How Do I Change My TSP to a Roth IRA?
- 1). Make sure you are eligible for a TSP rollover. You are allowed to rollover your TSP if you have left the federal service. You can also access your TSP funds if you are over 59 1/2. If you do not meet these criteria, you can still move your funds into a Roth IRA but will be charged a 10 percent early withdrawal penalty.
- 2). Contact the department managing your TSP and let it know you want to roll over your funds. Ask if you can do a direct rollover into a Roth IRA or if the funds will be transferred to your bank account first. You have 60 days to transfer your funds from your bank account to a Roth IRA or you will be charged a 10 percent early withdrawal penalty.
- 3). Open a Roth IRA account with a brokerage firm. Let the firm know you will be rolling over your TSP account and they will help your transfer over your retirement funds.
- 4). Report your TSP balance as income in the year of the rollover. You will need to pay income tax on your entire TSP balance to complete a rollover to a Roth IRA.
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