Retirement Rollover into TSP, eligible for early withdrawals?

[FL747]

I must be fuzzy this morning, I can't tell for the life of me if funds rolled into a TSP are then made eligible for the penalty-free early withdrawal. I'd like to roll over traditional IRAs into the matched portion of the TSP, but I'm wondering if they differentiate between those employer matched funds and funds you transferred in from elsewhere when it comes time for distributions.

If not, I think we'll just bite the tax bullet and convert them to Roth, but it'd be nice to avoid that.

Relatedly, I just want to make sure - there's no way to convert the funds from the Traditional 401k account to Roth, right?

 

[MJ]

You can convert into a Roth/TSP Roth. You'll owe taxes from the transferred pre-tax money.

Move money into the TSP | Thrift Savings Plan

www.tsp.gov

I'm not sure what you mean by "into the matched portion"?

 

[FL747]

You can convert into a Roth/TSP Roth. You'll owe taxes from the transferred pre-tax money.

Move money into the TSP | Thrift Savings Plan

www.tsp.gov

I'm not sure what you mean by "into the matched portion"?

I'm still fuzzy, apparently. The matched portion is the employer contribution, and is the portion of the TSP filled with pre-tax funds - everything else is Roth/post-tax. We have some traditional IRAs we would like to roll into that traditional portion, but I'm not clear on whether that affects our ability to distribute them tax free between retirement and 59.5 - it probably doesn't matter as long as it doesn't taint the whole account, but I'm trying to make sure I don't do anything that limits future options.

 

[Termine]

There are two buckets, the Traditional bucket (pre-tax) and the Roth bucket (post-tax). No matter what you elect when setting up a payroll deduction, the Agency match will go to the Traditional bucket. If you roll a Trad IRA into the TSP it will also go into the Trad bucket, unless you convert it to Roth by paying income tax on the money.

I don't think there's any distinguishing where the funds originally came from once they get to the Trad bucket—payroll, agency match, IRA rollover, it's all the same and it's all subject to the applicable distribution rules. I don't think you'll "taint" the matching funds by rolling an IRA in. I'm not an expert though, if you want to be certain you should ask a CPA or something.

 

[MJ]

What Termine said is correct. There's no distinction between the money except if its Roth or not.