TSP won’t roll in Roth account from prior employer

[bigbossjock]

Before I enlisted, I had an employer-sponsored Roth plan at my previous job. They labeled it as a personal IRA, so the TSP won’t accept it as a roll-in. However, I found this on TSP’s website:
“We will accept both direct and indirect rollovers of tax-deferred money from traditional IRAs, SIMPLE IRAs, and eligible employer plans such as a 401(k) or 403(b) to the traditional balance of your account.”

I’m confused. Is there any way to convert my Roth IRA to one of the above accounts that are acceptable to rollover into my TSP?

 

[leahfaith]

@bigbossjock Your other option is to just roll it over / transfer into another Roth IRA with Vanguard or any other brokerage. That's if you are unhappy with the selection of funds where it's currently at.

 

[teapartypatty]

@bigbossjock Just keep it as an IRA. If you’re not happy with the current platform/custodian, you can transfer it to a different custodian (ie Vanguard, Schwab, etc)

 

[bigbossjock]

@teapartypatty It’s currently with MissionSquare and it’s not gaining value because I’m not making contributions. Wish there were other ways to invest the money

 

[saved1994]

@bigbossjock

it’s not gaining value because I’m not making contributions.

Are you not invested in index funds inside it?

 

[bigbossjock]

@saved1994 Nope. Maybe I should re-allocate. Good call

 

[teapartypatty]

@bigbossjock I'm not familiar with MissionSquare, but if it's an IRA, you can make annual contributions of up to $7,000 a year. If they for some reason don't allow you to make contributions while not with your previous employer, I would transfer it to a different custodian and then continue to contribute to it in addition to your TSP. Most IRA custodians will let you invest in just about anything except when it comes to some mutual funds.

 

[davidolonge]

@bigbossjock

“We will accept both direct and indirect rollovers of tax-deferred money from traditional IRAs, SIMPLE IRAs, and eligible employer plans such as a 401(k) or 403(b) to the traditional balance of your account.”

I’m confused. Is there any way to convert my Roth IRA to one of the above accounts that are acceptable to rollover into my TSP?

Did you read the above?

eligible employer plans such as a 401(k) or 403(b)

Additionally, if you read on:

We do not accept indirect rollovers of Roth money and do not accept either type of rollover from a Roth IRA.

So you can only do a direct Roth rollover into TSP, unless it's from an IRA.

FYA, TSP are not the ones disallowing this, the IRS themselves don't allow rollovers to Roth 401k plans from a Roth IRA. Here's a chart....if your old plan is labeled as a Roth IRA, the IRS isn't going to allow it. Nothing you can do about it (beyond the other comment saying to withdraw the IRA to live off of while increasing your TSP contributions).

 

[bigbossjock]

@davidolonge Noted. There’s $1200 in the account. It’s not that much. I’ll probably just withdraw and take the 10% IRS penalty

 

[teapartypatty]

@bigbossjock Don't take the penalty! The general guide is to contribute to your TSP up to get the max match, then max an IRA, then return to max your TSP. Definitely transfer the account to a different IRA custodian if you don't like the investment options.

 

[holywalk]

@bigbossjock Why? There is nothing wrong with a Roth IRA. In fact, it can be better than the TSP if used correctly.

 

[zara123]

@bigbossjock Why not just leave it in your Roth IRA, invest it, and add to it over time? You contributed it to your former employer’s Roth 401(k) for a reason, presumably for your future self. If you still expect to retire at some point, you should leave retirement funds in your retirement accounts.

 

[almunday]

@bigbossjock Your quote that you selected doesn’t include Roth.

 

[bethelxhillsong]

@bigbossjock Okay I'll keep a long story short. But I didn't have much in TSP and wanted to roll it into my employer's 401k, sho was with Vanguard. Some of my TSP was Roth. It kept getting kicked back from Vanguard because they were not provided a "cost basis and start date" of my Roth TSP. I went back and forth between the two institutions for 5 months. (Side question: why do I as a regular person have to be the go between for 2 financial institutions???) TSP had no idea what I was I asking for and Vanguard wouldn't accept anything they sent because they didn't find it valid. Idk, whatever. I put it in my Fidelity Roth IRA and that took 5 seconds, so, stick with that. Screw both Vanguard and TSP.

 

[starfish63]

@bigbossjock Nope, but you can take the money out of the roth plan - you've already paid taxes on it, and then increase your contributions to compensate for the extra money.

 

[bigbossjock]

@starfish63 Yes, taxes have already been paid, but if I withdraw the money, won’t there be a penalty?

 

[starfish63]

@bigbossjock Your initial investment, no penalty. Your earnings have certain stipulations attached to them where you can withdraw without penalty (purchase a house, college, etc)

 

[christophersmith1182]

@bigbossjock “Tax-deferred” is the keyword there; a Roth is not a tax-deferred account.

You could, in theory, open a traditional IRA, start funding it with post-tax dollars, and attempt to roll over the principal of the Roth, leaving the earnings in Roth form. In practice, I’m not sure if that’s possible, but if it is, then it should meet the definition given that post-tax contributions will generate taxable earnings.

 

[bigbossjock]

@christophersmith1182 I understand taxes have already been paid, but I don’t want to incur an IRS penalty for withdrawing it

 

[zara123]

@bigbossjock There will be a 10% early withdrawal penalty on all earnings withdrawn. If you don’t have a statement from your previous employer, you’ll have a hard time proving how much was contributions vs earnings.