Yes. As of January 28, 2026, the Thrift Savings Plan allows Roth conversions, and there are two ways to do one: an in-plan conversion that moves traditional TSP dollars into your Roth TSP balance without the money ever leaving the plan, or a rollover of traditional TSP funds to a private Roth IRA.1Federal Register. Roth In-Plan Conversion; Correction Either way, the taxable portion of the converted amount is added to your ordinary income for the year, so the size and timing of a conversion drive most of the planning.
The Two Ways to Convert
An in-plan Roth conversion reclassifies a chosen dollar amount from your traditional TSP balance as Roth TSP. The money stays invested in the same funds inside the TSP. Nothing is distributed to you, and nothing is withheld for taxes.2Thrift Savings Plan (TSP). Roth In-Plan Conversions Once converted, those dollars grow tax-free and qualified withdrawals in retirement come out tax-free.
A rollover to an outside Roth IRA moves the money out of the TSP entirely, into a Roth IRA at a bank or brokerage of your choosing. That opens up a wider range of investments, but the money is no longer inside the TSP.
Rollovers come in two flavors. A direct rollover sends funds straight from the TSP to the receiving custodian, with no withholding taken from the transfer itself.3Thrift Savings Plan. Changes to Tax Rules About TSP Payments You still owe income tax on the converted amount when you file. An indirect rollover sends you a check, gives you 60 days to deposit the money into a Roth IRA, and requires the TSP to withhold 20% of the taxable portion for federal income taxes.4Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions If you want the full original amount to reach the Roth IRA, you have to make up that 20% out of your own pocket and wait to recover the withheld money as a refund. Miss the 60 days and the whole distribution becomes taxable income, plus a possible 10% early withdrawal penalty if you’re under 59½. The direct rollover avoids all of that.
Who Is Eligible
The eligibility rules for an in-plan Roth conversion are broader than most participants expect. Active federal employees and uniformed services members can convert at any age. Separated participants and spouse beneficiary participants can also convert.5Federal Register. Roth In-Plan Conversions The age-59½ rule that governs in-service withdrawals does not apply here, because a Roth in-plan conversion isn’t a withdrawal — the money never leaves your TSP account.6The Thrift Savings Plan (TSP). In-Service Withdrawal Types and Terms
External rollovers to a Roth IRA are different. Because the money has to actually leave the plan, active employees face the same age-59½ threshold that applies to other in-service withdrawals. Separated participants can roll traditional TSP dollars to a Roth IRA at any time after leaving federal service.
There is no income limit on Roth conversions of any kind. Income limits apply to direct Roth IRA contributions, not conversions.7Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) Spousal consent is not required for an in-plan Roth conversion.8The Thrift Savings Plan (TSP). Roth In-Plan Conversions
Limits on In-Plan Conversions
The TSP’s final rule, codified at 5 CFR § 1650.60, sets several parameters:5Federal Register. Roth In-Plan Conversions
- Up to 26 Roth in-plan conversions per calendar year.
- Each conversion must be at least $500.
- You must keep at least $500 in each of your traditional contribution source balances (employee contributions, tax-exempt contributions, agency automatic 1% contributions, and agency matching contributions).
- Money invested in the Mutual Fund Window cannot be converted directly. Transfer it back into one or more TSP core funds first.
- Only vested funds are eligible. Agency automatic (1%) contributions require three years of service to vest for FERS employees.
The conversion comes proportionally from all your eligible traditional contribution sources. You cannot direct the conversion from one specific source or fund.8The Thrift Savings Plan (TSP). Roth In-Plan Conversions
What You’ll Owe in Taxes
The IRS treats the taxable portion of a Roth conversion as ordinary income in the calendar year the conversion is processed.7Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) Convert $50,000, and $50,000 gets added to your wages, pension income, and everything else on your return. A large conversion can push you into a higher bracket, which is why many participants split conversions across multiple years.
Tax-exempt contributions from combat zone service inside your traditional balance are not taxed again upon conversion. But you cannot cherry-pick only the tax-exempt portion. The conversion is proportional: if 10% of your traditional balance is tax-exempt and you convert $10,000, then $1,000 is non-taxable and $9,000 is taxable.8The Thrift Savings Plan (TSP). Roth In-Plan Conversions
Because an in-plan conversion never leaves your account, the TSP withholds nothing for taxes.9Thrift Savings Plan (TSP). Roth In-Plan Conversions You’ll owe income tax on a potentially large sum with no money set aside. That has to come from somewhere else: a savings account, higher payroll withholding, or quarterly estimated tax payments.
Estimated Tax Payments
If regular withholding won’t cover the extra liability, you may owe estimated tax payments to avoid an underpayment penalty. The IRS generally requires estimated payments when you expect to owe at least $1,000 after subtracting withholding and refundable credits, and your withholding will cover less than 90% of the current year’s tax or 100% of the prior year’s tax (110% if your prior-year adjusted gross income exceeded $150,000).10Internal Revenue Service. Estimated Tax
Quarterly due dates are April 15, June 15, September 15, and January 15 of the following year. If you’re still working, a simpler fix is often to increase federal income tax withholding on your W-4 for the rest of the year. Withholding is treated as paid evenly throughout the year regardless of when it was actually deducted, which can help you avoid a penalty even if you convert late in the year.
State Taxes
Most states also treat the conversion as ordinary income. Nine states have no state income tax on the conversion: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Everywhere else, state rates on conversions range from under 3% to over 13%.
The Two Five-Year Clocks
This is where TSP Roth conversions get tricky, especially if you’re under 59½. Two separate five-year clocks control how your Roth money is taxed on withdrawal.8The Thrift Savings Plan (TSP). Roth In-Plan Conversions
The earnings clock. Your Roth TSP earnings become qualified — meaning tax-free on withdrawal — once two conditions are both met: five years have passed since January 1 of the year you first contributed to (or first converted into) your Roth TSP balance, and you’ve reached age 59½, become permanently disabled, or died. If you started making Roth contributions in 2022, your earnings clock started January 1, 2022. A conversion in 2026 does not reset that clock. It only starts a new one if you had no prior Roth TSP balance.
The conversion-amount clock. Each individual conversion starts its own five-year clock beginning on January 1 of the conversion year. If you withdraw the converted dollars within five years and you’re under 59½, you’ll owe the 10% early withdrawal penalty on that amount. The rule exists to stop people from sidestepping the early withdrawal penalty by converting and immediately withdrawing.9Thrift Savings Plan (TSP). Roth In-Plan Conversions If you’re already 59½ or older when you convert, this second clock doesn’t matter.
How to Submit a Conversion Request
For in-plan Roth conversions, log in to My Account on tsp.gov. No paper forms are required.11The Thrift Savings Plan (TSP). Forms and Resources The system walks you through picking the dollar amount.
For an external rollover to a Roth IRA, use the same My Account portal to initiate a withdrawal or distribution request. Have the receiving institution’s name, mailing address, taxpayer identification number, and your Roth IRA account number ready before you start. Pick the direct rollover option to avoid the 20% mandatory withholding and the 60-day redeposit deadline.
The TSP processes requests every business day. Requests entered before noon Eastern time are processed that same night; anything after noon goes through the following business night.12The Thrift Savings Plan (TSP). Withdrawals in Retirement You can cancel or change a request only until noon on the day it’s scheduled for processing.
Year-End Deadline
A conversion counts toward the tax year in which it is processed, not the year you submit the request. To land a conversion in the current tax year, the request has to be processed by the last business day of the year.9Thrift Savings Plan (TSP). Roth In-Plan Conversions With the noon cutoff, don’t wait until December 31. Build in a few business days of buffer.
After year-end, the TSP sends you a Form 1099-R reporting the conversions. Keep your own records of each conversion date and amount too. If you’re tracking multiple five-year clocks, the 1099-R alone won’t break those out.
A Note on Required Minimum Distributions
Starting with tax year 2024, Roth TSP balances are no longer subject to required minimum distributions during the participant’s lifetime.13The Thrift Savings Plan (TSP). SECURE 2.0 and the TSP Only your traditional balance counts toward RMD calculations. One exception: spouse beneficiary participant accounts still calculate RMDs based on the entire account balance, including Roth money.