tsp roth

[PraiseGod7]

Just to confirm, A tsp Roth works the same as a brokeage roth, correct? I have a Fidelity Roth, but thinking of starting a tsp roth by moving some funds from 401k tsp to roth tsp. Is there anything different I need to consider? I understand the tax consequences, but I am elderly and taking rmd's. I am comfortable with tsp model and interested in reducing my 401k. Will I have any issues with 2 roths?

[Scarfinger]

Not exactly. Most people want all their Roth money in equities for maximum gains and then the traditional account will have bonds. The TSP Roth can't be separated from the allocation percentages of the traditional money for the overall portfolio allocations. You can make withdraws from Roth and or traditional money in the TSP but it will still be a Pro-Rata, "proportional" withdrawal.

You can have 2 Roth accounts and I would bet many here do. I do, Roth TSP money and a Roth at Fidelity. I plan on moving all my TSP Roth money to Fidelity at retirement.

If you are thinking of taking your RMD's amount and converting it to a Roth for that year. I am pretty sure that will NOT count as an RMD withdraw. But I could be wrong.

Probably some smarter people will jump in and correct me

[BelieveGod]

Not exactly. Most people want all their Roth money in equities for maximum gains and then the traditional account will have bonds. The TSP Roth can't be separated from the allocation percentages of the traditional money for the overall portfolio allocations. You can make withdraws from Roth and or traditional money in the TSP but it will still be a Pro-Rata, "proportional" withdrawal.

You can have 2 Roth accounts and I would bet many here do. I do, Roth TSP money and a Roth at Fidelity. I plan on moving all my TSP Roth money to Fidelity at retirement.

If you are thinking of taking your RMD's amount and converting it to a Roth for that year. I am pretty sure that will NOT count as an RMD withdraw. But I could be wrong.

Probably some smarter people will jump in and correct me

My experience, at your age and employed, is that it will not count as an RMD until you reach the RMD age. So yes, you can transfer any amount from IRA to Roth before RMD's are required. My RMD age was 73. Taking withdrawals beginning at retirement is perfect; before beginning Social Security. Wish I had transferred some of my funds from TSP 401K to Roth AFTER retirement and BEFORE beginning Social Security. I have to pay tax on TSP sometime; the earlier, the better the growth at a tax-free rate and lower income before beginning Social Security. Leave some funds in IRA rollover to take RMD's as Qualified Charitable Donations (QCD). My charitable donation age began at 70 1/2. This is tax-free and does not require itemizing. (A Qualified Charitable Distribution is a direct transfer of funds from your IRA to a qualified charity. This transfer allows you to avoid paying income tax on the amount donated, making it a tax-efficient way to give.) Yes, one can transfer to Roth after RMD start, but only AFTER taking RMD first. Google for a better explanation.

[evilanne]

Just to confirm, A tsp Roth works the same as a brokeage roth, correct? I have a Fidelity Roth, but thinking of starting a tsp roth by moving some funds from 401k tsp?to roth tsp. Is there anything different I need to consider? I understand the tax consequences, but I am elderly and taking rmd's. I am comfortable with tsp model and interested in reducing my 401k. Will I have any issues with 2 roths?

TSP & 401Ks usually have more restrictive rules and fewer investment options than a brokerage accounts. Brokerage accounts are generally easier to deal with. It looks like TSP now allows for QCD and conversions
Qualified Charitable Distributions lower your taxable income. You still have to to take the RMD before you can do conversions. Conversions in any account will increase you MAGI and could impact the amount you pay for Medicare in future years.

You can only transfer Traditional to Traditional and Roth to Roth from 401K to TSP. You cannot transfer traditional 401K to Roth TSP, that would be a conversion. You would have to transfer the traditional and then convert.
With Roth IRA there is no RMDs. TSP recently 2024 made change so you do not need to take RMD for Roth TSP
There is no issue with having multiple Roth accounts.

The one big difference if you are still working and contributing to outside Roth. Workplace conversions (TSP & 401K) counts as income, whereas IRAs are not, when determining the income threshold and ability to contribute to Roth. I would recommend transferring 401k to IRAs rather than TSP based on my experience. Fidelity is much easier to deal with than TSP which is primarily focused on people still in the workforce rather than retirees

[PraiseGod7]

You can only transfer Traditional to Traditional and Roth to Roth from 401K to TSP. You cannot transfer traditional 401K to Roth TSP, that would be a conversion. You would have to transfer the traditional and then convert. /quote]

Yes I understand and agree with all your comments but need clarification of quote above. Yes, I want to convert and understand tax consequences and Social Security increase. "You can not transfer traditional 401K to Roth TSP." Please explain, "You would have to transfer the traditional and then convert". Thank you.