Hey guys, I had this situation come up with a TSP transfer and made a post out of it. Hopefully it will be helpful if you guys have a similar situation. You can find the whole post here. If anyone knows the answer to the last question, let me know.

My investor was an active duty Army soldier and had contributed to a TSP account while on active duty. He then left the military completely and came back in as a Reservist. He is currently a Reservist, and had not transferred or withdrawn his TSP money during the two year period he was out of the military completely. The general rule for TSP accounts is that you are not able to transfer or withdraw them while still employed with the federal government, with some exceptions that you can find on the TSP website. Those exceptions didn’t apply here. The question was whether he was able to transfer his account from the TSP to an IRA. In his situation, although he is now employed by the federal government as an Army Reservist, he was able to transfer the account into an IRA because he had a break in service of at least 31 days and had not contributed to the TSP since coming back into the Army. This was the answer that TSP gave me.

That brings up a few other interesting questions, not necessarily applicable here, but possibly applicable to other investors. What if an investor had contributed to a TSP account while on active duty in the military, but is now a Reservist and is not currently contributing to their TSP? Can that investor transfer his TSP to an IRA? The answer I was given was no, they cannot. Since they are still employed and receiving paychecks from the federal government as a Reservist, they would still be considered a federal employee and could not transfer or withdraw (subject to some exceptions not relevant here).

I have one last question that I have not been able to find the answer to, and TSP was no help. A member of the active duty military contributes to a TSP account, but then goes into the Individual Ready Reserve (IRR) and does not collect a regular paycheck from the federal government. However, they most likely still collect some retirement points, and possibly some pay once a year for their annual check-in/medical exam. Can that investor transfer his TSP money into an IRA? My guess would be no since they are still under contract as a member of the military. Anyone out there know this definitively or dealt with a situation like this?