Greetings, I've retired from active duty! I am rolling over my TSP to Fidelity and my new job offers a 401k, which I am contributing to as a Traditional 401k. My questions are the following and thank you for any help you may provide.
I'd like to rollover my TSP into Fidelity IRAs. I say IRAs because almost half of my TSP balance is Traditional and of course the other half is Roth. So I have two IRAs with Fidelity Trad/Roth.
My wife and my new income are generating 189k in taxable income in a 4 person house.
I've been reading pro-rate rules, back door Roth, or just straight logging into TSP and rolling them straight to respective IRAs but I'm mixing it up an can't seem to grasp what is best to do.
I do NOT want to leave them in TSP so if you could please help me with the smartest way to avoid tax issues, I would humbly appreciate it. Thanks,
Posted by kastlegrayskull
3 Comments
I’m not understanding what the goal is here. Is your goal simply to move it from your TSP? Why?
Do you want to have the backdoor IRA option? Do you plan on making more than $230k combined?
If you want to avoid pro-rata rules when doing a backdoor Roth contribution, you will not want to have a Traditional IRA balance. To avoid that, just leave your current balance in the TSP. Why do you want to move it?
> My wife and my new income are generating 189k in taxable income in a 4 person house.
MFJ has an AGI limit of $230k before you need to worry about the backdoor Roth process.
**If** that is a concern, you do not want pre-tax dollars in a Traditional IRA. So you should either leave those dollars in TSP or roll them into your current 401k.
If you don’t think your AGI will exceed that limit, then backdoor Roth isn’t something you need to worry about, meaning neither is the pro-rata rules.
Personally, I would roll your Roth TSP into a Roth IRA, and leave the Traditional TSP where it sits – TSP is *probably* better than your new 401k.