Several years ago I rolled my traditional IRAs into my federal Thrift Savings Plan (TSP), which is like a 401(k) plan for federal employees. In a few years I must begin taking required minimum distributions (RMDs) from my retirement accounts. What happens to my IRA money? Did it get blended into the TSP or will the plan report proportional distributions of my IRA and TSP money?

Your IRA money is blended into your TSP account. IRAs that are rolled into an employer-sponsored retirement account become part of that account.

As you know, you must start taking RMDs from individual retirement accounts after turning 72 even if you’re still working. But the TSP has a slightly different RMD rule: Even after you turn 72, you can postpone taking RMDs from your TSP account until you leave the job. That's also true for most 401(k)s: You don't have to start taking RMDs, even after turning 72, if you're still working for the 401(k) plan's sponsor. (The exception: If you own 5% or more of the company that employs you, then you must begin taking RMDs from that company's 401(k) plan at age 72 even if you still work there.)

Another reason people sometimes decide to roll IRAs into a 401(k) is that 401(k) plans typically let you start tapping your account penalty-free if you leave your job after age 55. But you can't freely tap an IRA without a penalty until you’re 59½.

Finally, the best employer-sponsored plans feature lower fees than IRAs and extra services, like free financial advice. But readers be warned: Other 401(k)s offer a limited menu of expensive, mediocre investments. It’s important to do a careful comparison before deciding to roll IRAs into a 401(k).

The bottom line

It sometimes makes sense to roll IRAs into an employer-sponsored retirement plan.

More information

bit.ly/nerdwalletIRAto401k

irs.gov/taxtopics/tc558

TO ASK THE EXPERT Send questions to act2@newsday.com. Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.

Newsday LogoSUBSCRIBEUnlimited Digital AccessOnly 25¢for 5 months
ACT NOWSALE ENDS SOON | CANCEL ANYTIME