Do I need to report my TSP on my taxes?
by TurboTax• Updated 2 months ago
Reporting taxes
We report all TSP withdrawals and distributions to the IRS, to the appropriate state tax agencies if applicable, and to you on IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
With traditional TSP, your contributions go into the TSP before tax withholding, which can potentially lower your current income tax rate. But when you take money from your traditional TSP, you'll pay taxes on both your contributions and earnings at the income tax rate of the year you make the withdrawal.
IRS Form 1099-R — In mid-January, the TSP will mail IRS Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to participants who received a withdrawal between January 1 and December 27, 2023, and/or a taxed or foreclosed loan between January 1 and ...
If you are 591/2 or older, you can make withdrawals from your TSP account while you are still employed . You must pay income tax on the taxable portion of your withdrawal unless you roll it over to an IRA or other eligible employer plan .
If you have a 401(k) or TSP through your employer, your contribution is reported in Box 12 of your W-2 with the letter code D. Because your contribution is included in your W-2, do not re-enter it in the retirement section.
The 2024 IRS annual limit for regular TSP contributions is $23,000. If you are covered by the Federal Employees Retirement System (FERS, FERS-RAE, or FERS-FRAE), you will lose valuable Agency Matching TSP contributions, if you reach the annual limit before the end of the calendar year.
We'll set up and automatically contribute 1% of your basic pay toward your Thrift Savings Plan account, whether you contribute to it or not. If you do contribute to the TSP, we'll match your contributions dollar for dollar up to 3%, and 50 cents on the dollar for the next 2%.
When you make an age-59 ½ withdrawal, you must pay 20% federal income tax on the taxable portion of the withdrawal unless you're able to roll it over to an IRA or an eligible employer plan. The booklet Tax Rules about TSP Payments provides more information about the tax rules affecting age-59 ½ withdrawals.
Established by Congress in the Federal Employees' Retirement System Act of 1986, the TSP offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
Is the TSP tax exempt?
Traditional TSP—If you make traditional contributions, you defer paying taxes on your contributions and their earnings until you withdraw them. If you are a uniformed services member making tax-exempt contributions, your contributions will be tax-free; only your earnings will be subject to tax at withdrawal.
Important tax considerations:
However, the penalty can be applied retroactively if you stop your life expectancy installments or take additional money from your account within five years of beginning your installments or before you turn 59½ years old.
Verdict: Keeping your funds in your TSP may be best if you aren't sure what you want to do next. There is no harm in leaving the TSP to grow while you figure out your next steps. If there is a chance that you may go back into federal service, then leaving it in the TSP is probably your best option.
If your loan becomes delinquent, any taxable portion of the outstanding balance and accrued interest will be treated as taxable income by the IRS. If you're under age 59½, you may have to pay an additional early withdrawal penalty tax.
Gains and losses in your TSP are tax-deferred, and there's no provision of law that allows you to claim gains or losses in the value of your TSP on your current year tax return.
No. 401(k), 403(b), and Thrift Savings Plans (TSPs) aren't the same thing as an IRA. When we ask if you have a traditional or Roth IRA, don't answer Yes if you have a 401(k), 403(b), or TSP—unless you have an IRA in addition to any of these.
Any payment from your traditional balance is considered taxable income since you've deferred paying taxes on this money . This includes your contributions, any agency or service contributions, and the earnings .
| Property Tax Rate *lowest to highest | State | Tax traditional TSP withdraws? |
|---|---|---|
| 0.66% | Arizona | YES |
| 0.69% | Idaho | YES |
| 0.71% | Tennessee | NO |
| 0.76% | California | YES |
A 1099-R reports distributions from retirement accounts. Distributions from other sources may also be reported on a 1099-R, and it's possible to get one even if you're not making withdrawals to fund your retirement.
I have both Roth IRA and traditional IRA style accounts in my TSP. No, you should not include your TSP contributions separately on your tax return. All you have to do is report W2 data in Turbo Tax exactly as it appears on the form. The TSP plan contributions you elect to make come directly out of your salary.
Do you get a 1099 for a TSP loan?
IRS Form 1099-R — In mid-January, the TSP will mail IRS Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to participants who received a withdrawal between January 1 and December 27, 2023, and/or a taxed or foreclosed loan between January 1 and ...
We'll withhold 10% on the taxable portion of your withdrawal for federal income tax. You have the option of changing withholding to any percentage you want, including to 0%. The taxable portion of your withdrawal is subject to federal income tax at your ordinary rate. Also, you may have to pay state income tax.
All of the monies distributed from a traditional TSP account are taxable in the year that the monies are paid to the account owner. Withdrawals made from the TSP are taxed as ordinary income. This is because neither the contributions nor the earnings have been included previously in the account owner's taxable income.
The 2024 IRS annual limit for regular TSP contributions is $23,000, and the TSP Catch-up annual contributions limit is $7,500. The Catch-up contributions may be made in addition to regular TSP contributions, if you are age 50 or older (or will be turning age 50 in 2024).
The Rule of 55 allows workers who leave their job during or after the year they turn 55 to avoid paying the 10% early withdrawal penalty on their retirement account distributions. It doesn't matter why you are leaving, but you must be at least 55 years old in the calendar year you are leaving your job.
