IRA Transfer into TSP

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tj
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IRA Transfer into TSP

Post by tj »

I'd like to transfer my Vanguard IRA into the TSP, does anyone have any idea where we mail the TSP-60 to at Vanguard for this? Apparently Vanguard has to fill the form out....
rkhusky
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Re: IRA Transfer into TSP

Post by rkhusky »

Send them a secure message from within your account at the Vanguard web site and they will provide the instructions.
FederalFIRE
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Re: IRA Transfer into TSP

Post by FederalFIRE »

tj wrote: Mon Mar 18, 2019 10:32 pm I'd like to transfer my Vanguard IRA into the TSP, does anyone have any idea where we mail the TSP-60 to at Vanguard for this? Apparently Vanguard has to fill the form out....
As both a Vanguard IRA holder and TSP user, I'm curious, what's your motivation for moving the Vanguard funds into TSP? Simplicity?
Tatupu
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Re: IRA Transfer into TSP

Post by Tatupu »

I suggest staying all over Vanguard on this transaction. They butchered my request to transfer a Rollover IRA into the TSP. Vanguard handled it very poorly and the agents were not helpful in sorting out the problems. The upshot is that we had a significant amount of money not invested in the market for about 2 months until they finally fixed it. It was infuriating and in hindsight I wished I had just left it at Vanguard.
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Carini
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Re: IRA Transfer into TSP

Post by Carini »

Tatupu wrote: Tue Mar 19, 2019 7:19 am I suggest staying all over Vanguard on this transaction. They butchered my request to transfer a Rollover IRA into the TSP. Vanguard handled it very poorly and the agents were not helpful in sorting out the problems. The upshot is that we had a significant amount of money not invested in the market for about 2 months until they finally fixed it. It was infuriating and in hindsight I wished I had just left it at Vanguard.
I strongly second this. My rollover from Vanguard to the TSP took months and I don't know how many phone calls to Vanguard. It all started when Vanguard put the wrong dollar amount on the form indicating the total rollover. For some reason the rollover was sent from Vanguard in two separate checks and the amount listed on the form was just one of the two instead of the total. TSP wouldn't process until they had a corrected version of that form and it took about two months to get Vanguard to send a revised form with the correct amount. The Vanguard customer service reps couldn't tell me what was going on as they don't do the processing. They were also unable to get in touch with the people that actually do the processing, which was somewhere between frustrating and completely unbelievable to me. At the same time the TSP was threatening to return the checks to Vanguard as they will only wait for so long to complete the transaction.

Had the original form been completed correctly this likely would've been fine. Once things went off track it was a nightmare. Good luck!
Topic Author
tj
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Re: IRA Transfer into TSP

Post by tj »

Thanks for the tips - sounds like I'll stay put at Vanguard.
cherijoh
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Re: IRA Transfer into TSP

Post by cherijoh »

FederalFIRE wrote: Tue Mar 19, 2019 7:14 am
tj wrote: Mon Mar 18, 2019 10:32 pm I'd like to transfer my Vanguard IRA into the TSP, does anyone have any idea where we mail the TSP-60 to at Vanguard for this? Apparently Vanguard has to fill the form out....
As both a Vanguard IRA holder and TSP user, I'm curious, what's your motivation for moving the Vanguard funds into TSP? Simplicity?
If it were a rollover IRA, it could be clering the way for a backdoor Roth.
Topic Author
tj
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Re: IRA Transfer into TSP

Post by tj »

cherijoh wrote: Tue Mar 19, 2019 11:17 am
FederalFIRE wrote: Tue Mar 19, 2019 7:14 am
tj wrote: Mon Mar 18, 2019 10:32 pm I'd like to transfer my Vanguard IRA into the TSP, does anyone have any idea where we mail the TSP-60 to at Vanguard for this? Apparently Vanguard has to fill the form out....
As both a Vanguard IRA holder and TSP user, I'm curious, what's your motivation for moving the Vanguard funds into TSP? Simplicity?
If it were a rollover IRA, it could be clering the way for a backdoor Roth.
Not an issue for me...my TSP deductions are larger than what's left on my net pay! :mrgreen:
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Carini
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Re: IRA Transfer into TSP

Post by Carini »

Access to the backdoor roth was my motivation for moving the IRA to the TSP.
FederalFIRE
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Re: IRA Transfer into TSP

Post by FederalFIRE »

tj wrote: Tue Mar 19, 2019 11:18 am
cherijoh wrote: Tue Mar 19, 2019 11:17 am
FederalFIRE wrote: Tue Mar 19, 2019 7:14 am
tj wrote: Mon Mar 18, 2019 10:32 pm I'd like to transfer my Vanguard IRA into the TSP, does anyone have any idea where we mail the TSP-60 to at Vanguard for this? Apparently Vanguard has to fill the form out....
As both a Vanguard IRA holder and TSP user, I'm curious, what's your motivation for moving the Vanguard funds into TSP? Simplicity?
If it were a rollover IRA, it could be clering the way for a backdoor Roth.
Not an issue for me...my TSP deductions are larger than what's left on my net pay! :mrgreen:
@tj - So if not to make a Backdoor possible, is it just for simplicity?
Topic Author
tj
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Re: IRA Transfer into TSP

Post by tj »

Wanted to use it for G fund for bond allocation
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Bammerman
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If a NC resident, possibly not a good idea

Post by Bammerman »

FYI, according to my recollection, if you are a resident of North Carolina, and benefit from the Bailey Rule, transferring the Roth into the TSP may render all of your TSP disbursements subject to NC income taxation. Normally, TSP disbursements would be subject to the Bailey Rule and exempt from taxation, but only if the funds there are not intermingled with funds from outside the TSP.
rkhusky
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Re: IRA Transfer into TSP

Post by rkhusky »

You can’t roll a Roth into the TSP.
Topic Author
tj
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Re: IRA Transfer into TSP

Post by tj »

Yeah my rollover is much smaller than my Roth IRA. For whatever reason, Roth ira's can't be transferred into the tsp.

I wonder if moving from vanguard to Fidelity or schwab and then transfering to the tsp would be more efficient?
ChrisC
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Re: If a NC resident, possibly not a good idea

Post by ChrisC »

Bammerman wrote: Tue Mar 19, 2019 3:10 pm FYI, according to my recollection, if you are a resident of North Carolina, and benefit from the Bailey Rule, transferring the Roth into the TSP may render all of your TSP disbursements subject to NC income taxation. Normally, TSP disbursements would be subject to the Bailey Rule and exempt from taxation, but only if the funds there are not intermingled with funds from outside the TSP.
I think you're confusing things. Here's what NC says about rollovers:

https://www.ncdor.gov/taxes-forms/indiv ... t-benefits

"Distributions from most types of retirement plans may be rolled over into another retirement plan or into an IRA. Because rollover distributions lose their character upon rollover, all distributions from a qualifying Bailey retirement account in which the employee / retiree was "vested" as of August 12, 1989, are exempt from State income tax regardless of the source of the funds contained in the account. Conversely, qualifying tax-exempt Bailey benefits rolled over into another retirement plan or to a traditional IRA lose their character and would not be exempt upon distribution from the other plan unless the plan is a qualifying Bailey retirement account in which the employee was vested as of August 12, 1989. See Directive PD-04-1."

[The NC Directive then mentions Roth conversions. If you do a Roth conversion, then Bailey does not shield you from State income tax that would occur if you convert funds from a tIRA account into a Bailey exempt account. I don't believe TSP allows rollovers from tIRA or Roth IRAs into Roth TSP, so this might be a nonissue for now. But if you do a Roth conversion from a Bailey account to a Roth IRA, you don't pay any state income tax on that conversion, such as rolling over traditional TSP funds into a Roth IRA.}

"Income Tax Treatment of a Rollover Distribution to a Roth Account
While a rollover distribution to a traditional IRA is generally not taxable at the time of rollover and the subsequent distributions from the traditional IRA are generally taxable, a rollover distribution to a Roth account is generally taxable at the time of rollover and the subsequent distributions from the Roth account are generally not taxable. If the rollover to a Roth account is from a qualifying tax-exempt Bailey retirement account, the rollover distribution is exempt from State income tax and deductible on the State return to the extent the rollover distribution was included as income on the taxpayer’s federal income tax return. See Directive PD-14-1."
....

My take on this literature is that (1) rollovers into Bailey exempt accounts like TSP make all distributions from that account, NC state income tax exempt; (2) conversions from traditional TSP accounts into Roth IRAs, which is also considered a taxable distribution for Federal tax income purposes, is nonetheless exempt from NC state tax income and it appears the Federal income tax from that conversion is reportable as a state income tax deduction; (3) rollovers or transfers of Roth 401K funds into Roth TSP funds probably have no tax consequences going in or coming out of the Roth TSP; (4) we'll have to see what happens when TSP modernization happens, though if modernization permits conversions within TSP, this should make it easier for Bailey folks who plan on conversions.
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hoppy08520
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Re: IRA Transfer into TSP

Post by hoppy08520 »

tj wrote: Tue Mar 19, 2019 4:30 pm For whatever reason, Roth ira's can't be transferred into the tsp.
Just one point on this: Roth IRAs cannot be rolled into Roth 401(k) plans either, or any employer retirement plan, not just the TSP.
Topic Author
tj
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Re: IRA Transfer into TSP

Post by tj »

hoppy08520 wrote: Wed Mar 20, 2019 1:35 pm
tj wrote: Tue Mar 19, 2019 4:30 pm For whatever reason, Roth ira's can't be transferred into the tsp.
Just one point on this: Roth IRAs cannot be rolled into Roth 401(k) plans either, or any employer retirement plan, not just the TSP.
Is there a reason they made it that way?
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hoppy08520
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Re: IRA Transfer into TSP

Post by hoppy08520 »

tj wrote: Wed Mar 20, 2019 2:22 pm
hoppy08520 wrote: Wed Mar 20, 2019 1:35 pm
tj wrote: Tue Mar 19, 2019 4:30 pm For whatever reason, Roth ira's can't be transferred into the tsp.
Just one point on this: Roth IRAs cannot be rolled into Roth 401(k) plans either, or any employer retirement plan, not just the TSP.
Is there a reason they made it that way?
I'm not really sure why, but it's just the law as it is. It's spelled out here: Publication 590-A (2018), Contributions to Individual Retirement Arrangements (IRAs) in Table 1-4. Rollover Chart.

Here is one non-official explanation here: Can I transfer or rollover a Roth IRA to a Roth Solo 401k? Summary: Congress didn't allow it because of complications that would result from the 5-year rule, where you can withdraw contributions, plus different distribution rules for each account type. If you co-mingled Roth IRA contributions and Roth 401(k), it would get complicated. But don't ask me, ask Congress :-)
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