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<< Six years ago, my dear sister decided to chuck it all, and leave fast paced southern California, and her high pressure job w/the Navy.

She and her family sort of "dropped out", which is all well and good, but I just found out that she left her 30k civil service retirement behind too!


So for the last six years, she's had 30k just sitting, not earning a dime. When I found out, I urged her to take immediate action, and recommended that she roll it over into a Roth, using a mutual fund that has performed well as a vehicle. (I don't think she's in any shape to actively manage anything.)

Now, I'm not so sure that she CAN put it into a Roth. I vaguely recall some quirky thing about having to put it into a traditional IRA first, and then converting. Is this correct? And if so, wouldn't there be tax consequences when it's converted? The retirement contributions were after tax in the first place....can they be taxed again in this manner? >>

I'm going to assume that she was a civilian employee covered by CSRS. As you note, her contributions were after tax. Sorry, but none of this can be rolled into any kind of IRA. Her choices are to take it without interest (and without tax liability) and invest it in a taxable account, or leave it there and draw a discontinued service annuity when she's 62(?).

You might find more details at the OPM website:

Phil Marti
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