Questions About Rolling Over to IRA

[losingmoney]

So, I am trying to learn as much as I can to make the right decision. So correct me if I am wrong on any of these statements to help me learn.

1. Wouldn’t you not pay any taxes on the transfer as long as you do a direct rollover it to the same account traditional/roth in etrade?
2. Wouldn’t the best “cash” alternative to G fund be just that, go to cash and just leave the money in cash in your brokerage account?
3. Expense rate to just buy the SPY itself is .09 percent on etrade. On TSP, it is currently .043 for C fund which is SPY. So double the fee to have the ability to move when you want and buy what you want. 0 fees if just buying a stock. I believe I could beat just buying and holding the SPY and only having two moves.
4. I do see two down sides. One having to wait till 59 and a half to make withdrawals. Two not being able to put your money to work in your new account until you roll it over every new year.
5. Why can’t you rollover early to another account, and then keep contributing to TSP to get your match? Then roll it over once a year when eligible to roll it again. Here is something I don’t understand, would I be limited in my future rollovers from TSP to only 7K since I still have TSP?
6. Very interested in this option to jump back and forth in the future to go back to TSP.

Keep in the information coming

 

[tsptalk]

I'm no expert on retirement or rollovers, but here's my 2 cents from my experience:

So, I am trying to learn as much as I can to make the right decision. So correct me if I am wrong on any of these statements to help me learn.

1. Wouldn’t you not pay any taxes on the transfer as long as you do a direct rollover it to the same account traditional/roth in etrade?
2. Wouldn’t the best “cash” alternative to G fund be just that, go to cash and just leave the money in cash in your brokerage account?
3. Expense rate to just buy the SPY itself is .09 percent on etrade. On TSP, it is currently .043 for C fund which is SPY. So double the fee to have the ability to move when you want and buy what you want. 0 fees if just buying a stock. I believe I could beat just buying and holding the SPY and only having two moves.
4. I do see two down sides. One having to wait till 59 and a half to make withdrawals. Two not being able to put your money to work in your new account until you roll it over every new year.
5. Why can’t you rollover early to another account, and then keep contributing to TSP to get your match? Then roll it over once a year when eligible to roll it again. Here is something I don’t understand, would I be limited in my future rollovers from TSP to only 7K since I still have TSP?
6. Very interested in this option to jump back and forth in the future to go back to TSP.

Keep in the information coming

1: Yes, no penalty if rolling into another qualifying account. A Roth wouldn't qualify.

2: Cash / Money market in a brokerage account

3: With 0% commissions, the expense of ETF's would certainly be the comparison, but I'm not sure exactly what that comparison is (in etrade, etc.)

4: Not sure

5: I don't believe that is an option if you are still working and contributing the the TSP, although some rules have been revised in recent years and last year with COVID, and there may be loopholes now.

6: Again, unless something has changed recently, I don't believe that is a current option.

 

[Boghie]

What you are talking about is an 'In Service Withdrawal'.

You cannot bounce assets back and forth between retirement accounts. An 'In Service Withdrawal' will have tax consequences and a likely IRS penalty. You will lose far more than you gain by trying this. Look at the 'Hardship In-Service Withdrawal' requirements and how they are taxed/fined.

If you quit, however, you will be able to transfer your TSP assets to a self-directed IRA. Just make certain you do not touch the money - have the transfer occur electronically between the two retirement plan managers.

BTW, while there might be differences for some Federal fields with mandatory earlier retirement ages, but you cannot withdraw assets from TSP till you are 59 1/2. The only way you could is to retire early and take 72(T) withdraws. I am looking into that, but...