Frequently Asked Questions
 
Retirement Rollovers
Self-Employed 401(k) Loans
Contribution Limits
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How long does it take to set up an account?
Is there a set up fee?
How long does it take for a rollover?
What is the maximum I can borrow?
How often can I borrow from my account?
What is the interest rate on the loan?
How much time do I have to repay the loan?
What happens if I miss a payment?
How to Do a Rollover
401(k) Plans
Government Plans
ROTH IRA
 
Thirft Savings Plans

Can I rollover my TSP to a Rollover IRA?

Yes. If you have left the federal government for at least 31 days, you can have your TSP funds rolled over to a Rollover IRA.

Keep in mind that you need to first select a financial institution and the investment that will receive your TSP account balance for a trustee-to-trustee transfer. You must not receive any of your TSP funds to avoid income taxes. If you do, the TSP office will be required to withhold taxes from your TSP distribution.

What is TSP?
TSP stands for Thrift Savings Plan. The TSP is a retirement savings and investment plan for workers who work for the U.S. Government. This plan is similar to a 401(k) retirement plan used by the private sector.

Can I roll over part of my TSP?
Yes. You can rollover all or part of a single payment or, in some cases, a series of monthly payments of your TSP to a Rollover IRA.

 

State and Local Government 457 Plans

Can I roll over my 457 Plan?

Yes. Starting in year 2002, under the new law you can move your money from a Section 457 plan to an IRA.

However, just because the law allows it doesn't mean that this provision will automatically be adopted by your plan. Check with your previous employer to see if the plan has been updated to reflect the new law.

What if I left my job with the state or local government a long time ago?
As long a you have a balance in your 457 plan you may be able to roll it over into your new employer’s plan or into an IRA.
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ROTH IRA

What is a ROTH IRA?
A ROTH IRA is an individual retirement account established by individuals that provides tax-free income after 5 years and age 59-1/2.

How much of my Rollover IRA can I convert to a ROTH IRA?

There is no limit on the amount that can be converted to a Roth IRA as long as your modified adjusted gross income is below $100,000 per year.

I thought that the maximum amount that I could convert to a Roth IRA was $2,000 per year.
Not so. Any amount can be converted to a Roth IRA if you meet the $100,000 per year income limit. However, only $3,000 in 2003 can be contributed to a Roth IRA subject to certain income limits. Investors 50 years old or above may make an additional "catch-up" contribution of $500, bringing their total to $3,500 for the year. Don’t confuse the unlimited amounts allowed for Roth IRA conversions with the annual contribution limit.

What is a Roth IRA conversion?
If your income falls below a certain limit, you can convert any amount in your Rollover or regular IRA to a Roth IRA. Caution: You must pay taxes on any amounts converted from your Rollover or regular IRA to a ROTH IRA.

Does it make sense for me to convert my Rollover IRA to a Roth IRA if I have to pay taxes on all my retirement funds?
Maybe. Your converted retirement funds in your Roth IRA will grow tax free as opposed to growing on a tax-deferred basis. In essence, you stop the tax clock by paying your taxes today on your retirement funds for the benefit of withdrawing your money tax-free tomorrow. Refer to our Roth IRA Conversion calculator as a guide.

Who can convert their retirement funds to a Roth IRA?
Anyone can convert their retirement funds to a Rollover IRA and then to a Roth IRA if they meet certain income limits. Your modified adjusted gross income as a single or married filing jointly taxpayer must be $100,000 or less in order to convert to a Roth IRA. Also, you must be able to pay the income tax you will owe on the converted amount from some other income source. You can’t use your Roth IRA funds to pay your conversion taxes.

What about couples, who file separately, can they convert a Rollover IRA to a Roth IRA?
Yes. Couples who are married filing separately may convert their Rollover or regular IRAs to a Roth IRA but only if they have been living separately from their spouse for the entire taxable year and meet the $100,000 modified adjusted gross income limit individually.

Can I move only certain IRAs to a Roth IRA?
No. You can convert several IRAs – SEP, Simple IRA, regular IRA or Rollover IRA– to a Roth IRA as long as your modified adjusted gross income is below $100,000

What if I convert my Rollover IRA to a ROTH IRA but later learn that my modified adjusted gross income is greater than $100,000?
You can reverse your ROTH IRA conversion without taxes or penalties.

Can I convert my Rollover IRA to a Roth IRA a little at a time?
Yes. You can convert as much or as little as you like of your Rollover or regular IRA to a Roth IRA each year as long as you meet the annual income limit. Partial conversions will allow you to manage and better plan for the taxes that you must pay on your converted amounts.

What are some advantages of converting my Rollover IRA to a Roth IRA?
You get to withdraw money from your Roth IRA tax-free after at least five (5) years and if you are over age 59-1/2.

You will not be required to withdraw a minimum amount from your Roth IRA after reaching age 70-1/2. Thus, your money can continue to grow tax-free until you really need to access it.

Your beneficiaries can inherit your Roth IRA tax-free.

When must I start receiving distributions from my Roth IRA?
There is no requirement that you start receiving distributions from your Roth IRA at a particular time. Withdrawals from your ROTH IRA will, however, be tax-free only after five (5) years of opening your account and if you are over age 59-1/2.

I’ve started taking Required Minimum Distributions (RMD) out of my IRAs. Can I still convert them to a Roth IRA even though I am over 70-1/2.
Yes. Age is not a factor. Anyone can convert IRAs to a Roth IRA. You cannot, however, convert your RMD payout. The balance of your IRA after you take out your RMD can be converted to a Roth IRA. Caution: You will be taxed on all funds withdrawn from your IRAs and converted to the Roth IRA.

What's the deadline for converting my IRAs to a Roth IRA?
A Roth IRA conversion can be done at any time before the end of the year. Do not confuse the Roth IRA April 15 of the following year contribution deadline with the December 31 Roth IRA conversion deadline.

Do I need to rollover my SEP or SIMPLE IRAs first to a Rollover IRA before converting them to a Roth IRA?
No. Because SEP and SIMPLE IRAs are already IRAs, you can convert them directly to a Roth IRA. However, for a Simple IRA, you must hold your Simple IRA account for at least 2 years before converting it to a Roth IRA.

Can I use any of my Roth IRA funds to buy a house?

Yes. After your Roth IRA account has been opened for at last 5 years, you can withdraw up to $10,000 (a lifetime maximum) without owing any taxes or penalties on this withdrawal as long as the money is used for your first time home purchase. You can also withdraw money from your Roth IRA for your children’s first time home purchase.
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