Can I do a Roth Conversion within the TSP (Thrift Savings Plan)?

TSP vs. Roth TSP
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[@pilgrimtiger2023]

We’ll done. Learned a lot. Thanks for the efforts.

[@christopherbellboy25252]

Wow. 😮Excellent video. This topic always confused me, but now I have a clear understanding. Everything just clicks now. Thanks!

[@michaelvadney5803]

Thanks Dallen! Always enlightening.

[@ngg123]

First! Was just talking about this topic the other day.

[@loony4birds]

Video is great very informative 👍

[@bryanreinholdt1234]

One important note is that when you do a Trad to Roth conversion you are paying taxes on the principle and the interest accrued. Start with Roth, pay taxes on the principle, and enjoy tax free growth.

[@calvinhaynes5781]

I was pondering that idea while listening. If you start with $100 then lose $20 because of a down market, once you convert to a Roth you have to pay the tax on the $80 correct? Whatever is left after the taxes are paid on the $80 is what grows tax free.

[@lilianafrancomelo7109]

Definitely save this video to my Financial Education Folder 💰

[@Pinho.Ponderosa]

When will the TSP start allowing the agency match amount to be matched as Roth? Isn’t it now allowable as part of the SECURE 2.0 Act? TSP doesn’t even mention it on their website and my agency doesn’t seem to know anything about it.

[@michaelsmith935]

This is definitely one of the better videos I've seen on this subject.

[@PlanYourFederalBenefits]

Glad you think so!

[@joshlovern756]

I love watching these videos. Everytime you say "long story short" I take a drink. I'm usually pretty drunk by the end, lol

[@ifihadthumbstheydbegreen.9426]

Fantastic and informative video! Got a technical question for you…when converting Trad. TSP to Trad. IRA, how long does your $ have to stay in that Trad. IRA before converting to a ROTH IRA? 10 minutes, 1 day, 6 months, 1 year, etc…Thank you!!!

[@PlanYourFederalBenefits]

Great question. It would depend on what company you use.

[@ifihadthumbstheydbegreen.9426]

@@PlanYourFederalBenefits Thanks! I was thinking there was a tax law that established a time requirement, but I guess you’re saying there is no tax law or regulation, it’s just up to the rules from the financial entity where the Trad. IRA is held. Have you come across a range of time requirements? Any examples? Thanks again! Great and informative videos!

[@bmwilborn]

I've been wanting to switch contributions to Roth with m my wife's TSP for years, but her agency isn't helping with which forms to submit, or where to send them. Any body know which forms and who to send this to?

[@mikedv39]

Good morning, have a question on retiring prosses with Gov.. I put in for my retirement on March 17 2023. Received a text from my retirement counselor on September 18 2023. I retie on November 30 2023 and it is November 4 2023. I did text last week and the reply was I'm working on November retirement now. I am looking for any information on what the checking out prosses is, where or who I'm to get this from. My supervisor has been looking into this also. I am trying not to have some one tell me I was supposed to do this or that along time ago. My work has hired my replacement already and I am training them. Getting close and i am still lost in the prosses. Help needed. Thank You Mike V

[@Winchester1906]

any word yet when the tsp will let us put our matching funds into the roth? i thought the secure act 2.0 mandated our ability to do that. i'm waiting tsp🤔

[@billysun6067]

Does TSP has to convert to IRA and then to Roth IRA? We're not qualified to have IRA but have roth IRA account. Can we convert TSP directly to the roth IRA? Thank you

[@Sermo_Fin_Grp]

Morning and thank you for what you do for us Federal employees. Question, Isn't it the law if I contribute to Roth TSP, the government match should also be in Roth?

[@erickarnell]

Government match is currently into the Traditional TSP (Nov 2023). Matching into the Roth account would be nice though.

[@alrocky]

If and when Roth TSP match is implemented, you will owe tax on that Roth TSP match. There is no free lunch here.

[@user-fr2ln4bo2h]

Why can't a conversion be from Traditional TSP directly into a Roth IRA (why does it need to park in a Traditional IRA first)?

[@jonathanreed8198]

Take out a tsp loan and when paid back it's with after tax dollars so should be considered Roth after the loan is repaid right?

[@alrocky]

no

[@bradyj2852]

At what age is it best to do a conversion? Should you do it a 59 1/2 or 55? I understand the tax bracket planning.

[@BlackMarilynMonroe33]

You can’t do Roth conversions of TSP funds until you’re retired. If you’re retired at 55, then starting conversions at that time would be great in order to optimize your “tax window,” the time you’re first eligible to start conversions up to the age you’re forced to start required minimum distributions (RMD’s).

[@jimm1738]

It is best after 59 1/2. It is generally best before starting social security, if you are not going to be taxed on all of your social security. Filling up the 12% bracket is great while working and doing conversions. If you are filing (married joint-standard deduction-under age 65), you and your spouse in 2024 can gross $94,300 +$29,200 = $123,500 and still be in the 12% tax bracket. If you and your spouse earn $100,000, are contributing entirely to roth TSP, and you are at least 59 1/2, you should convert 123,500 - 100,000 = 23,200 to roth. Hopefully you pay the conversion IRS tax out of your cash money to keep more in the 401K-IRA umbrella. I believe you can only start your in-service TSP withdrawals after 59 1/2. If you like roth IRA money, do the Haws method. If you like TSP roth money, do an in-service $23,200 rollover to a traditional IRA, live off the money with withdrawals from that traditional IRA that year, and contribute. $23,200 to your roth TSP through your government salary. I even did this the year I retired on July 1 in full. In 2024 if you are over age 50, you can contribute up to a total of 23,000+ 7500 catch up = $30,500 to TSP in one year. As a government retired person, I am paying 22 or 22.2% on my traditional withdrawals [12% + (12% X 0.85 SS tax]. in retirement.

[@bradyj2852]

@@jimm1738 I figured out that I could not really do much until 59 1/2. I am 54 and maxing out my TSP and also Roth IRA. At this point I am maintaining my income sweat spot by increasing the TSP Roth and lowering my Traditional. Wish I would have left money in my Vanguard IRA rather than moving it all over to the TSP. Can't go back but I'm in a better position to pay more in taxes now. Wish TSP would allow conversions!

[@lilianafrancomelo7109]

I’m currently 47 years old. Do have have to be retired in order to move some money from my Traditional TSP into a Traditional IRA so that I can start the conversation process?

[@jimm1738]

At 59 1/2 you can do in-service withdrawals from TSP to IRA. Do direct transactions where TSP sends the funds by check directly to you IRA institution. If TSP allowed this at 47, you would have a 10% penalty from the IRS.

[@appleblows1]

Is there a way to roll most of TSP into traditional ira do roth conversion and roll back into roth TSP while employed as a federal employee?

[@PlanYourFederalBenefits]

Great question. Here's a good video about that: kzbin.info/www/bejne/bIukYpSohceibq8&ab_channel=HawsFederalAdvisors

[@alrocky]

No, IRS disallows moving Roth IRAs to Roth TSP/401(k) and generally not good idea anyway if allowed.

[@loony4birds]

Once you take it from the traditional TSP into a IRA and then transfer it to a Roth IRA can you take that Roth IRA and put it back into your tsp as a Roth401K

[@alrocky]

No, IRS rule prevents moving Roth IRAs to Roth TSP/401(k)

[@amovie07]

What's TSP

[@BlackMarilynMonroe33]

Thrift Savings Plan

[@eandrgoodwin]

Functionally, a Roth Conversion and Backdoor Roth are the same. The only difference is WHY you’re doing it!

[@LifeIsGood143]

We don’t get a match on Roth I would do the 5% traditional and then rest Roth that way you get the full match. I do have a question are we allowed to contribute a lump sum into your Roth , let’s say from a savings or checking account

[@alrocky]

You can contribute 5% to either Roth TSP or traditional TSP to get 5% government TSP match. You cannot use lump sum from your savings or checking account to contribute to TSP.

[@rsaunable]

A Roth? Who wants to pay taxes at their highest rates? Never seen anyone so excited to have you give your money to the government.

[@RobertBeedle]

The way you explained tax brackets made it sound like it is not a progressive marginal tax system. This is already a common mistake. To clarify, you pay 10% of the money earned in the first bracket, 12% in the next, and so on. Going up a bracket only impacts the dollars in that bracket, NOT the previous money earned. This also does not include deductions. The federal income tax brackets for the 2024 tax year in the United States are as follows: Single Filers - **10%**: $0 to $11,600 - **12%**: $11,600 to $47,150 - **22%**: $47,150 to $100,525 - **24%**: $100,525 to $191,950 - **32%**: $191,950 to $243,725 - **35%**: $243,725 to $609,350 - **37%**: $609,350 and above ### Married Filing Jointly - **10%**: $0 to $23,200 - **12%**: $23,200 to $94,300 - **22%**: $94,300 to $201,050 - **24%**: $201,050 to $383,900 - **32%**: $383,900 to $487,450 - **35%**: $487,450 to $731,200 - **37%**: $731,200 and above ### Married Filing Separately - **10%**: $0 to $11,600 - **12%**: $11,600 to $47,150 - **22%**: $47,150 to $100,525 - **24%**: $100,525 to $191,950 - **32%**: $191,950 to $243,725 - **35%**: $243,725 to $365,600 - **37%**: $365,600 and above ### Head of Household - **10%**: $0 to $16,550 - **12%**: $16,550 to $63,100 - **22%**: $63,100 to $100,500 - **24%**: $100,500 to $191,950 - **32%**: $191,950 to $243k