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TSP Distribution


Guest Commuter Rex

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Guest Commuter Rex

I've determined that combat zone pay is exempt, even if it was contributed to the TSP and is distributed. At distribution, it will be segregated from normal before-tax contributions (though its earnings won't). What I need opinion on is whether the contributions to the TSP this year (that came from combat pay) will count towards the $12,000 limit? It seems from the TSP website that since the combat pay was exempt from income and is not reported, then the portion of it that was contributed to the TSP doesn't count.

Any actual experience with this out there? <_<

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Guest Commuter Rex

Well I got my own answer. Exempt income is a non-event as far as TSP and 401(k) contribution limits. Only the contributions that came from normal/taxable income count. At distribution, the form gives the option of the new plan/IRA accepting the exempt money as part of the rollover, or if the plan cannot accept it then the distribution is divided up and exempt contribution (less any gains) is sent to participant.

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