Tax rules differ depending upon which method you choose to move your IRA or eligible plan money into the TSP.
Transfers
If you do a transfer into the TSP, there is no immediate tax liability. Depending on the type of money you transfer, you may be subject to income tax when you withdraw your TSP account. For more information, see the TSP tax notice “Important Tax Information About Payments From Your TSP Account.”
Rollovers
If you decide to do a rollover, or if your plan has already sent you a check for your account balance, you will have 60 days to complete the transaction. The 60 days begins on the date when you receive the funds from your plan.
You may roll over all or part of the money you receive. Your traditional IRA or former plan should withhold the appropriate amount for taxes before it sends the money to you. Therefore if you want to roll over your entire balance, you will have to make up the difference (i.e., the amount withheld for taxes) from your own funds. Any amount that you do not roll over may be subject to Federal income tax and it may also be subject to a 10% early withdrawal penalty tax.
