Q: Having read your answer about making a withdrawal from the TSP, I understand that to make a withdrawal while working, I would have to be 59.5 years old or older and make a one time, age based, in-service withdrawal.
I am in the old CSRS system. Percentage wise, I have maximized my contributions to TSP since its inception. I am 60 years young and have met both age and years of service requirements for immediate retirement. In the past five years only I have also maximized my TSP catch-up contributions. I do not have a Roth TSP, but I do have a Roth IRA that has been open more than 5 years, but I have not made any additional contributions to it since the initial opening.
I have been reading up on the Voluntary Contribution Program that only CSRS covered employees (who are still working) may participate in. Once I have a VCP account, may I withdraw or transfer funds from my TSP, and immediately contribute to the VCP up to 10% of the accumulated basic pay I received over my entire CSRS career – all with the intention of then converting the VCP into a Roth TSP?
A: That is a great question. Once your VCP account is established you are able to deposit up to 10% of your career earnings into the VCP account. The funds deposited into the VCP must be non-qualified funds so you would not be able to transfer funds directly from the Thrift Savings Plan. If you have any non-qualified accounts such as CDs or Investments that are not retirement accounts you can deposit those in the VCP. Once the funds are in the VCP you would be able to transfer the funds out into your Roth IRA not the Roth TSP. The Roth TSP is prohibited from accepting transfers from VCP accounts into a Roth TSP balance.
Also the Roth TSP does not have income limitations but a Roth IRA Does. From https://www.tsp.gov/planparticipation/eligibility/traditionalRothContributions.shtml you can see it says” Roth TSP is similar to a Roth 401(k), not a Roth IRA. There are no income limits for Roth TSP contributions.”
The VCP has complex rules and there a lot of things to consider. Please call me at 844-733-3435 any time for questions and we could discuss your options in detail for free.