Rollover from the TSP to Eligible Retirement Plans

June 17, 2023

How is the TSP treated under the IRC?

According to IRC 7701(j), the TSP is to be treated as a 401(a) trust that is exempt from 501(a) taxation. Also see 5 USC 8440.) Therefore, the TSP is a qualified trust and our “determination letter” is statutory in nature. Based on the IRC’s description of the TSP, a plan administrator (or trustee or custodian) can carry out the rollover of a TSP participant’s account.

Are all qualified trust regulations applicable to the TSP?

No. According to IRC section 414(d)’s definition, the TSP is a government plan. As a result, it is exempt from the joint and survivor annuity provisions of IRC sections 401(a)(11) and 417. The TSP is also exempt from 416’s “top-heavy plan” provisions.

How is a rollover made?

Every day, a check from the U.S. Treasury is sent to the plan or IRA that will be rolled over. The TSP has an Employer Identification Number of 52-1529691. On a participant’s distribution request, the participant’s financial institution or the administrator of the plan must certify that the plan will accept the funds and provide rollover information.
Note: The rollover forms from other plans or financial institutions will not be accepted by the TSP.

What TSP distributions are considered “eligible rollover distributions”?

The following TSP distributions are eligible rollover distributions:

  • A distribution of part or all of an account after the participant separates from service.
  • All force-outs (i.e., automatic payouts of accounts that contain less than $200).
  • Equal installments expected to be paid out in less than 10 years (unless installment amounts are computed using the IRS life expectancy table).
  • Amounts paid to a participant after the total distribution of a TSP account (e.g., a late contribution to a participant’s account).
  • An age-59½ withdrawal.
  • Death benefits paid to the spouse.
  • Death benefits paid to a nonspouse provided the nonspouse requests a rollover to an inherited IRA described in IRC § 402(c)(11).
  • Amounts paid to a current or former spouse under a qualifying court order or legal process.

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