Post-retirement partial TSA rollover to IRA
I have a retired client that has a TSA from when she was a teacher at a Catholic school. She has about $230,000 in there and wants to move $200,000 to an IRA at a different company, leaving the $30,000 in the TSA, where it is earning 3%, as part of an emergency fund.
I believe we can do this partial direct rollover, but I want to make sure, first.
If necessary, she could convert the entire TSA to an IRA at the current company, then do a partial IRA transfer, but that could delay issues. The relinquishing company is known for extended delay tactics.
Eventually, she will probably convert the remaining TSA to an IRA to simplify RMD considerations, but that will not be an issue for a few years.
Permalink Submitted by Alan Spross on Fri, 2011-12-09 19:01
While the plan must allow a direct rollover, it is possible that they would not permit a partial rollover. The client would have to check with the plan to determine what partial distribution options exist. There certainly is no problem with respect to the IRS in doing a partial rollover.
Note that if she has any pre 1987 contributions in the plan, RMDs do not need to start on the 12/31/1986 balance until age 75. When a partial rollover is done, the first dollars out of the TSA are deemed to be the pre 1987 dollars and the RMD beginning date would be moved up to the usual IRA beginning date. This may well not be an issue that matters in her case, but wanted to mention it.