Any ROTH TSP experts here?

[Nika]

I can't seem to find the specifics on rules for converting ROTH TSP into ROTH IRA.

Info I found out there says that you can, but I would like to know the details. There must be a number of limitations -- they won't just allow you to put up to 17K a year and than convert it all to ROTH IRA, on top of the additional 5K a year you are allowed there.

In general, there is not enough info on ROTH TSP, most articles are making a comparison between traditional TSP and ROTH TSP not between ROTH IRA and ROTH TSP (not sure why).

[creditcardfree]

By TSP, do you mean the Thrift Savings Plan?

[Nika]

YEP. Thats the only TSP I know of.

[creditcardfree]

Me too...just checking. On the TSP website, it indicates that you cannot specify which funds you withdraw...traditional, tax exempt or roth. Therefore, if you have contributions in all those 'buckets, your withdrawal will be proportional to the contributions made in all those areas.

That would keep me from doing it. Generally, you also need to be seperated from service to withdraw unless it is a hardship or you have met the age that allows you to withdraw.

I'm not an expert on the Roth TSP, but have done some reading...just take that with a grain of salt!

[jpg7n16]

You are probably searching for the wrong terminology.

"Convert" means to go from a pre-tax plan to an after-tax plan. So there is no need to "convert" a Roth anything to a Roth IRA. Roth TSP, Roth 401k, etc. -- they are already under the Roth rules. If you are still with the position that has the TSP, you just need to check and see if you can transfer to an IRA while in service (probably not). Most of the time, as long as you are with a position, you have to keep the assets with the plan.

If you have left your position, then you don't need to "convert" - you need to "rollover."


What made you decide to move from the TSP to the IRA?


As long as you are in the position with the TSP, and meet the income limits, there is absolutely nothing stopping you from doing $17k to the Roth TSP and another $5k to the Roth. Then once you leave your position, combine the two together by rolling over.

[creditcardfree]

You are probably searching for the wrong terminology.

"Convert" means to go from a pre-tax plan to an after-tax plan. So there is no need to "convert" a Roth anything to a Roth IRA. Roth TSP, Roth 401k, etc. -- they are already under the Roth rules. If you are still with the position that has the TSP, you just need to check and see if you can transfer to an IRA while in service (probably not). Most of the time, as long as you are with a position, you have to keep the assets with the plan.

If you have left your position, then you don't need to "convert" - you need to "rollover."


What made you decide to move from the TSP to the IRA?


As long as you are in the position with the TSP, and meet the income limits, there is absolutely nothing stopping you from doing $17k to the Roth TSP and another $5k to the Roth. Then once you leave your position, combine the two together by rolling over.

Agreed!

[Nika]

You mean to say that once the employed (not me, btw) leaves the gov, he can roll over the entire ROTH TSP into his ROTH IRA? (after being vested 5 years) Meaning, one could potentially be getting up to 22K a year into the ROTH (of course that would involve not puting anything into traditional TSP).

It is just hard to believe!

What made you decide to move from the TSP to the IRA?

We are not moving anything, but with new thing of ROTH TSP being available, contributing something to that seems like a good idea. We love ROTH and always max it out. And if an opportunity presents to get more money into ROTH, it seems interesting.

[Like2Plan]

I can't seem to find the specifics on rules for converting ROTH TSP into ROTH IRA.

Info I found out there says that you can, but I would like to know the details. There must be a number of limitations -- they won't just allow you to put up to 17K a year and than convert it all to ROTH IRA, on top of the additional 5K a year you are allowed there.

In general, there is not enough info on ROTH TSP, most articles are making a comparison between traditional TSP and ROTH TSP not between ROTH IRA and ROTH TSP (not sure why).

I don't think there is a lot of info because the Roth TSP feature is so new. They may change the rules in the future, but right now I don't see anything that would preclude you from transfering your Roth TSP to an Roth IRA when you leave federal service. It looks like if you maintain both traditional and ROTH features in your TSP, when you later take distributions they will be taxed proportionally:
"Note: Be aware that if you receive a payment from an account that has both taxable and tax-exempt contributions, your distribution will be paid proportionally from taxable and nontaxable amounts. Additionally, any payment from your Roth balance will be paid proportionally from your Roth contributions and earnings."


Here's some info I found.

TSP-70 Request for Full Withdrawal
April 2012

Important Tax Information About
Payments From Your TSP Account

Tax Treatment of Thrift Savings Plan
Payments Made Under Qualifying Orders

[creditcardfree]

You mean to say that once the employed (not me, btw) leaves the gov, he can roll over the entire ROTH TSP into his ROTH IRA? (after being vested 5 years) Meaning, one could potentially be getting up to 22K a year into the ROTH (of course that would involve not puting anything into traditional TSP).

Yes...$17K max to Roth TSP and $5K max to Roth IRA per year.

Once you leave service you can roll all the money over into the appropriate IRA...Traditional or Roth.

Only because of the way your post is written, I will point out that the employee cannot rollover the Roth contributions EACH year, simply because you cannot withdraw unless you meet age requirements or have a hardship while still employed.

Yes, there is potential to invest up to $22K in a Roth type vehicle each year because of the Roth TSP (or Roth 401K for those in the civilian world who have that as an option with their employer plan).

[Nika]

See, considering that ROTH TSP, unlike ROTH IRA, is subject to mandatory distribution I would think there would be more hurdles than just being no longer employed to qualify for rolling it into ROTH IRA (after all, everybody who is retired is no longer employed). Just sounds too good to be true.

[jpg7n16]

You should read the following --

Chart of the new TSP options:

https://www.tsp.gov/whatsnew/roth/compareRoth.shtml

PDF file that discusses the RMD and rollover provisions of the TSP:

https://www.tsp.gov/PDF/formspubs/tsp-775.pdf

Again, there is nothing stopping you from doing $17k to the Roth TSP and another $5k to a Roth IRA ($22k total) -- just like there is nothing in the private sector stopping someone from doing $17k to a Roth 401k and also $5k to a Roth IRA (assuming their firm has a Roth option). And then both of you can roll the entire balance in full to a Roth IRA after you leave employment, regardless of plan requirements for distributions.

[creditcardfree]

Distribution requirements are not an issue if you rollover the entire amount after you seperate from service. Once you convert you then follow the distribution rules for the Roth IRA. Contributions are always tax and penalty free to withdraw.

[GrimJack]

You mean to say that once the employed (not me, btw) leaves the gov, he can roll over the entire ROTH TSP into his ROTH IRA? (after being vested 5 years) Meaning, one could potentially be getting up to 22K a year into the ROTH (of course that would involve not puting anything into traditional TSP).

It is just hard to believe!

What's not to believe? - you can do the same with a regular TSP and a 401k/403b so why would you not be able to roll over the Roth - they are ≅.

[Like2Plan]

Distribution requirements are not an issue if you rollover the entire amount after you seperate from service. Once you convert you then follow the distribution rules for the Roth IRA. Contributions are always tax and penalty free to withdraw.

Right, it would seem that it would be a good idea to roll over the Roth part and leave the traditional in the TSP so that distributions are not taxed proportionally.

I was wondering how easy will it be to take an early distribution on Roth TSP contributions while still in service?

[Kodymiester]

Why can't I roll over a Roth IRA to a Roth TSP?

I want to roll over a ROTH IRA to a Roth TSP. The form 60-R said that it had to be a different type of Roth IRA to allow for this. Does anyone know why? Also, after reading this blog does this seem like a good idea if I could do it?