Transfers to a Roth IRA at MRA/30 prior to 59.5 years old

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I would like to take partial withdrawals from my traditional TSP balance to reduce taxes later when taking RMDs. If I do these as Roth transfers before age 59.5, and use withdrawals from the TSP to cover the transfer taxes (after paying the regular withdrawal taxes), would I be subject to any penalties?

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Asked on May 5, 2021 4:57 pm
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I assume that you have (or will have) retired at MRA+30 and the withdrawals you will be taking will be post-separation partial withdrawals. You cannot take an in-service (i.e. still working) withdrawal until you are 59 1/2. These withdrawals are considered to be eligible rollover distributions.
If that is the case, there will be no penalty for taking money out of your TSP because you are 55 or over, and there will be no penalty for contributing to a Roth prior to 59 1/2.
I would think that paying taxes on your withdrawals when taken would result in the money that you withdrew being considered already taxed and you would not have to pay any taxes over and above that.

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Posted by (Questions: 0, Answers: 60)
Answered on May 5, 2021 8:25 pm