Contribution into TSP after separating

[Gator850]

I was planning to separate from Gov service (20yrs service, a few years before my MRA) at the end of the year, 31 Dec. I'll have over 400hrs of annual leave that I was told it would be paid out in the following year. I was wondering if I could contribute all of this money into my TSP account for next year's contribution even though at that point I have already left the government.

Thanks
Mike

 

[Frixxxx]

I've been told that once you retire, on that day, your participation in TSP is unavailable. The check comes after you leave. But check with your HR person.

 

[Bullitt]

Use it as a contribution to your 2021 Roth IRA. You have until April 2022. Best you can do TSP wise is crank up catch-up contributions if eligible.

You can always put it into a taxable investing account.

 

[SWAVET]

I agree with Bullit and you could invest in QQQ (last trade @ $380) or QQQX (last trade @ $30.53). QQQ is better than invest in C or S funds. I took all of my money out of TSP and invest in QQQX (they sell cover call of QQQ to collect extra $ (they have 5.88% dividend yield/$0.45 for ex-dividend date 9/14/2021 and payable on 10/01/2021 ---> I have my as Dividend Reinvestment). I comparing QQQ and they beat the Nasdaq (comparable to S fund) more than 200% and S&P500 (C fund) more than 400%

Use it as a contribution to your 2021 Roth IRA. You have until April 2022. Best you can do TSP wise is crank up catch-up contributions if eligible.

You can always put it into a taxable investing account.

 

[flalaw97]

I've been told that once you retire, on that day, your participation in TSP is unavailable. The check comes after you leave. But check with your HR person.

While I agree you may not want to add it to your TSP, if you do want to add it to TSP, you might be able to if it is via transfer. The TSP website says: [FONT=&quot]Once you leave the federal government, you’ll no longer be able to make employee contributions. However, you can still change your investment mix, transfer eligible money into your account, and enjoy our low costs—all while your account continues to accrue earnings.

[/FONT]So if I am correct, you could put the money into a Roth IRA (since it has already been taxed) and then transfer it from Roth IRA to TSP Roth account. Or you might be able to add it to IRA and transfer it to regular TSP account (but I don't understand how that works on taxes...). Again, you may want to use outside investing vehicles but if you really want it in your TSP, you may be able to do so with a two step process that involves a transfer of eligible money.

Many people use that annual leave payout as a tideover until first pension check comes but it looks like you are leaving before MRA so no immediate pension?

Good luck!

 

[Bullitt]

So if I am correct, you could put the money into a Roth IRA (since it has already been taxed) and then transfer it from Roth IRA to TSP Roth account.

Only options are traditional IRA, (Roth) 401k or 403b rollover from another employer.

We will not accept Roth rollovers that have already been paid to you and will not accept transfers or rollovers from Roth IRAs.

https://www.tsp.gov/tsp-basics/move-money-into-tsp/

 

[evilanne]

I was planning to separate from Gov service (20yrs service, a few years before my MRA) at the end of the year, 31 Dec. I'll have over 400hrs of annual leave that I was told it would be paid out in the following year. I was wondering if I could contribute all of this money into my TSP account for next year's contribution even though at that point I have already left the government.

Thanks
Mike

They won't take TSP from the leave but it will be considered earned income, so you can fund a Roth IRA for both 2021 (prior to April 15 2022) & 2022 (prior to April 15m 2023 if you are otherwise eligible based on income level. Contributing to a Roth is a better option than TSP IMO if you are getting out early as you can withdraw contributions without penalty

So what are your plans after you leave the federal government?