It's my understanding that, starting in 2026 the TSP will allow you to move money from your traditional TSP to a Roth TSP for the first time. You will have to pay taxes on the amount you move, & it can't be with TSP money. This may be a good choice for some who maybe want to leave money for family members, who do not have to pay taxes on them when it's available to them.
I heard about this from FEDweek. I wonder if one can do this BEFORE retiring (maybe making sure that one doesn't do so much in one year that it pushes one into another tax bracket).
I recently used the updated TSP website to make a partial withdrawal and direct Trustee to Trustee transfer from my TSP 401(k) [pre-tax] account into my Roth IRA [post-tax]. I transferred the full amount rather than having TSP or new Trustee withholding because I have monies set aside to pay the taxes. My Roth IRA Trustee has classified the receipt of the money as a Roth Conversion Direct Purchase and will document this on an IRS Form 5498. My concern revolves around TSP’s documentation: TSP classifies any type of action other than withdrawal as a Rollover regardless if it going to another 401(k) / Traditional IRA or a Roth IRA. The IRS instructions seem to consider what I have done as a Normal Distribution (CODE 7) vs a Direct Rollover (CODE G). Which is correct? How to I (and through this help others) to ensure I/we do not run afoul of the IRS? Thanks in Advance.
Good information! Thank you!
It's my understanding that, starting in 2026 the TSP will allow you to move money from your traditional TSP to a Roth TSP for the first time. You will have to pay taxes on the amount you move, & it can't be with TSP money. This may be a good choice for some who maybe want to leave money for family members, who do not have to pay taxes on them when it's available to them.
I heard about this from FEDweek. I wonder if one can do this BEFORE retiring (maybe making sure that one doesn't do so much in one year that it pushes one into another tax bracket).
In the example you gave, what is the benefit to converting to a Roth at age 60?
can I transfer my tsp Roth on,y out of the TSP......with NO TAX COMPLICATIONS?
I recently used the updated TSP website to make a partial withdrawal and direct Trustee to Trustee transfer from my TSP 401(k) [pre-tax] account into my Roth IRA [post-tax]. I transferred the full amount rather than having TSP or new Trustee withholding because I have monies set aside to pay the taxes. My Roth IRA Trustee has classified the receipt of the money as a Roth Conversion Direct Purchase and will document this on an IRS Form 5498.
My concern revolves around TSP’s documentation: TSP classifies any type of action other than withdrawal as a Rollover regardless if it going to another 401(k) / Traditional IRA or a Roth IRA. The IRS instructions seem to consider what I have done as a Normal Distribution (CODE 7) vs a Direct Rollover (CODE G). Which is correct? How to I (and through this help others) to ensure I/we do not run afoul of the IRS? Thanks in Advance.