Transfer TSP Roth to Roth Solo 401k | Thrift Savings Plan Transfer to Solo 401k

QUESTION: I found a TSP publication online. It looks as if the tax-exempt can be rolled over into either a solo 401k or Roth solo 401K.  I also read that they would direct deposit qualified rollovers and if they mail me a check directly, they withhold 20% for federal taxes.  Does having the 401K trust name on the check stop them from withholding?


Pete in New York

ANSWER: I read through the TSP publication and it confirms that you may directly transfer your Roth TSP and pre-tax Thrift Savings Plan to a 401k or IRA. Therefore, since our solo 401k plan documents allow for Roth Solo 401k contributions, you can request on the TSP forms a direct rollover of both the Roth and pre-tax TSP funds to a solo 401k as long as you are self-employed and have not full-time employees. Note that two solo 401k bank accounts will need to be opened, one to hold the pretax and the other to hold Roth TSP funds.

Lastly, by electing to process a direct rollover of your TSP, the checks will be made payable in the name of the solo 401k, and the movement of the Roth and pre-tax TSP funds will be treated as a trustee-to-trustee or direct rollover not subject to the mandatory 20% withholding that would apply if the check was made payable in your name only.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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