TSP to ROTH TSP

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roskopfm

Member
Will the TSP board in 2012 allow us to roll part of the existing TSP into the ROTH TSP. It woudl be nice to pay the taxes in 2012 and let it grow tax free.
 
I think it's highly doubtful. I am not aware of any 401k programs that allow you to roll over to Roth 401k.
At this point, I'd just be happy if they actually allow me to contribute to Roth TSP in 2012. Their website still says it will be offered in 2011. I'm afraid they're going to come back and say they haven't had enough opportunity to education TSP participants on the Roth, and they need to push it back yet another year.
 
I'm not happy about the news, but thanks for the links.

I had a sneaking suspicion that it was going to be delayed. At this point, I am placing my bets that it does not get implemented until 2013.
 
The TSP board will likely find it necessary to spend a few million to "educate" us... Maybe mail us all a DVD again.
 
SkyPilot said:
The TSP board will likely find it necessary to spend a few million to "educate" us... Maybe mail us all a DVD again.
Click to expand...


LOL... I’m still waiting to see all the money the TSP Board saved by limiting our IFT’s... They aren’t in our corner, thats for sure!!:cool::cool:
 
That was when they introduced the "L" funds (2005-2006)...

I would like to see the cost/benefit analysis related to how much the "L" combos of funds we already have is used.

I think the FTRIB is pi$$ed off because so many people refuse to use them as designed...

http://www.tsptalk.com/mb/showthread.php?p=23371&highlight=fund+dvd

http://www.highbeam.com/doc/1P2-39271.html





http://www.govexec.com/dailyfed/1205/122005r1.htm

TSP life-cycle investors won't let go of other funds
By Karen Rutzick December 20, 2005

Many investors in the Thrift Savings Plan's life-cycle funds are tempering their effectiveness by continuing to invest in traditional stand-alone funds too, officials said at a board meeting Monday.
 
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Not a happy camper today.

Called FAA Human resources to try and ask what the plan was for how to begin making contributions in ROTH.

As you know, TSP begins ROTH on Monday. This comes FOUR YEARS after autorization to start a ROTH plan was passed by Congress and put into law, and a DECADE since the subject of ROTH for the TSP was first debated in Congress. Twice delayed by the TSP board while they go their software ready, I figured I'd call FAA Human Resources and see if they were going to be able to start on Monday, since the TSP said not all agencies were ready yet, but they DID mention that Department of Interior (Who handles FAA payroll functions now) would be one of the lead agencies starting next week. I figured FAA would have to roll in either right this week, or perhaps I thought maybe in the pay period following. I figured it couldn't take much, now that they've been working on this stuff for four years.

The first two human resource people at FAA that I talked to didn't have a clue what I was talking about.

Finally got a supervisor, who promised to call HR in Washington, and get the story on when we would be able to "turn it on", and he promised to call me back.

Four hours later on Friday, got a call back.

Said FAA HQ's didn't know anything about it, they just learned of this "TSP ROTH" thing in the last few days, and said they had no idea what they needed to do to adapt the payroll system to handle ROTH information. Said it may be months to possibly years before we would be able to do anything as an Agency. Nobody in Human Resources had any idea what a ROTH was, or how to implement it.




-------------------------


On a side note- I see once again the FAA's ratings are out in the annual 'Best Places to Work" competition. FAA ranked 200th of 229 agencies for 2011. Best Places to Work > Department of Transportation - Partnership for Public Service


Enough said.
 
This was posted this morning on our parent agency's web page:

Roth TSP Allows Flexibility In Taxes Now And Later
By Sharon Dobson
Posted: May 8, 2012

On May 7, the Thrift Savings Plan (TSP) gave Federal employees the option to treat some or all of their TSP contributions as Roth contributions. Participants now have flexibility in the tax treatment of their contributions today and in the future.

In a traditional TSP, employee contributions are considered pre-tax income, which lowers the amount of your current taxable income and gives you a tax break today. TSP contributions and earnings are tax-deferred while growing in your account, but when you withdraw your money, you pay taxes on both the contributions and their earnings.

In contrast, Roth contributions are taken out of your paycheck after your income is taxed. However, when you withdraw funds from your Roth balance, you will receive your Roth contributions tax-free since you have already paid taxes on the contributions. You also won’t pay taxes on any earnings, as long as you’re at least age 59½ (or disabled) and your withdrawal is made at least 5 years after the beginning of the year in which you made your first Roth contribution. Upon your death, no part of the Roth IRA will be subject to income tax to your beneficiaries, though the Roth IRA will be subject to estate taxes.

Employee Express will begin accepting Roth contribution elections on May 20 effective on June 3. A TSP representative will answer questions at the 2012 DOT Health and Fitness Expo on May 16th from 11 a.m. to 2 p.m. in the DOT HQ West Atrium.

When making TSP elections, keep in mind that the combined total of your Roth and tax-deferred traditional contributions in 2012 cannot exceed the elective deferral limit of $17,000, or if you are age 50 or older the catch-up contribution limit of $5,500. In addition any agency contributions you receive will always be treated as a part of your traditional (non-Roth) balance. Employees may want to consult a qualified tax or financial advisor to help decide if Roth is the right choice for them.

A few facts about the Roth TSP:


  • There are only two ways to put Roth money into your account: (1) From you future pay; and/or (2) Transfer Roth money into your account directly from eligible plans (Roth 401(k)s, Roth 403(b)s, or Roth 457(b)s only).
  • You cannot transfer money into the TSP from Roth IRAs.
  • You cannot convert money that is already in your TSP account into Roth money.
  • You cannot convert any agency traditional contributions into Roth contributions.
  • Agency automatic and matching contributions will always be traditional, tax-deferred contributions, even if your own contributions are only Roth.

All employee contributions, whether traditional or Roth, are added together to determine if the elective deferral maximum amount has been reached. The maximum contribution is the sum of the elective deferral and catch-up contribution limits.

A TSP participant may contribute:

  • Up to $17,000.00 in combined traditional and Roth contributions.
  • If age 50 or older, up to $5,500.00 in combined traditional and Roth catch-up contributions.
  • For a combined total of up to $22,500.00. TSP-eligible participants age 50 or over may elect Roth catch-up contributions.
Please refer to the information displayed in the chart below.



[TABLE="width: 100%"]
[TR]
[TD][/TD]
[TD]
Roth IRA​
[/TD]
[TD]
Roth TSP​
[/TD]
[/TR]
[TR]
[TD]
Income Limits​
[/TD]
[TD]
Not available to taxpayers with income above certain limits:
Married Filing Jointly - $173,000 to $183,000
Married Filing Single - $0 to $10,000
All others – 110,000 to 125,000​
[/TD]
[TD]
Available to all participants regardless of income​
[/TD]
[/TR]
[TR]
[TD]
Contribution limits​
[/TD]
[TD]
$5,000
($6,000 if at least 50 years of age)*​
[/TD]
[TD]
$17,000
(plus an additional $5,500 if at least 50 years of age)*​
[/TD]
[/TR]
[TR]
[TD]
Required Minimum Distributions (RMD)​
[/TD]
[TD]
Not subject to RMDs until the IRA owner dies​
[/TD]
[TD]
RMDs apply to both Roth and traditional balance
(April 1st after you turn 70 ½)​
[/TD]
[/TR]
[TR]
[TD]
Rollover rules​
[/TD]
[TD]
May NOT be rolled into a Roth 401(k); a Roth can only be rolled into another Roth IRA​
[/TD]
[TD]
Can be rolled into another
Roth 401(k) or a Roth IRA​
[/TD]
[/TR]
[/TABLE]
*2012 limit

The Leave and Earnings Statement will list the basic information as to the distribution elected (Roth amount contributed or percent elected). The deductions will display both Roth and Roth Catch-Up as separate line items.
If you have additional questions regarding the Roth TSP plan, please contact TSP directly at 1-877-968-3778 and hit prompt “3” to speak with a representative.

Visit the TSP website to view a short video about the Roth TSP, or check out the April 2012 Thrift Savings Plan Highlights bulletin for more information.
TSP is one of three components of the Federal Employees Retirement System (FERS). The others the FERS annuity and Social Security. Together, the three components are designed to closely resemble the dynamics of private sector 401(k) plans. TSP Roth is also open to Federal employees covered under the older Civil Service Retirement System (CSRS).
Click to expand...
 
Jamesxxxxx: Thx for posting the FAA Roth info (My top-rated agency too). Sounds like we can use EmpExpress later this month to start RothTSP contribs. I hadn't checked with HR or links yet... they got it going faster than we might have guessed.
 
Am I reading that chart right that says we I can only put in $5,000 to the Roth TSP? I thought it was going to be the same $17,000 contribution limit regardless of whether you used Roth or not.
 
I think you are reading it wrong. To me it looks like you can put in the full $17,000 into the Roth.

seven said:
Am I reading that chart right that says we I can only put in $5,000 to the Roth TSP? I thought it was going to be the same $17,000 contribution limit regardless of whether you used Roth or not.
Click to expand...
 
seven said:
Am I reading that chart right that says we I can only put in $5,000 to the Roth TSP? I thought it was going to be the same $17,000 contribution limit regardless of whether you used Roth or not.
Click to expand...

You are reading it wrong.

The chart says you are limited to $5,000 for a ROTH IRA.

The chart says you are limied to $17,000 for the ROTH TSP, unless you are over age 50, in which case you would get an additional $5,500 added to your limit.


As to me- it doesn't matter, I can't afford $17,000 anyway. My ROTH contributoin will be lower. :-(
 
Wow, I just scrolled down & re-read the chart & have no idea what was wrong with me on that day. LOL
 
Seven,

I read in your thread that you are contributing to both traditional and Roth TSP. How were you able to sign up? I looked all through tsp.gov and didn't see a way. I'm guessing for me I'll have to go through EBIS. I can't access it from home, so will have to wait to get back to work on Monday to find out.
 
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