TSP Confusion

Submitted by steve jackson on Wed, 2020-10-21 19:28

Age 64 and still working( In service distribution), want to do a direct rollover to advisor firm. Was told two different things by two different people at TSP. One said there would be a mandatory 20% withholding, the other said their would be no with holding and 100 would transfer to new firm/custodian. Which is right?
Thank you



Submitted by David Mertz on Thu, 2020-10-22 00:02

  • A direct rollover is not subject to tax withholding.  The person that told you that there would be 20% mandatory tax withholding must have been thinking that this would be an indirect, 60-day rollover or was simply confused.  The TSP confuses things by referring to direct rollovers as “transfers.”
  • See Transfers on page 4 of Publication TSP-536:  https://www.tsp.gov/publications/tsp-536.pdf

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