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Can I do a back door Roth with TSP?

The Thrift Savings Plan (TSP) is a retirement savings plan for federal employees and members of the uniformed services. It offers the traditional and Roth options for contributions, allowing participants to save for retirement with pre-tax or after-tax dollars. However, the TSP has specific rules regarding conversions and rollovers, which may impact your ability to perform a back door Roth conversion.

A back door Roth conversion is a strategy used by high-income individuals who are not eligible to contribute directly to a Roth IRA due to income limits. This involves making non-deductible contributions to a traditional IRA and then converting those funds to a Roth IRA. This allows individuals to take advantage of the tax-free growth and withdrawals offered by a Roth IRA, regardless of their income level.

In the case of the TSP, the ability to perform a back door Roth conversion may be limited due to specific IRS rules and TSP regulations. The TSP does not allow for in-service withdrawals or partial withdrawals while still employed, which could impact your ability to move funds from the TSP to a traditional IRA for the purpose of a back door Roth conversion.

Additionally, the TSP has specific rules regarding the transfer of funds to external accounts. While it is possible to rollover TSP funds to a traditional IRA or Roth IRA upon leaving federal service, there are limitations on the frequency and timing of such transfers. If you are still actively employed and contributing to the TSP, you may not be able to move funds to an external account for the purpose of a back door Roth conversion.

It’s important to consult with a financial advisor or tax professional to determine if a back door Roth conversion is feasible with your TSP account. They can help you navigate the specific rules and regulations governing the TSP and provide guidance on the best retirement savings strategies for your individual circumstances.

In conclusion, while the TSP offers the traditional and Roth options for contributions, the ability to perform a back door Roth conversion may be limited due to specific IRS rules and TSP regulations. It’s important to seek advice from a professional to determine the best retirement savings strategies for your situation.