Let’s dive into the process of transferring funds into the Thrift Savings Plan (TSP) and identify the accounts eligible for consolidation.
Below, you’ll find a chart detailing what can and cannot be transferred into the TSP. It’s important to note that not all retirement accounts qualify for consolidation into the TSP.
We’ll also examine the advantages and disadvantages of transferring into the TSP, ensuring you have all the information needed to make an informed decision that aligns with your financial goals.
| Rolling Away From | Rolling Into | |
|---|---|---|
| TSP | Roth TSP | |
| Traditional IRA | Yes | No |
| Roth IRA | No | No |
| Simple IRA | Yes | No |
| 401(k) (pre-tax) | Yes | No |
| 403(b) (pre-tax) | Yes | No |
| 457(b) (pre-tax) | Yes | No |
| Roth 401(k) | No | Yes (No indirect rollovers) |
| Roth 403(b) | No | Yes (No indirect rollovers) |
| Roth 457(b) | No | Yes (No indirect rollovers) |
Are you looking to streamline your retirement savings and make life easier by having just one retirement account? Rolling over funds into your Thrift Savings Plan (TSP) could be the strategic move you’ve been searching for. With the flexibility to consolidate funds from various eligible retirement plans, such as a 401(k), 403(b), or traditional IRA, into your existing TSP account, you can enjoy numerous benefits that could positively impact your financial future.
Consolidation for Clarity and Growth
One significant advantage of rollover contributions to the TSP is the ability to consolidate your retirement savings under one roof. By centralizing your funds, it becomes easier to assess your progress towards your retirement goals and ensure that your asset allocation aligns with your objectives.
Moreover, with the TSP offering low-cost investment options, your savings have the potential to grow faster compared to other employer plans, thanks to minimized fees and expenses.
How to Make the Move
Moving money into your TSP account is a straightforward process that can be done through two convenient methods:
- TSP Rollover Concierge Service: Simply call the ThriftLine and navigate to the rollover concierge service. A dedicated rollover specialist will guide you through each step of the process, from contacting the providers of your existing retirement accounts to ensuring that the rollover is seamlessly executed into your TSP account.
- Self-Service Rollovers in My Account: If you prefer a DIY approach, log in to your My Account portal and utilize the online tool to initiate the rollover contribution process. You’ll coordinate with your current retirement plan provider to request a rollover distribution and then follow the step-by-step instructions provided within My Account to finalize the transfer.
Direct vs. Indirect Rollovers
Understanding the distinction between direct and indirect rollovers is crucial:
- Direct Rollovers: Funds are transferred directly from your eligible retirement plan or IRA to your TSP account, bypassing taxation at the time of rollover.
- Indirect Rollovers: You receive the funds from your retirement plan, and then you transfer them to your TSP account within a specified timeframe (usually 60 days). While this option provides flexibility, it’s essential to replenish any taxes withheld to maintain the tax-deferred status of your funds.
Investing Your Rollover Contributions
Once your funds are in your TSP account, they will be invested according to your future contributions investment elections. You have the flexibility to allocate your rollover money across various TSP funds, ensuring that your investment strategy aligns with your risk tolerance and retirement timeline.
Pros and Cons of TSP – Should You Stay or Go?
It is your responsibility to decide if consolidating into TSP is the right decision for you. To learn more about the pros and cons of TSP check out our article on Should You Transfer Out of the TSP?.
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