Tsp rollover to Roth IRA | Ed Slott and Company, LLC

Tsp rollover to Roth IRA

My Thrift Savings Plan allows full withdrawals, partial withdrawals, or periodic withdrawals. I am allowed only 1 partial withdrawal.

Can I select periodic withdrawals ($2000 per month) and then roll each monthly withdrawal over into a Roth IRA? That would mean 12 Roth rollovers/conversions per year. I realize I would owe taxes on all rollovers/conversions. This would get around the limitation of a single partial withdrawal and would allow me to spread rollovers/conversions over several years.

Yes, you can. However, if you are subject to RMDs, the first distribution must be the RMD and you cannot convert any RMD dollars, just additional distributions. You will also have to replace the mandatory 20% withholding that will be deducted in order to have the entire distribution go to your Roth IRA. Also, note that each Roth rollover is a separate conversion that can be recharacterized and would require a separate earnings calculation if you recharacterized. Any recharacterization must go to a TIRA account, not back to the TSP. Finally, if you find that your tax liability is higher than desired for any year, you could roll the distributions over to a TIRA rather than a Roth IRA to reduce the tax bill.

 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.