My complaining has finally paid off! I've been hoping this would happen because I've been transferring money out of TSP to do conversions. Starting in 2026 I will do them within TSP. Thanks for the heads up.
I've been telling everyone that would listen to send the TSP requests to make this happen. Now we need to get them to allow withdrawing from just the G fund when needed.
YEA!, TY for letting us know. I was OPM early disability retired this year (age 53), and was thinking on doing an SEPP starting sometime in 2025. May just leave it all in there for now till know this new thing.
How I do it with my Roth conversions from my traditional IRA is figure how much more taxes I will pay for the conversion that year and than increase my tax withholding from my payroll to cover that amount. I also use Bing A.I to calculate my additional taxes(you can download it for free). A couple of reasons you don't want to pay your taxes with your IRA is your money will compound higher with the whole amount and if you are under the age of 59 1/2 and you paid taxes with your traditional IRA you would be penalized 10 percent besides being taxed for the conversions.
Does W-2G income penalize the pension supplement? I looked on OPM it says W-2 usually earned income but it does not say specifically gambling income is or is not.
So you can do the conversion and pay taxes on it like a regular conversion, but you have to use some external money to pay the taxes? Seems like a great way to ensure that your taxablenincome for the year is as high as possible. Afterall, remember that the conversion will be at your marginal tax rate. So like anything else, this works if you have little income or expect to have more money in retirement. Just don't run off and start converting unless it actually makes sense.😊
If you happen to be in a lower tax bracket post retirement you wouldn’t have to pay income taxes at your former tax rate. For example, you were in the 22% federal tax bracket while working but in retirement you find yourself in the 15% tax bracket. Doing the Roth conversion now would save you 7% in income tax. @CarolSanborn
My complaining has finally paid off! I've been hoping this would happen because I've been transferring money out of TSP to do conversions. Starting in 2026 I will do them within TSP. Thanks for the heads up.
I've been telling everyone that would listen to send the TSP requests to make this happen. Now we need to get them to allow withdrawing from just the G fund when needed.
next on the agenda is roth employer match.
YEA!, TY for letting us know. I was OPM early disability retired this year (age 53), and was thinking on doing an SEPP starting sometime in 2025. May just leave it all in there for now till know this new thing.
I have been waiting for these ROTH conversions. Can't wait.
Can you make the conversion if no longer a federal employee?
TO PAY TAXES Send Quarterly payment to IRS. 4/15/2026, 6/15/2026, 9/15/2026 AND 1/15/2027
Wow. Phenomenal.
Great information, thank you!
Good info! Does the same rule apply that you can not take any Roth out until you are 59 years old?
I want free health insurance like states give to their employees
Awesome!
How I do it with my Roth conversions from my traditional IRA is figure how much more taxes I will pay for the conversion that year and than increase my tax withholding from my payroll to cover that amount. I also use Bing A.I to calculate my additional taxes(you can download it for free). A couple of reasons you don't want to pay your taxes with your IRA is your money will compound higher with the whole amount and if you are under the age of 59 1/2 and you paid taxes with your traditional IRA you would be penalized 10 percent besides being taxed for the conversions.
Does doing roth conversions make sense for someone who is 30+ years away from retirement ? Asking for a friend.
YES!
Yes!!! ASAP
That will be 30+ years of tax free growth, capital gains and dividends.
Does W-2G income penalize the pension supplement? I looked on OPM it says W-2 usually earned income but it does not say specifically gambling income is or is not.
Will these transfers count as a minimum distribution withdraw ?
There is no withdrawal. Only conversion.
Is the money converted still subject to the 5 years?
And I am retiring in 2025, thanks TSP 🤬🤬🤬
So you can do the conversion and pay taxes on it like a regular conversion, but you have to use some external money to pay the taxes? Seems like a great way to ensure that your taxablenincome for the year is as high as possible. Afterall, remember that the conversion will be at your marginal tax rate. So like anything else, this works if you have little income or expect to have more money in retirement. Just don't run off and start converting unless it actually makes sense.😊
Do you still have to wait 5 years until you can withdraw from your Roth account?
5 years and 59 1/2 years old
That is awesome. I hope they eventually allow QCDs.
Only value of Roth conversion within TSP is if they ALSO allow distribution only from Roth, which is not currently the case.
I believe it is already allowed.
@ It is taken proportionately from both Roth and Traditional currently, you can’t choose one over another.
WOW IS THIS REAL
I cant wait 🎉🎉🎉🎉
Why does tsp care how you pay the taxes?
If you happen to be in a lower tax bracket post retirement you wouldn’t have to pay income taxes at your former tax rate. For example, you were in the 22% federal tax bracket while working but in retirement you find yourself in the 15% tax bracket. Doing the Roth conversion now would save you 7% in income tax. @CarolSanborn
Sounds good, but in my case I retire in 2026…… So……