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As always great I formation. I am 59 1/2, but have not left Fed Service, can I move TSP money to Traditional IRA?
In my opinion a person should participate in the traditional TSP and get the immediate tax break if they expect their income in retirement to be less than it when working. I f you expect your income in retirement to be MORE than it is while working then you should participate in the ROTH TSP.
Very clear and solid advice. Thanks.
Two questions:
1. If I start a Roth TSP account now does that start the 5 year restriction clock?
2. Does the money that you moved from tsp to the IRA have to sit there for some amount of time before you can move it to the Roth TSP?
Thanks!
Great thank you so much !!!
This is what I want to do
can i move money from the Traditional TSP straight into a ROTH IRA. I just have about $4000 to move, why do i need to move to a Traditional IRA
If I have 200k in my TSP would I miss out on future growth if I drop my contributions down to 5% and start over in a Roth TSP?
So how do I open the Roth? I have traditional..gonna retire in 2 years have 175000to move base salary 74000
The law may be changing in Dec. Do I have to convert the entire amount to a Roth IRA before then?
I like your show.
I'm wondering why you do not mention that after retirement, a person can transfer from a Traditional TSP directly to their Roth IRA in just one step instead of the two steps of TSP to traditional IRA then to Roth IRA as you described. I have done it both ways and I liked doing the simple just direct to Roth IRA transfer. The two steps would make sense if the person wanted to take all of their TSP saving completely out and move it to an traditional IRA then slowly move to the Roth IRA. However, I want to keep the traditional TSP because of the low expense ratio compared what is available in most IRAs. I then slowly move directly to my Roth IRA each year from my TSP. I think it's a much better method… it involves less paper work and also when it comes time to do taxes, I will only have one 1099-R distribution form to deal with vs. two 1099-Rs.
The following is a quote from the TSP publication called, Transfers From the Thrift Savings
Plan to Eligible Retirement Plans.
Is the TSP authorized to make transfers to eligible retirement plans?
Yes. Participants may transfer eligible rollover distributions from their TSP accounts to a qualified trust or an eligible retirement plan (as defined in IRC § 402(c)(8)). See 5 USC§ 8433(c)(2). An eligible retirement plan can be either an IRA or an eligible employer plan. Note 5. An IRA is any individual retirement account that is not a SIMPLE IRA… see note 5
Note 5: Any portion of a distribution from a participant's traditional balance (other than tax-exempt contributions) that is transferred to a Roth IRA will be taxed in the current year.
I plan on transferring my entire TSP sum into a Vanguard IRA after 60. And over 4 years, rolling over maybe 40% into a Roth IRA. Does anybody know of a reputable financial planning company that will make this as seamless as possible? I saw GEBA now has a financial planning side to their business. Has anybody used them? And I wonder if the tax bill for such rollover can just be taken from the TSP sum and not paid out of pocket?
So, is what you describe in this vid a "Roth Conversion"? How about a "Back-Door Roth Conversion"? I have my terms mixed up. I had thought I would, during the course of my upcoming retirement, slowly convert my TSP to Roth in small increments year- to- year until the whole shebang was Roth.
I thought, the most you can put into a roth ira was 6000 or 7000 depending on age, and that it had to be earned income. You can't just put 30K into roth so I thought.
This was your best video yet!
Great video
Do you think the TSP will ever change their "NO" policy on Traditional tsp conversion to Roth tsp in our lifetime?
I always thought that Roth IRAs (and Roth TSP) are for people who expect to be living on a much higher income when they retire. They are mainly for new people just coming into the service. A regular IRA (or TSP) is better if you expect your income to go down after retirement. With compounding growth of your contributions over time, you will have a lot more money in your account if you put it into the regular TSP. Granted, you'll have to pay taxes on it when you take it out. But if you take it out slowly the tax hit wont be as bad (you might even get money back from the IRS). I'd like to see a side-by-side chart of the growth between the two. Please do the math.
Good info
Haven't thought about the timing of the conversion (other than tax bracket considerations) when it comes to executing the transfer in an up market vs. down market. That can be a very valuable strategy. Thanks!
When 59.5 you can move w/o penalty out of traditional tsp to traditional ira. Then convert to Roth IRA and pay the tax. Also, move your Roth TSP too before you retire as Roth TSP is subjected to RMD where traditional Roth are not required to have RMD. At 59.5, you move it slowly any pay the tax for conversion or whatever works best for your needs