Tsp to Roth conversion
- Thread starter Haygrrl
- Start date
Roth conversion is taxable the year you move the money. If your income will be higher this year, it will put you at higher tax rate by probably 2 tiers. Talk to a real tax professional about your specific numbers. How much you anticipate earning this year, when you anticipate taking tsp withdrawal and the tax difference in waiting until Jan 1 to withdraw. Guessing won't do.
Most of my deposits were Roth when I was able to use the option in TSP. I haven't touched that money, yet. I have probably 2/3 of tsp in traditional because it was too expensive to move it. My income has been higher since retirement. It will reduce in About 2/3 years, that is when I plan to shift or withdrawal some of the tsp traditional accounts to other streams for future. Otherwise, I just give the govt an extra $60k a year.
You can always take small amounts and move them to other retirement accounts as long as it wasn't touched by you. Just be careful not to exceed beyond the interest the account makes per year. You don't want to lose principle $$$$.
Planning ahead with a tax person can help avoid too much tax. But, you will pay on the money... somewhere.
I use Roth TSP now too. However most is in traditional. Because of my past life in big corporations I'm going to be taxed no matter. Ugh.
Same. The best you can do is take smaller dispersement to avoid the large payment hit and live outside California if you own property.
The corporate ones we take a dispersement twice a month. Smaller amounts and store them in accounts for later.
We are going to list a Tahoe property this fall, if one of the kids doesn't want to live there and cover costs. We listed the Florida condo, too. Both have a lot of interest but, we haven't decided on a place to buy as a new residence. Prices are coming down out of state, just not to my liking. And the sale of the two properties will, of course, generate big taxes.
If the HOA hadn't gone up insanely, we would probably have kept the condo. It's convenient to just walk away for months.
We did check Hawaii. It's not as expensive as I would have thought. But, the Airbnb/ short term rental restrictions now sort of hit that market. Which is good for locals.
If ND wasn't so cold, it has beautiful scenery. But, I grew up with -40. I don't think I could do that again. I just need fishing, open space and decent Internet.
We looked at reno area. Good airport, great fishing but, kind of boring. And the housing is silly priced for the area. New track house are $800k +. In Reno
I take smallest disbursements possible. Just limits the additional taxes paid each year.Same. The best you can do is take smaller dispersement to avoid the large payment hit and live outside California if you own property.
The corporate ones we take a dispersement twice a month. Smaller amounts and store them in accounts for later.
We are going to list a Tahoe property this fall, if one of the kids doesn't want to live there and cover costs. We listed the Florida condo, too. Both have a lot of interest but, we haven't decided on a place to buy as a new residence. Prices are coming down out of state, just not to my liking. And the sale of the two properties will, of course, generate big taxes.
If the HOA hadn't gone up insanely, we would probably have kept the condo. It's convenient to just walk away for months.
We did check Hawaii. It's not as expensive as I would have thought. But, the Airbnb/ short term rental restrictions now sort of hit that market. Which is good for locals.
If ND wasn't so cold, it has beautiful scenery. But, I grew up with -40. I don't think I could do that again. I just need fishing, open space and decent Internet.
We looked at reno area. Good airport, great fishing but, kind of boring. And the housing is silly priced for the area. New track house are $800k +. In Reno
Assuming your Tahoe is in CA not NV? Nevada isn't a bad place from tax perspective -- I looked in Reno too, actually still sort of looking, and also in Garderville, but prices are crazy because every Bay Area tech work from home moves to great places where if they have to get to Silicon Valley it's a four hour drive. There's nowhere else on the NV side of the Sierras with any sort of medical care, which is a necessity for those of us as we age.
Wondering if rate reduction will affect property values -- I'd expect at least half point or there's going to be a tornado in DC. HOA's are accelerating everywhere as most Boards defer to the CAI representatives, who advance funding for everything and stuff that's not close to needed.
Weather in Idaho isn't bad nor is tax situation. Most I know are relocating to NV, AZ, UT, ID, Eastern OR
Let me know where you land and how you decided.
damifiknow
Well-known member
if you are in the money market fund with your money do it now, because interest is 4% in roth ira , and 1.5 or less in our stupid plan, you do not get taxed for rolling it over, only if you take the money. i did this as soon as i coulod rolled the entire thing over and im getting 4% do it fast though because interest rates are going down ,, there is no taxes on a rollover. i have moved all of money out out 59 1/2 as soon as i could both rioth and traditional
RammerJammer
Well-known member
Starting in January you can do it within TSP.
Haygrrl
Well-known member
Yes. I was waiting until 2026 for that purpose, but wasn't sure about accessing it
Haygrrl
Well-known member
Awesome thanks, can I still take withdrawals?.. will I be taxed again?,
Haygrrl
Well-known member
Ok thanks..
RammerJammer
Well-known member
You’ll be taxed on any amount withdrawn or converted to Roth so got to be careful with what tax bracket it puts you in with pension and SS income. Still have to wait 5 years from January 1st of the year you make the first contribution to Roth in order to qualify so the Roth earnings are tax free. I’ve tried to find info but not sure if you’ve already been contributing to a TSP Roth then convert traditional TSP funds to that same Roth does clock start at time of conversion or from initial TSP Roth contribution. I wish they would explain better on tsp.gov.
If you or your family has an account at an investment firm, such as Fidelity or Schwab, ask them, as they're up to date on laws. Most will answer as they think they might get the funds in their establishment
Before anyone goes off the deep "hey I don't have that kinda money to deal with those rich guys" it takes less than a grand to open an account these days. Way different than before. You just have to have a higher balance to get specific financial investment advice.
Before anyone goes off the deep "hey I don't have that kinda money to deal with those rich guys" it takes less than a grand to open an account these days. Way different than before. You just have to have a higher balance to get specific financial investment advice.
FrozenToes
Well-known member
New website MyFEDPATH. First 30 days are free. Good people. Current/retired Feds. Knew the info. Or most is available to find. But it's nice to find in one location. The calculators were interesting too. Have one for Roth conversion. You have to enter details. They do not represent professionals.
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damifiknow
Well-known member
if you move your tsp into another plan after 59 /12 you will NOT be taxed, but if you take the money in any way then the taxes begin, traditional is standard tax, and roth becomes income so therefore taxed, again as soon as you can get it out of there.
Morty
Well-known member
I would love to have a summer home on lake superior. And a winter home...probably would rent a winter location/travel.If ND wasn't so cold, it has beautiful scenery. But, I grew up with -40. I don't think I could do that again. I just need fishing, open space and decent Internet.
We looked at reno area. Good airport, great fishing but, kind of boring. And the housing is silly priced for the area. New track house are $800k +. In Reno
stillfirstclass
Well-known member
? the benefit of roth is you contribute after tax and pay taxes only on growth or no tax at all?
Morty
Well-known member
You pay your taxes upfront, nothing more is ever paid after withdrawal.
Haygrrl
Well-known member
Yep
Income will be significantly lower if I wait until Jan 2026, so, my thought is to wait until then
Thanks
