How To Roll Over TSP Into a Roth IRA
The Thrift Savings Plan is a retirement savings vehicle for military and civilian government employees. The government withholds money from your paycheck to fund the account, and contributions grow tax-deferred until they are withdrawn. A Roth IRA is funded with money that already has been taxed. Funds grow tax-free and can be withdrawn tax-free. Rolling over a TSP into a Roth involves tax consequences.
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Instructions
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Open a Roth IRA at a bank, credit union, brokerage or other financial institution.
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Ask your TSP administrator to make a direct transfer to your Roth IRA. A direct transfer will allow you to avoid triggering 20% tax withholding from TSP funds.
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Pay taxes on the amount rolled over from the TSP when you file your return for that year.
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Tips & Warnings
If you are considering rolling over your TSP to a Roth IRA, start researching eligibility and possible tax consequences before the tax filing deadline. It is not to your advantage to make financial decisions under time pressure.
