TSP participants cannot use the mega-backdoor Roth, right?

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jastevenson
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Joined: Tue Nov 27, 2012 12:32 am

TSP participants cannot use the mega-backdoor Roth, right?

Post by jastevenson »

I'm a gov't employee with a TSP.

My understanding is that we cannot do the MEGA backdoor Roth because we can't make after-tax contributions to the TSP.

However, I just want to be certain, since I don't want to find out in 10 years that I could have done it!

Anyone want to verify that it's not possible?

Thank you! :)
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grabiner
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Re: TSP participants cannot use the mega-backdoor Roth, right?

Post by grabiner »

This is correct. The only investors who can make after-tax TSP contributions are active-duty military contributing tax-exempt combat pay (which would only be worthwhile after they have maxed out the Roth TSP), and even they cannot take the after-tax money out of the TSP until they leave the military.
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sesq
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Re: TSP participants cannot use the mega-backdoor Roth, right?

Post by sesq »

I remember hearing on a radio show about a backdoor option for the fed's that was interesting. I googled around and you can contribute 10% of your lifetime earnings as a voluntary contribution, which can then be rolled over with basis and converted into a roth. But the catch is that its for CSRS employees. So, I guess if you are on FERS you can't.

Its discussed a bit in this thread, on the first page:

viewtopic.php?t=137366

I have at times debated going to work for the feds and I thought that would be an amazing vehicle to transfer some net worth into a Roth. I didn't catch the CSRS only part.
motorcyclesarecool
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Re: TSP participants cannot use the mega-backdoor Roth, right?

Post by motorcyclesarecool »

Reviving this thread (note the dates) to inquire on this topic once more. I’ve read the fact sheet issued by the Board, but I am curious if there’s something in the enacted legislation of the TSP Modernization Act or in the proposed regs that could open Mega Backdoor Roth to civilians in FERS?
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Alan S.
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Re: TSP participants cannot use the mega-backdoor Roth, right?

Post by Alan S. »

The TSP Modernization Act only eliminated some of the withdrawal restrictions, not all of them. It did not reach into any other areas of the TSP or any other federal plans.

Therefore, no after tax non Roth contributions can be made to the TSP, and nothing to this effect seems to be under consideration. The CSRS voluntary contribution option remains in effect as before.
mxs
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Re: TSP participants cannot use the mega-backdoor Roth, right?

Post by mxs »

Are many CSRS employees even still working? I knew a few that were forced out due to military age limits, so I would think any current CSRS employees would have to be 65+.

*Edit* I read some info on CSRS and it looks like you had to be CSRS somewhere between 1981 and 1983 to not have been forced into FERS. That would make an 18 year old hired in '81 to '83 in the 53 to 55 year range. For whatever reason that is a lot younger than I thought. Like I said, there are few if any CSRS dual status technicians still working that I am aware of. Possibly this is due to the fact that becoming full time at age 18 is almost impossible. Non-military CSRS positions probably have a few in their 60's still working.
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