OhWell's method is the best for a series of traditional to roth rollovers. The problem with TSP is the withdrawal limitations again (as previously noted, they SAY they will be loosening up on the requirements. WHEN is the question.). When you retire, you can withdraw (or rollover) a lump sum, but you will only have one more shot at the withdrawal. And if you took an in-service withdrawal, it already counts as your first withdrawal. Either way, you would then be able to only a) Withdraw total remaining, b) Withdraw equal amounts monthly till gone, or c) Buy an annuity to pay you for the rest of your life (or some combination of A,B, and C). Only change after that would be Req'd Min Distributions (RMD's) starting at 71.5. (No choice on the latter.)
Make sense? Or still clear as mud?!?
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Thanks for the analysis! Clearer but still a little muddy. I selected monthly withdrawals from my TSP and I have wondered if I could roll those monthly payments into a Roth IRA to gain all of the ROTH advantages instead of into a savings account. Has anyone done this or do you know if it is feasible? I realize that the withdrawals would be taxable either way and that I would have to wait the five years to gain all of the ROTH benefits. Thanks!
Emotions should never play a role in one's investing strategy!
No to Greed...No to Fear!
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Theoretically, yes. But I'm not sure you would want to. Referring back to my previous post, the best way to go from TSP to Roth IRA is the way OhWell suggested. 12 rollovers a year is VERY unwieldy. Even worse for paperwork if you take a withdrawal and then roll it to a Roth IRA within 60 days (I believe it is 60...may be 30). Now you have 24 pieces of paper that the IRS will be looking at every year. Again, possible, but what a paperwork headache. Not to mention if you happen to miss a rollover deadline!
TSP may be willing to set up the monthly rollovers for you...not sure. I don't see anything in the instructions about that. (Personally, I would doubt that the TSP would want to do it, because of the aforementioned paperwork headache.) You can check with them. That would be the only way I would even consider this method. Even then........ And, what if you wanted to actually withdraw one or two, and NOT roll them over. The whole concept makes my head spin.
There are 10 types of people in the world. Those who know binary, and those that don't!!
Retired on December 31, 2018!!
Update on TSP changes coming down the pike. Alternative 'window' investments, and increased post retirement withdrawal options.
http://news.fedweek.com/t/296876107/9092797/5216/30/
Go TSP! (finally!)
There are 10 types of people in the world. Those who know binary, and those that don't!!
Retired on December 31, 2018!!
I don't think it is feasible. The biggest problem I see would be that Roth contributions have to be earned income, which you may be able to do if you retire in middle of year or if you work part time after retirement. I know many people talk about back door Roth IRAs but am not familiar with details and I believe it is while they are still employed.
Rather than a savings account, you could always invest in a Municipal Bond Fund to get tax free earnings.
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