financial planner Stephen Zelcer

Q&A: Can annual leave be rolled into the TSP?


Can excess annual leave (that gets paid lump sum upon the employee’s retirement) be rolled into the TSP or IRA?

If yes, how should an employee request that?  Is there a form?


The annual leave lump sum must be paid out to the employee. There’s no provision that allows that annual leave to be rolled into the TSP.
However, the annual leave is considered earned income.  As such, it can be used to fund an IRA.  Obviously, an IRA’s contribution limits are not as high as the TSP’s (TSP allows $26,000; IRA only allows $7,000), but at least it’s something to reduce the tax hit.  

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