Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: Roth IRA Roll-over from Fed. Program Date: 4/24/1998 2:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
[[ I used to be a Department of the Army Civilian. I
participated in the Thrift Savings Program, which is
similar to a 401(k), but under the tax laws, is not.
Still, my contributions were tax deferred. I am no
longer a Federal Governement Employee and would like
to roll-over this money to 2 Roth IRAs...right now,
it's about 21K, minus 20% taxes upon roll-over.]]

I'm not quite sure how your program works, so you might want to check with the pension plan administrator in order to determine the exact consequences of pulling your money out. In addition, if you make a direct "trustee to trustee" transfer, there will be no 20% withholding...which is the best way to go. If they DO take out the 20%, and you don't reach into your pocket and fund that back into your IRA rollover, you'll get hit with taxes and penalties on that withheld amount. So be careful.

[[ Florida is a community property state and I would
like to roll over half to my Roth IRA, half to my
wife's Roth IRA. Neither one of us have any IRA,
but I now contribute to my employer's 401(k) plan.]]

No can do. It is immaterial that FL is a community property state. Your retirement funds are yours and yours alone (regarding rollovers at least). So if you want to roll these funds over, you'll have to do so ALL in your name. Nonce can be rolled over to your spouse.

[[ The kicker is that I work overseas and have a tax
exclusion up to $70K....I will pay some tax this year,
because of extra pay and investments.]]

That should have no bearing on taking the funds out of your old government plan and rolling them into an IRA. It certainly may be a consideration should you decide to convert these funds to a Roth IRA. Since the conversion amount will not be considered "earned", these amounts will not be covered under the foreign earned income exclusion.

[[ Our Goal is to each borrow $10K for a first time house and borrow more from our mutual fund investments...
What if we buy the house before the 5 year roll-over?]]

If you wait for the 5 tax year period to expire, you'll be able to remove these funds without penalty or tax. If you pull the funds out prior to that time, you'll get hit with tax on the earnings and a 10% penalty on the total distribution for the "privilidge" of spreading your conversion income over a 4 year period.

For additional information on these issues, see my post on the Roth IRA in the Taxes FAQ area. You should also check out IRS Publication 590 at the IRS web site.

TMF Taxes
Roy

SPECIAL NOTE: Remember that this response is not the "last word" on your situation. It is really only a starting point. Make sure to review the "Read This First" post
(http://www.fool.com/School/Taxes/TaxesDisclaimer.htm) for additional information. In addition, many of your questions may already be referenced in the Taxes Frequently Asked Questions area. In order to visit the Taxes FAQ area, go to the Fool's School area (http://www.fool.com/school.htm) and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area (http://www.fool.com/school/taxes/taxes.htm). Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (http://www.irs.ustreas.gov).
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Apple

The Saddest Place on iPhone Day
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement