Federal Employees and Retirees Can Roll A 401(k) Into Their TSP Account

As a Thrift Savings Plan (TSP) participant, federal employees have the option of rolling over money from eligible retirement plans like a 401(k), 403(b), or a traditional IRA into their TSP account. Even better – you can either move money into your TSP while you’re working or after you retire.

For some investors, consolidating retirement savings into the TSP makes it easier to manage their investments while taking advantage of the TSP’s low fees. Add to this, during your working years, you can take out TSP loans and make hardship withdrawals when you meet the requirements.  

Understanding The Difference Between Direct & Indirect Rollovers

A direct rollover is when all or part of your money from an eligible employer plan or IRA is sent directly to your TSP account. The main advantage of a direct rollover is that the funds are not taxed as income at the time of the rollover.

On the other hand, with an indirect rollover, the money from an eligible employer plan or IRA is sent to you first, and you have 60 days to complete the rollover. Keep in mind that, if you choose an indirect rollover, the funds are subject to federal income taxes.

The TSP allows 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), into the traditional balance of your account.

The TSP will only allow direct rollovers of Roth distributions from Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s into the Roth balance of your account. If you don’t have a Roth TSP balance, the rollover will automatically create one.

Two Ways To Move Money Into Your TSP

One way to move money into your TSP is to call the ThriftLine and follow the prompts to connect with the TSP Rollover Concierge Service. A TSP rollover specialist will contact the administrators of the account you’re rolling over to the TSP and process the paperwork for you. If any signatures are needed to finalize the rollover, they’ll handle that, too.

Or, you can manage the rollover yourself by logging in to “My Account.” Once you’re logged in, you can use the online tool to start the process and follow the rollover steps and guidelines. Of course, you’ll have to contact the provider of your eligible plan and request a rollover to your TSP, then send any required documentation or rollover checks to the TSP.

For more information, download the Summary of the Thrift Savings Plan. Not sure if rolling your funds into the TSP is the right move? Reach out to a Federal Retirement Consultant (FRC®) to discuss which strategies might work best for you.