Can I move money from an IRA into the TSP?

Only if the IRA is a “conduit” IRA holding only the proceeds of a 401(k) or similar plan of a prior employer. Transfers into the TSP from funds in other types of IRAs are not allowed, nor are transfers of conduit accounts in which there are investments from other sources.

Check with your IRA provider to ensure that the distribution would be considered an “eligible rollover distribution.” For purposes of these transactions, there is a distinction between a transfer and a rollover. A transfer occurs when you tell the IRA provider to send all or part of your eligible distribution directly to the TSP. A rollover occurs when the IRA makes a distribution to you (after withholding a mandatory 20 percent federal income tax) and you then deposit all or any part of the gross amount of the distribution into the TSP within 60 days after receiving it.

The TSP can accept transfers of either traditional (pre-tax) or Roth (after-tax) balances but can accept a rollover only of a traditional balance.

Money rolled over or transferred into the TSP is allocated according to your current investment allocation and becomes part of your investments. It will be subject to the same plan rules as all other employee investments into the account. The money does not count against the annual dollar cap on employee investments.

2021 Digital Almanac

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