TSP conversion to Roth

Hello,

I am a retired federal employee (civil service). I have a Thrift Savings Plan. I am receiving monthly post-seperation withdrawals from my account. I pay income tax on these withdrawals as ordinary income. I am 61 years of age. Is it possible to convert my account to a Roth plan?



Yes, if your modified adjusted gross income for 2009 is no over 100,000, you are eligible. However, it is rarely a good idea to convert a large balance to a Roth IRA in a single year as it will inflate your tax bracket and may result in state and federal taxes higher than the average rate you expect to pay in retirement. If the TSP will allow you to convert incremental amounts to a Roth IRA instead of a lump sum, that would be a better plan. For some people converting enough to fill up their 15% bracket works well. If you change your mind after doing a conversion, it can still be recharacterized to a traditional IRA account, but not back to the TSP. A recharacterization will reverse the tax bill resulting from the conversion, and it can be done with the full amount or a partial amount.



Note:
Link to TSP website re Roth conversion:
http://www.tsp.gov/faq/faq15.html#sub2



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