July 27, 2015 at 4:42 pm #16965
I’m having trouble finding information about my options if I were to leave my federal job and become self-employed (i.e., not retire for many more years). I’ve read that I can transfer some IRAs into my TSP funds, but can I just start contributing cash out of pocket into the fund? Or do I have to put my money into an IRA and later transfer the IRA to the TSP?August 1, 2015 at 1:10 am #16976
You cannot contribute cash out of your pocket into the Thrift Savings Plan. The salient portion from the tsp.gov website is as follows:
The money that you intend to move into the Thrift Savings Plan must be considered an “eligible rollover distribution” for Federal income tax purposes. You can verify this by checking with the administrator of the plan or IRA from which you are moving the money. You can also consult a tax advisor.
Traditional: The TSP will accept into the traditional balance of your TSP account both transfers and rollovers of tax-deferred money from traditional IRAs, SIMPLE IRAs, and eligible employer plans.
Roth: The TSP will accept into the Roth balance of your TSP account only transfers (i.e., direct rollovers) of qualified and non-qualified Roth distributions from Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s. If you don’t already have a Roth balance in your existing TSP account, the transfer will create one.
The Thrift Savings Plan will not accept Roth rollovers that have already been paid to you and it will not accept transfers or rollovers from Roth IRAs.
The TSP Allocation Guide www.TSPallocation.com
You must be logged in to reply to this topic.