other exceptions. Research IRS 72t Rule or Substantially Equal Periodic Payments (SEPPs); there are also other exceptions to the 10% penalty but very limited. see https://www.irs.gov/retirement-plans/pl ... tributions

https://www.irs.gov/pub/irs-pdf/p721.pdf

[evilanne]

STX,
Another reference: https://www.irs.gov/taxtopics/tc557.html
Roth rules are slightly different for qualified distribution & penalty. Regular Roth IRA has 5 year rule. Since government didn't introduce Roth until 2012, five years from initiation will be 2017. Maybe the proportional distribution rule was set up to get around this rule for distributions.