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Financial Planning / Thrift Savings Plan (TSP)

URL:  http://boards.fool.com/epi-if-i-do-roll-it-over-into-a-roth-will-i-29101303.aspx

Subject:  Re: What to do with a TSP?? Date:  2/13/2011  11:36 AM
Author:  JudasTouch Number:  78 of 83

Epi,

If I do roll it over into a roth, will I incur any expenses or tax obligations because of the move?

In a word: Yes!

TSP contributions are pre-tax, while Roth contributions are taxed. Rolling that money into a Roth will force you to take an immediate tax hit. So, you'd want to investigate rolling it into a traditional IRA, if anything.

A talk with a tax professional might be in order. I am not such a creature. That said, here are my thoughts: I do recommend leaving that cash in your TSP account, especially if your tolerance for paperwork and your interest in actively investing that money are low. I think just leaving it in there on cruise control is an easy, super low-cost way to let that money work for you.

These might be of interest to you:

https://www.tsp.gov/lifeevents/separating/separatingFromGovS...

https://www.tsp.gov/PDF/formspubs/tspbk02.pdf

The TSP offers a decent amount of flexibility--I think it's plenty for all but the most hardcore, fund-hating investors. But the real benefit is the ridiculously low cost.

Good luck!
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