Ask The Experts: Money Matters

By Mike Miles

Direct rollover of IRA

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Q. I am in the process of transferring my IRA account from my bank to my Thrift Savings Plan account. The majority of my IRA is from old 401k rollovers from previous jobs (pretax). However, there were a few years when I made contributions to my IRA with after-tax money through my broker. I’ve had my IRA for years now and have no idea how much or what portion of it is after-tax money as my broker has made many trades over the years. How can I determine exactly how much of my IRA is pr-tax and how much is after-tax so I know what’s eligible to transfer into my TSP? Furthermore, how would TSP know what’s pretax or after-tax if I just decided to transfer the whole amount over?

A. When you made nondeductible contributions to your IRA, you were supposed to file a IRS Form 8606 with the return. The IRS will assume that everything in your IRA is pretax unless you can prove otherwise through your past tax returns. As long as you are willing to declare all of the money pretax, the TSP will accept it, and I doubt that the IRS will object to you paying tax on the money twice.

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Comments

  1. Boyd Says:
    October 6th, 2011 at 3:51 pm

    If a person is in retirement and has met their minimum distribution, can they take for instance:
    1. A distribution (Loan) of 5k the first of Nov. and a distribution of 5k the last of Nov. so long as it is all paid back within the 60 days?
    (I believe it is called a “Direct Rollover”).

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