Withdraw Contributions from Roth TSP?

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Topic Author
NavyRotorhead15
Posts: 35
Joined: Sun Oct 13, 2013 8:28 am

Withdraw Contributions from Roth TSP?

Post by NavyRotorhead15 »

Happy Friday,

Is there a way to withdraw Roth contributions from TSP? The vast majority of their literature gives very little mention to the contributions. Most of the withdrawal discussion is limited to in service withdrawals, loans, and associated penalties.

If the answer is a “no”, could the Roth TSP portion of the account be transferred over to an existing Roth IRA, and then the contributions taken from there?

The TSP’s “Important Tax Information About Payments From Your TSP Account” does say: Roth Withdrawals and the Early Withdrawal Penalty: This penalty never applies to contributions you made to your Roth balance or to qualified distributions of Roth earnings. It may apply to nonqualified distributions.

However, there is nothing on the site regarding “how” to do this.

Thanks for the help.
If you have time to read this forum, you also have time to read books about investing.
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: Withdraw Contributions from Roth TSP?

Post by mhalley »

IANAL/CPA
My understanding is you can’t do a Roth tsp withdrawal penalty free until 59.5
https://plan-your-federal-retirement.co ... wal-rules/
If you roll it to a Roth IRA, then you have to contend with the 5 year rules.
https://www.fool.com/retirement/plans/r ... year-rule/
I THINK you could take a distribution before 5 years, but would have to pay some taxes as you cant designate the money coming out is only contributions.

https://www.irs.gov/retirement-plans/re ... h-accounts
If you take a distribution from your designated Roth account before the end of the 5-taxable-year period, it is a nonqualified distribution. You must include the earnings portion of the nonqualified distribution in gross income. However, the basis (or contributions) portion of the nonqualified distribution is not included in gross income. The basis portion of the distribution is determined by multiplying the amount of the nonqualified distribution by the ratio of designated Roth contributions to the total designated Roth account balance. For example, if a nonqualified distribution of $5,000 is made from your designated Roth account when the account consists of $9,400 of designated Roth contributions and $600 of earnings, the distribution consists of $4,700 of designated Roth contributions (that are not includible in your gross income) and $300 of earnings (that are includible in your gross income).
Last edited by mhalley on Fri Jul 30, 2021 2:13 pm, edited 2 times in total.
Topic Author
NavyRotorhead15
Posts: 35
Joined: Sun Oct 13, 2013 8:28 am

Re: Withdraw Contributions from Roth TSP?

Post by NavyRotorhead15 »

I guess my question in this case is "is it a conversion"? The idea would to transfer from Roth TSP to Roth IRA. My intent in the scenario would be to tap only the contributions vice earnings.

In any case, I do appreciate the response.
If you have time to read this forum, you also have time to read books about investing.
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retiredjg
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Re: Withdraw Contributions from Roth TSP?

Post by retiredjg »

The contributions you make to the TSP, whether traditional or Roth, cannot be removed from the TSP until you separate from service. There are some exceptions (loan, I assume the TSP allows hardship withdrawals, maybe at age 59.5).
placeholder
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Re: Withdraw Contributions from Roth TSP?

Post by placeholder »

These are the same restrictions as similar plans like 401k and 403b.
jbinpa59
Posts: 150
Joined: Wed Jul 10, 2019 3:29 pm

Re: Withdraw Contributions from Roth TSP?

Post by jbinpa59 »

retiredjg wrote: Fri Jul 30, 2021 2:17 pm The contributions you make to the TSP, whether traditional or Roth, cannot be removed from the TSP until you separate from service. There are some exceptions (loan, I assume the TSP allows hardship withdrawals, maybe at age 59.5).
TSP allows for very limited financial hardship with-drawls iregaurdless of age

And up to 4 in service with-drawls per year if age 59.5+
(I have done 1 in service direct rollover to a Fidelity IRA, then a partial Roth conversion within Fidelity, but was already past 59.5yo)

If OP is under 59.5yo and still in federal service I believe a TSP loan is about their only choice to access the TSP Roth contributions
Alan S.
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Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Withdraw Contributions from Roth TSP?

Post by Alan S. »

As for situations after you have separated from federal employment, if you need to withdraw from the Roth TSP, first do a direct rollover to a Roth IRA. Then you can take distributions under the Roth IRA ordering rules, where all your regular Roth contributions come out first tax and penalty free. If your Roth TSP was not yet qualified, your elective Roth deferrals and even your IRRs (in plan Roth rollovers) come out of your Roth IRA prior to any earnings in either plan.

That avoids being taxed and penalized on pro rated gains which are included in any direct Roth TSP or Roth 401k distributions that are not qualified distributions.
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