Pro-rata rule.

http://news.morningstar.com/articlenet/article.aspx?id=687449

 

So if you rolled your TSP into your IRA and then want the backdoor option back. Could you roll your traditional ira into your 401k?

 

That was the one, the pro rata rule. After a quick refresher, I'm fairly certain this wouldn't hinder your ability to take after tax 401a contributions and convert them to a Roth IRA. I think what Full Of Luv is saying is that if you take pre tax TSP funds and put them into a traditional IRA, you can't segregate the new funds for the back door conversion.

ex;

-Pre Tax TSP funds roll into a traditional IRA
-You add $5500 to a traditional IRA
-IRS pro rata rule says all funds in ALL traditional IRAs must be converted (you can't just convert the new $5500 funds)
-since TSP funds were tax deferred (pre tax) funds now being forced into a Roth, you must pay the taxes on the original funds contributed and the gains on those funds

You're essentially creating a tax nightmare for yourself. My personal rule is never have any funds laying around in a traditional IRA, and convert intended backdoor funds ASAP. Keep in mind you are subjecting yourself to (some say) to some gray IRS area called the "step transaction doctrine"

https://www.kitces.com/blog/how-to-do-a-backdoor-roth-ira-contribution-while-avoiding-the-ira-aggregation-rule-and-the-step-transaction-doctrine/


Here is an article contrary to that;

https://www.financial-planning.com/news/its-not-about-timing-irs-on-backdoor-roth-conversions

Personally? Don't care, if the IRS has a problem they can let me know and we will go from there.

 

Good question falcon, I can't say for sure, but I believe you can. The only way to get a definitive answer is to call fidelity and ask them about the plan rules. I don't believe there are any IRS rules against it.

If your goal is to clear your Traditional IRA accounts and bring it back to zero to maintain it as the conversion vehicle for the Roth, that would be a good way of doing it if allowed. Alternatively, if you haven't already rolled TSP funds into the Traditional IRA, you can go direct into the DPSP from the TSP.

 

I rolled my over last year. (retiree) The process was a little cumbersome as you have to resort to snail mail to get forms from Fidelity and mail to DFAS but it worked OK. The fee's were a tad higher and the financial planner said don't do for long term costs and age accessibility to use as a bridge between 59 1/2 and retirement. But I just didn't care to let the US Govt use my money any longer. It took about 6 weeks. Never spoke with anyone at TSP, once they got the forms they transferred the cash in about two weeks. The account closed about 6 weeks after that. FWIW.

 

What fees are you referring to, that were a tad bit higher? The fact that you were using a planner might indicate why there were slightly higher fees, or perhaps you went into a life cycle fund?

 

I moved my TSP to Fidelity 401k last year as well. Agree with most of the above. Some of the process can be done electronically, but some of it requires mailing in paper forms. I don't remember any fees, but there might have been. I also don't remember it taking 6 weeks. It wasn't quick, but I don't remember it taking that long. Best advice, call Fidelity. They will walk you through the process.