Googles & Scarf

by Matt Merrill

How to extract tax exempt contributions from TSP penalty free

by | May 20, 2024 | Uncategorized

So there you were, in the stuff. Fighting Al Qaeda, the Taliban, or ISIS terrorists in some 120 degree sandbox.

First, thank you for your service. When you got home, did you notice that some of your TSP contributions had an asterisk next to them and said “tax-exempt”?

Have you ever wondered how to get that “tax-exempt” money out of your account?

Especially if your war time service occurred before the TSP got around to offering Roth accounts, your options are essentially zero.

There is however, one way to rescue that combat zone “tax-exempt” money from your TSP account

The Tactic, Technique, Procedure is to conduct a standard rollover out of TSP and into any other IRA account you have at an outside brokerage. The tax deferred money you contributed into TSP will move with no taxes and no penalties to the new brokerage, and your war zone tax-exempt contributions will be sent to you directly. Since these monies were exempt from taxes when you earned them, they are technically “post tax” and no new taxes are due.

Need help extracting your tax exempt contributions?

Contact me for assistance at mattmerrill@brightroadwealth.com.

Matt Merrill

Matt is a Financial Advisor with Bright Road Wealth Management, a long-time investor, licensed Texas realtor, and former United States Marine Corps F-18 pilot. His focus is helping military families with investing and financial planning.
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