How to Roll Over TSP Into IRA Treasury Bonds

by John Csiszar, Demand Media
    An IRA can generally provide you with more investment options than a TSP.

    An IRA can generally provide you with more investment options than a TSP.

    A thrift savings plan is a retirement plan for federal employees, similar to a 401(k). If you have an individual retirement account, you may be able to roll over your TSP into your IRA. Once the money is in your IRA, you are free to buy Treasury bonds or almost any other type of investment. A direct transfer is often a better option than an actual rollover.

    Step 1

    Choose between a transfer and a rollover. A transfer occurs when the custodian of your TSP moves your money directly into your IRA. With a rollover, your TSP custodian will send your TSP money directly to you. At that point, you have 60 days to deposit the money into your IRA to avoid possible taxes and penalties. Specifically, if you fail to meet the 60-day deadline, the IRS will consider your rollover a distribution, subjecting you to ordinary income tax and an additional 10 percent penalty if you are under age 59 1/2.

    Step 2

    Qualify for a rollover. If you are still employed by the federal government, you qualify for a withdrawal only if you have a significant financial hardship or are over 59 1/2. Because you can't roll over any amounts necessary for a financial hardship, you can only roll over an in-service withdrawal based on age. If you have separated from service, you are free to roll over your TSP money at any time, regardless of the reason.

    Step 3

    Get the correct form from your employer or the TSP website. If you are requesting a rollover while still employed with the government, use Form TSP-75, "Age-Based In-Service Withdrawal Form." For rollovers after separation from service, use Form TSP-70, "Request for Full Withdrawal." If you only want to roll over part of your account after separation from service, use Form TSP-77, "Request for Partial Withdrawal When Separated."

    Step 4

    Complete the withdrawal forms. For a rollover, complete Section VII of the form to indicate where you would like your direct deposit sent, or simply complete the informational sections of the form to receive a check to your home address. If you want to transfer your withdrawal directly to your IRA, each of the three withdrawal forms provides space for you to do so. In Section V of the appropriate form, write in your name, address, Social Security number and phone number. Give the form to your IRA administrator to enter the relevant details about the IRA in Section VI. Return the completed form to your employer to process your transfer.

    Step 5

    Deposit the rollover money into your IRA. If you didn't elect a direct transfer to your IRA, you will receive a check or deposit in your bank account that you must redeposit in your IRA. For a transfer, the money will appear in your IRA automatically.

    Step 6

    Buy Treasury bonds. Treasury bonds aren't on the list of restricted investments or prohibited transactions in an IRA, so you are free to buy Treasury bonds in your IRA. You can't use the TreasuryDirect website to buy Treasury bonds in an IRA, but you can purchase them through most financial institutions.

    About the Author

    John Csiszar began writing in 1989 at the ERIC Clearinghouse for Junior Colleges. His work appears in various online publications, including The Huffington Post. Csiszar earned a B.A. in English from UCLA and served 18 years as an investment adviser and certified financial planner.

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