dmertz
Level 15

Retirement tax questions

A TSP participant can choose whether a particular distribution be made from the traditional account, the Roth account or both.  Until the Roth TSP account is qualified, distributions from the Roth TSP are a proportionate mix of nontaxable and taxable amounts of the funds in the Roth TSP account.  The same is separately true of the traditional account.  See page 6 of the TSP's Distributions pamphlet.

 

https://www.tsp.gov/taking-money-from-your-account/

 

No part of the Roth TSP is permitted to be rolled over to a traditional IRA.

 

Errors in rolling over funds from the traditional TSP account directly to a Roth IRA are likely the result of the participant preparing the request form incorrectly.  The form has a clear way to indicate whether the destination is to be rolled over to a traditional IRA or a Roth IRA.  However, if one has no basis in nondeductible traditional IRA contributions, it makes no difference if the funds are moved first to a traditional IRA or not other than having two Forms 1099-R to deal with instead of one.  Certainly it can be helpful to put the funds in the traditional IRA first if it's necessary to wait until close to the end of the year to determine how much to convert to Roth.