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[[ 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

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
( 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 ( and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area ( Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (
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