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Rollover out of tsp fund to vanguard Tradtional IRA. Tsp stated will hold 20%tax

Although it stated Direct rollover on Tsp site, however, when I attempted withdrawal or rollover, it seems it only offers Indirect withdrawal!. If I pursue this indirect withdrawal with 20% withheld, will I get tax again when depositing the whole amount( including the 20% tax withheld by tsp) to my Vanguard Traditional IRA? 

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1 Reply
dmertz
Level 15

Rollover out of tsp fund to vanguard Tradtional IRA. Tsp stated will hold 20%tax

The TSP is required to offer a direct rollover of at least what would otherwise be the taxable amount of a distribution paid to you.  Nontaxable amounts distributed to you have no withholding requirement because only taxable amounts paid to you are subject to the 20% minimum withholding.

 

If you for some reason end up receiving a distribution paid to you and 20% of the taxable amount is required to be withheld for federal taxes, you can substitute other funds to complete the indirect rollover of the full gross amount of the distribution.

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