By Mike Miles
401(k) rollover
January 19th, 2012 | Uncategorized
Q. I am currently employed with 10 years service accrued in the Federal Employee Retirement System. If I were separated/left federal employment for the private sector, would I be allowed to roll over the entire contents of my 401(k) account (acquired via my new employment) into my Thrift Savings Plan? Similarly, if I were to retire from federal employment, would I be allowed to roll over the entire contents of any 401(k) account(s) (acquired as a result of any previous private-sector employment) into my TSP?
A. As long as you maintain your TSP account, whether employed, separated or retired from federal service, you may transfer eligible balances into your TSP account; 401(k) account assets consisting of only pretax money would be eligible from transfer.
Tags: 401(k), FERS, pretax contributions, rollover, transfer, TSP
Contributions after retirement
January 17th, 2012 | Uncategorized
Q. I retired in 2007 and am in the Civil Service Retirement System. Am I permitted to continue to contribute monthly to my Thrift Savings Program? May I roll over the entire contents of my Individual Retirement Account into TSP? Can I then make monthly contributions into TSP from my checking account?
A. You may not contribute to the TSP after you retire, but you may transfer eligible IRA balances into the TSP at any time. To be eligible, the IRA must contain only pretax money.
Tags: contributions, CSRS, IRA, pretax contributions, retirement, rollover, TSP
Garden State TSP rules, Part I
December 15th, 2010 | Uncategorized
Q: Thank you for agreeing to respond to my New Jersey Thrift Savings Plan taxation question. New Jersey does not permit federal employees to contribute pretax dollars into TSP accounts. Its position is that TSP was not established under a Internal Revenue Code 401(k) plan. As this impacts many thousands of federal workers in the state, my question is: Presumably at retirement, New Jersey TSP participants will be taxed at the federal level for all TSP distributions, and at the state level for distributions minus contributions which NJ previously taxed (let’s hope so; that alone may be a recordkeeping nightmare). But what would the tax situation be for participants who moved to another state after retirement? Would another state recognize the post-tax contributions to TSP during a New Jersey residency, and permit state-tax-free distributions of that portion of distributions previously taxed by New Jersey? I’m mystified that the federal government never stepped in to convince New Jersey to treat TSP contributions the way other states do.
A: The answer will depend on the state in question. Logic would suggest that your basis should be portable, but logic doesn’t always prevail when it comes to state-by-state differences in tax law. You should consult a certified public accountant in the state in question for specific advice.
Tags: 401(k), New Jersey, pretax contributions, thrift savings plan, TSP