TSP: What You Can and Can’t Rollover

TSP: What You Can and Can’t Rollover

During employment as well as after separation, Thrift Savings Plan (TSP) participants are permitted to roll the money into their TSPs. However, the money that is rolled over must come from qualified plans and/or qualifying IRAs. On the other hand, money can also be rolled out of the TSP, but also must go to a qualified plan or qualifying IRA and can only be done once while working and once or twice once after retirement.

If a separated worker stayed in the TSP and rolled more money into it from other qualified plans or qualifying accounts that would be ideal for the Thrift Investment Board.

Into the Traditional balance of your TSP, you can roll money from the following:

1) Traditional 401(k) – a Traditional employer-sponsored plan that was acquired either before or after your federal career.

2) Traditional deductible IRA – a Traditional IRA where contributions have been able to be deducted from your federal income tax.

3) Conventional non-deductible IRA – The earnings component from a Traditional IRA where you have not been able to deduct your IRA contributions.

Additionally, you are permitted to roll money from a Roth employer-sponsored plan, like a Roth 401(k), that was acquired before or after your federal career, into your TSP’s Roth balance.

You cannot roll money from any of the following into either the Roth or Traditional balance of a TSP:

1) Money that is not coming from a qualified plan.

2) Any money at all in a Roth IRA

3) The contributions component from a Traditional non-deductible IRA

4) Money that does not belong to you, regardless of whether it’s in a qualified plan or not. An example of this includes money in the qualified plan of a spouse.

Money that is moved into a Thrift Savings Plan via a rollover doesn’t count against the annual elective deferral limit. Currently, the limit for 2018 is $18,500.

Form TSP 60 would be used for a rollover into a traditional balance while form TSP 60-R would be used for any rollover for your Roth TSP balance.

But what about rolling money from the TSP and into another qualified plan or account? TSP rollovers have been permitted since the very beginning.

Almost all rollovers, whether it’s in or out of the TSP are completed as “direct rollovers.” This means a direct move between tax-advantaged accounts.

Currently, there are strict limitations on the number of rollovers that can be conducted when it comes to rolling money away from the TSP. As of right now, there are only two opportunities for TSP withdrawal and withdrawal is the modern-day method used to roll any money out of your TSP. This will continue to be the case until the TSP Modernization Act is implemented, which is expected to occur in September of 2019.

There are options when it comes to withdrawal forms such as age-based, partial, or full. You would select the form appropriate for your needs and then elect to make your withdrawal. At that point, the custodian of the receiving account would need to complete all transfer information on your selected form. Then the money should transition seamlessly from the TSP to your new account.

There is a publication available for the TSP in the “Forms and Publications” section of the TSP website called Transfers from the Thrift Savings Plan to Eligible Retirement Plans, which is made available for plan administrators of IRAs or other qualified plans. You may wish to provide this to the new plan’s custodian at the time of initiating a rollover.

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