Thursday, June 11, 2026
    Banner Top
      Financial Planning — TSP & Roth

      TSP Roth
      Conversion Guide.

      A Roth TSP or Roth IRA conversion means paying taxes now in exchange for tax-free growth and withdrawals later. For federal employees and retirees, understanding the Roth TSP vs. traditional TSP comparison — and what happens when you convert — is essential to long-term tax planning.

      Roth vs. traditional comparison Converting TSP to Roth IRA
      Tax-freeRoth earnings after 5-year holding period + age 59½
      No RMDRoth IRAs have no required minimum distributions (unlike Roth TSP)
      No limitNo income limit for Roth TSP contributions (unlike Roth IRA)
      Tax-free
      Roth earnings after 5-year holding + age 59½ or disability
      No RMD
      Roth IRA — no lifetime RMDs (Roth TSP still has RMDs; roll over to avoid)
      No income limit
      For Roth TSP contributions — unlike Roth IRA direct contributions
      Consult first
      Tax impact of conversion can be significant — always verify with a tax advisor
      01 · Overview

      Roth TSP —
      the core advantage.

      Roth contributions are taxed today but grow tax-free forever. Once your money is in a Roth and the holding requirements are met, all dividends, interest, and capital gains are completely tax-free — one of the very few such vehicles available to investors.

      The two-balance TSP account

      Once you begin making Roth contributions, your TSP account will have up to two separate balances: a traditional (pre-tax) balance and a Roth (after-tax) balance. Agency matching contributions always go into your traditional balance — they cannot be directed to Roth.

      Money already in your TSP when you start Roth contributions remains in the traditional balance. You cannot convert existing TSP balances to Roth within the TSP — only a rollover out to a Roth IRA accomplishes a full conversion.

      Electing Roth is not all-or-nothing. You can split contributions between traditional and Roth — diversifying your tax treatment for retirement.

      Roth vs. traditional TSP — side by side

      Feature Roth TSP Traditional TSP
      Contributions taxed? Yes — contributions come from after-tax dollars. No immediate tax deduction. No — contributions reduce your taxable income today (pre-tax).
      Growth taxed? No — earnings grow tax-free if 5-year rule and age 59½ requirements are met at withdrawal. Deferred — earnings grow tax-deferred; taxed when withdrawn.
      Withdrawals taxed? No — qualified withdrawals (5 years + age 59½, disability, or death) are fully tax-free. Yes — all withdrawals (contributions + earnings) taxed as ordinary income.
      Agency match goes to? Agency contributions always go to traditional balance regardless of your contribution election.
      RMDs required? Yes — Roth TSP is subject to RMDs (unlike Roth IRA). Roll to Roth IRA before RMD age to avoid. Yes — RMDs begin at age 73.
      Income limits? None — no income cap for Roth TSP contributions. None — no income cap for traditional TSP contributions.
      Inherited accounts? Beneficiaries pay no income tax on inherited Roth TSP/IRA accounts open at least 5 years. Beneficiaries pay ordinary income tax on all inherited traditional distributions.
      02 · Roth Details

      Roth TSP key
      characteristics.

      ✓ Money already in your TSP when you begin Roth contributions stays traditional — it cannot be converted to Roth within the TSP.
      ✓ Agency automatic and matching contributions always go into your traditional balance, even if 100% of your own contributions are Roth.
      ✓ Any contribution allocation or interfund transfer applies to both your Roth and traditional balances proportionally.
      ✓ Roth TSP is similar to a Roth 401(k) — not a Roth IRA. No income limits apply to contributions.
      ✓ Loans, in-service withdrawals, and partial withdrawals come out on a pro-rata basis — proportionally from both traditional and Roth balances.
      ✓ You can transfer Roth 401(k), 403(b), and 457(b) money into your Roth TSP balance — but not from a Roth IRA.
      ✓ At withdrawal, you can separately transfer Roth and traditional balances to different IRAs or employer plans.

      How to sign up for Roth contributions

      Elect Roth contributions the same way you've always elected traditional contributions — through your agency's electronic system or Form TSP-1 (TSP-U-1 for uniformed services). For catch-up contributions, use your agency system or Form TSP-1-C. Check with your agency to confirm whether elections should be made electronically or by form.

      Two ways to get Roth money into your TSP

      You cannot convert your existing traditional TSP balance to Roth within the TSP system. There are only two ways to add Roth money:

      1

      From future pay contributions

      Notify your agency or service that you want to make Roth contributions going forward. All future Roth contributions come from after-tax dollars; they do not reduce your current taxable income.

      2

      Transfer from eligible Roth employer plans

      Transfer Roth money directly from a Roth 401(k), Roth 403(b), or Roth 457(b) into your Roth TSP balance. Direct transfers from Roth IRAs are not permitted into the TSP.

      Converting your TSP to a Roth IRA

      To convert your traditional TSP balance to Roth, you must roll it out of the TSP into a Roth IRA. This is a taxable event — the full amount converted is included in your taxable income for the year of conversion.

      The conversion strategy — paying taxes now for tax-free growth later

      Federal employees and retirees may find that converting some or all of their TSP or traditional IRA savings to a Roth IRA saves significant taxes on investment earnings and growth over the long term. The conversion makes the most sense when you expect to be in a higher tax bracket in retirement than you are today — or when your account has significant growth potential ahead.

      Once the Roth IRA has been open at least 5 years, earnings are tax-free at withdrawal. Beneficiaries also pay no income taxes on inherited Roth IRA accounts open at least 5 years.

      Additionally, unlike traditional IRAs, Roth IRAs do not require minimum distributions during the owner's lifetime — a major advantage over leaving money in a traditional TSP or IRA after age 73.

      Conversion means paying all deferred taxes now. Transferring your traditional TSP to a Roth IRA does not allow you to avoid the taxes — it accelerates them. The full amount converted is taxable in the year of the transfer. Depending on the amount, this may push you into a higher tax bracket or trigger estimated tax obligations. Confirm your tax liability before initiating any conversion.

      Conversion Q&A

      You must be eligible to withdraw your TSP account and the payment must qualify as an eligible rollover distribution — meaning you must be eligible for an age-based in-service withdrawal (age 59½+) or a post-separation withdrawal. Once eligible, you can transfer all or part of your balance to a Roth IRA.
      Yes — the full amount transferred is taxable in the year of transfer. Roth IRAs are funded with after-tax money. Your traditional TSP contributions and their earnings have never been taxed, so the entire amount is ordinary income in the conversion year. Future earnings on the Roth IRA will be tax-free if the 5-year and age requirements are met.
      No — because a Roth IRA transfer is treated as an eligible rollover distribution, the TSP does not withhold taxes on direct transfers. However, you are still liable for the income tax. Make sure you have the funds available to pay your tax bill when it comes due. If receiving payment directly (not as a direct rollover), there is mandatory 20% federal withholding.
      No. The 10% early withdrawal penalty does not apply to transfers to a Roth IRA, traditional IRA, or eligible employer plan. However, you may be subject to the penalty later if you withdraw Roth IRA earnings before meeting the eligibility requirements.
      No dollar limit — you can transfer any amount. However, remember that the entire amount is taxable in the year of transfer and may push you into a higher tax bracket. Consider converting in stages across multiple years to manage the tax impact. Consult a tax advisor before proceeding.
      Yes, if you received an eligible rollover distribution directly, you can roll it into a Roth IRA. Standard 60-day rollover rules apply. Note that if you received the payment directly, there was mandatory 20% federal tax withholding — to roll the full amount into the Roth IRA, you must make up the withheld 20% from other funds and claim it back when you file your tax return.
      Tax rules on Roth IRA transfers are complex. Consult a qualified tax advisor before initiating any conversion. The TSP strongly recommends this, and so do we. See IRS Publication 590-B for detailed guidance on Roth IRA distributions and conversions.
      03 · Resources

      Roth TSP &
      IRA guidance.

      IRS Roth guidance, TSP forms, and planning articles on Roth conversions for federal employees and retirees.

      Fact Sheet

      TSP Roth Contributions fact sheet — official TSP guidance

      tsp.gov · PDF↗
       IRS

      IRS Publication 590-B — Distributions from Individual Retirement Arrangements

      IRS.gov↗
       Forms

      TSP Forms & Publications — withdrawal and transfer forms

      tsp.gov↗
       Guide

      TSP.gov — Withdrawal options including Roth and traditional rollovers

      tsp.gov↗
       Guide

      TSP Considerations — withdrawal options, RMDs, stay-or-go decision

      federalretirement.net↗
       Guide

      TSP Fund Choices — G, F, C, S, I and Lifecycle Funds explained

      federalretirement.net↗