TSP Participants Can Now Move Money

You can now "roll" money into your Thrift Savings Plan accounts from other 401(k) plans or IRAs. There are two ways to make the move: a direct transfer or a rollover. The direct transfer involves contacting the current entity that controls your 401(k) or IRA and have them move money into the TSP.

A rollover involves taking money out of your former 401(k) or IRA yourself and moving it into the TSP.

The entity will, however, withhold taxes during this process. The TSP-60 form recommends making a direct transfer, though participants can move their money any way they wish.

"That 20 percent [tax] withholding is a very unfortunate thing that happens during these rollovers.

It was done as a pay-for in a tax bill, so they could score that 20 percent withholding in order to offset the budgetary cost of something else. So that's why it's in there.

It's not a retirement policy goal to tax funds that are still being planned on for use in retirement. It's just the way it applies."

The roll-in feature has been very popular. During 2009, the TSP saw over 20,000 transfers and roll-ins totaling more than $435 million.

For more information please contact your TSP Benefits Offices or http://www.tsp.gov.