Over the last few years, there has been a lot of information put out on how to pull out TSP money that is tax-exempt (combat zone contributions) and get it into a Roth IRA. It was my understanding that in years past, this effort took quite a bit of attention to make it happen, but I just did it and want to let folks know that the process now is extremely easy.
- Log into TSP and select Withdrawals and Rollovers
- I then selected a Partial Distribution as I still have Roth TSP money I wanted to keep in the TSP.
- TSP will show you your Traditional Balance, with Tax-Exempt contributions, and also your Roth Balance. I chose to rollover my entire traditional balance.
- During this process you'll need to identify where you want the funds to go via snail mail. TSP will not send it electronically. I pulled this information from Vanguard to include my Traditional IRA account number. NOTE: You need to have the Vanguard information loaded in the TSP system for about 10 days before they will allow you to do the transfer.
- Here's the CRITICAL part. When you are filling out the forms for the transfer there will be a check box that asks you if that account will accept all the funds. DO NOT CHECK THE BOX. If you check the box then all the funds will go to Vanguard and you'll have a bit of a mess. Do not check the box and you will get a check in the mail for the tax-exempt balance. When you receive your tax-exempt check in the mail 7 days later, there will be a sheet that says "SAVE THIS STATEMENT FOR YOUR TAX RETURN". It lists out that the distribution is non-taxable and that you will receive a tax form in the future for this payment. The sheet also tells you that you have 60 days to complete the indirect rollover for the funds you just received.
Last year I was going to rollover these funds after they changed the TSP website hoping that they'd make the process easier, but as most TSP users know, the transition to the new website was simply disastrous. I decided to hold off until now and it appears as though everything is working as it should; I had zero problems and had it all complete in 7 days.
Hope this helps!
- Log into TSP and select Withdrawals and Rollovers
- I then selected a Partial Distribution as I still have Roth TSP money I wanted to keep in the TSP.
- TSP will show you your Traditional Balance, with Tax-Exempt contributions, and also your Roth Balance. I chose to rollover my entire traditional balance.
- During this process you'll need to identify where you want the funds to go via snail mail. TSP will not send it electronically. I pulled this information from Vanguard to include my Traditional IRA account number. NOTE: You need to have the Vanguard information loaded in the TSP system for about 10 days before they will allow you to do the transfer.
- Here's the CRITICAL part. When you are filling out the forms for the transfer there will be a check box that asks you if that account will accept all the funds. DO NOT CHECK THE BOX. If you check the box then all the funds will go to Vanguard and you'll have a bit of a mess. Do not check the box and you will get a check in the mail for the tax-exempt balance. When you receive your tax-exempt check in the mail 7 days later, there will be a sheet that says "SAVE THIS STATEMENT FOR YOUR TAX RETURN". It lists out that the distribution is non-taxable and that you will receive a tax form in the future for this payment. The sheet also tells you that you have 60 days to complete the indirect rollover for the funds you just received.
Last year I was going to rollover these funds after they changed the TSP website hoping that they'd make the process easier, but as most TSP users know, the transition to the new website was simply disastrous. I decided to hold off until now and it appears as though everything is working as it should; I had zero problems and had it all complete in 7 days.
Hope this helps!
Statistics: Posted by SurferLife — Mon Jan 29, 2024 7:21 pm — Replies 0 — Views 97