This TSP Roth conversion guide covers what federal employees need to know now that the Thrift Savings Plan in-plan conversion feature is live. Since January 28, 2026, you can convert traditional (pre-tax) TSP dollars into Roth (after-tax) dollars inside your own account, with no rollout to an IRA. This page covers the mechanics, the 2026 rules and limits, the tax cost, and when a conversion may fit.
A TSP Roth conversion moves money from your traditional TSP balance to your Roth TSP balance. As of January 28, 2026, federal employees convert in-plan on TSP.gov with no rollover. The converted amount is taxed as ordinary income that year, the TSP withholds nothing, and the decision is permanent. Minimum is $500 per conversion, up to 26 conversions a year.
What is a TSP Roth (in-plan) conversion?
A TSP Roth in-plan conversion moves money from your traditional (pre-tax) TSP balance into your Roth (after-tax) TSP balance inside the same account. The converted amount counts as ordinary income in the year you convert, but qualified future growth and withdrawals are tax-free. No money leaves the TSP, and no rollover to an outside IRA is required.
Talk With Craig Wear's Team
Craig has helped IRA millionaires save over $1 million each in unnecessary taxes. Find out if a Roth conversion strategy fits your retirement, with no sales pressure and no product pitch.
The trade is simple: you pay income tax now, at your current rate, so the converted dollars grow and come out tax-free later. Roth TSP balances also carry no lifetime RMDs for the owner. For the underlying concept, see the Q3 explainer on how Roth conversion planning works.
When did TSP in-plan Roth conversions start?
TSP in-plan Roth conversions launched January 28, 2026, and the feature is live today. Before that date, a federal employee could reach Roth status only by rolling traditional TSP dollars out to an IRA and converting there. As of 2026, active employees, separated participants, retirees, and spouse beneficiaries can convert directly in the My Account portal on TSP.gov.
The launch closed a long gap: the Roth TSP has existed since 2012, but participants could never move existing traditional money into it without leaving the plan.
How does the new in-plan TSP Roth conversion work?
You request an in-plan conversion in the My Account portal on TSP.gov and choose a dollar amount from your traditional balance. The TSP pulls the money proportionally across your traditional contribution sources, reclassifies it as Roth, and reports the taxable amount to the IRS. Nothing is withheld, so you plan the tax payment separately.
How do I actually do it in the My Account portal (step by step)?
Log in to My Account on TSP.gov, open the withdrawals and distributions area, and select the Roth in-plan conversion request. Enter a dollar amount of at least $500, confirm the sourcing and tax acknowledgment, and submit. Requests confirmed before noon Eastern generally process the same business day; later requests process the next business day.
- Sign in to My Account at TSP.gov and verify your identity.
- Open the withdrawals and distributions section, then choose the Roth in-plan conversion request.
- Enter the amount to convert, at or above the $500 minimum, keeping at least $500 in each traditional source.
- Review the confirmation that the amount is taxable ordinary income with no tax withheld, then submit. The TSP reports the taxable amount on a Form 1099-R for the year.
What are the rules, minimums, and limits?
Each TSP Roth conversion must be at least $500, and you must keep at least $500 in each traditional contribution source you draw from. You can request up to 26 conversions per calendar year, matching the biweekly cycle. The TSP takes the money pro-rata across your traditional sources and withholds no tax. There is no dollar cap on the total you convert.
| Rule | 2026 detail |
|---|---|
| Minimum per conversion | $500 |
| Balance you must leave | At least $500 in each traditional source (employee, matching, automatic 1%, rollover) |
| Conversions per year | Up to 26 (aligned to the biweekly cycle) |
| Annual dollar cap | None; conversions are uncapped |
| Tax withholding | None; you pay from outside funds |
| Sourcing | Proportional (pro-rata) across eligible traditional sources |
| Reversal | Not allowed; recharacterization of conversions ended in 2018 |
Because sourcing is proportional, a conversion draws a slice from every eligible traditional source at once. For sizing the amount, the Q3 walkthrough on how much to convert to Roth covers the math.
Who is eligible to convert?
Active federal employees, separated participants, retirees, and spouse beneficiaries with a traditional TSP balance can request an in-plan Roth conversion in 2026; you do not need to have separated from service. If you are subject to a required minimum distribution for the year, you must take that RMD first, because a conversion cannot satisfy or include an RMD.
How much tax will I owe on a TSP Roth conversion?
The full amount you convert is added to your ordinary income and taxed at your marginal federal rate, plus any state tax. A federal employee in the 22% bracket who converts $50,000 owes roughly $11,000 in federal tax; at 24%, about $12,000. The TSP withholds nothing, so you pay from outside savings.
A worked illustration for a single filer in 2026: with $60,000 of taxable income (inside the 22% bracket), converting $40,000 keeps you in the 22% band and adds about $8,800 of federal tax. Push the conversion to $80,000 and the top slice crosses into the 24% bracket (which reaches $201,775 for single filers). The Roth conversion break-even point guides the amount.
How do I pay the tax bill if TSP won’t withhold?
The TSP withholds no tax on in-plan conversions, so you cover the bill from outside funds, usually through quarterly estimated payments or increased W-4 withholding. Paying from taxable savings, rather than the converted dollars, keeps the full amount in the Roth balance to grow tax-free.
Estimated payments follow the quarterly calendar, and missing an installment can bring an IRS underpayment penalty. A conversion is not itself subject to the 3.8% net investment income tax, but the added income can push other investment income over the $200,000 single or $250,000 joint threshold where that tax applies; see the note on the net investment income tax in 2026.
Will a conversion raise my Medicare premiums (IRMAA)?
A large conversion raises your modified adjusted gross income, which can trigger the Medicare income-related monthly adjustment amount (IRMAA) on Part B and Part D. IRMAA uses a two-year lookback, so a 2026 conversion is measured against your 2028 premiums. The 2026 base Part B premium is $202.90, with surcharges starting above $109,000 in MAGI for single filers and $218,000 for joint filers.
The two-year lag means timing matters near Medicare age: the last conversion year that does not affect a future premium is generally the year you turn 62. Spreading conversions to stay under an IRMAA threshold can hold surcharges down while still moving money to Roth.
TSP in-plan conversion vs. rolling to a Roth IRA: how do they compare?
Both routes tax the converted amount as ordinary income the same way; the difference is where the money lives afterward. The in-plan TSP conversion is one step and keeps your dollars in the TSP low-cost funds. Rolling to a Roth IRA takes more steps but opens a wider investment menu and more flexible withdrawal rules. The right fit depends on your goals.
| Factor | TSP in-plan conversion | Roll to a Roth IRA |
|---|---|---|
| Steps | Single request inside the TSP | Roll traditional TSP to an IRA, then convert |
| Investment options | TSP funds (C, S, I, F, G, L, mutual fund window) | Individual stocks, bonds, ETFs, funds |
| Costs | Very low expense ratios | Varies by custodian and holdings |
| Withdrawal access | TSP withdrawal rules apply | Contributed and converted basis reachable per IRA rules |
| Owner RMDs | None on the Roth TSP balance | None on a Roth IRA |
| Tax on conversion | Ordinary income, no withholding | Ordinary income, no withholding |
When does a TSP Roth conversion make sense?
A TSP Roth conversion tends to fit well in a lower-income year, when you expect higher tax rates later, when you want to shrink future RMDs, or when tax-free legacy assets are a goal. The common thread is paying tax at a known, relatively low rate today to avoid a larger or less predictable bill in the future.
- Lower-income years. The gap after retirement but before Social Security and RMDs begin often opens room in a lower bracket to fill at a favorable rate.
- Reducing future RMDs. Traditional balances drive required distributions at age 73, or 75 for those born in 1960 or later (the first age-75 RMD year is 2035). Converting earlier lowers the base those RMDs are figured on. See the Q3 guide to required minimum distributions in 2026.
- Expecting higher rates. If you believe your bracket will rise, converting locks in today’s rate.
- Legacy planning. Heirs pay no income tax on qualified Roth distributions, raising the after-tax value passed on.
What are the risks and downsides?
A conversion creates an immediate tax bill, can push income into a higher bracket, and cannot be reversed. Converting when your balance is high also means paying tax on a value that a later market drop could erase. These factors make sizing and timing matter, and they are why many households convert in measured annual amounts rather than all at once.
- Immediate tax burden. The converted amount is fully taxable this year, so you need outside cash to cover it.
- Bracket bumping. A large conversion can lift the top slice of income into a higher marginal rate; filling to a bracket edge, not past it, contains the rate.
- Irreversibility. The IRS ended recharacterization of conversions in 2018, so a completed conversion is permanent.
- Market timing. Converting at a market peak means paying tax on value that may fall.
How can federal employees coordinate conversions with FERS and Social Security?
FERS annuity income and Social Security stack on top of a conversion, so they can fill the lower brackets before you convert a single dollar and can raise the share of Social Security that is taxable. Modeling all three together, rather than the conversion alone, shows the true marginal rate on each converted dollar and helps size conversions to a target bracket.
Consider an illustrative married couple, both age 65, filing jointly in 2026, with a $48,000 FERS annuity and $30,000 of taxable Social Security, for $78,000 of ordinary income. Their $32,200 standard deduction plus the $1,650 per-spouse age-65 addition and the $6,000-per-person senior deduction (available 2025 through 2028) totals $47,500 and brings taxable income before any conversion to $30,500, well below the top of the 12% bracket, which for joint filers reaches $100,800.
In this illustration the couple could convert about $68,000 and keep the converted dollars inside the 12% band, leaving roughly $2,300 of headroom below the $100,800 top. Because Social Security taxation and IRMAA thresholds move with total income, a conversion large enough to make more of the benefit taxable can raise the real cost above the headline rate. Many federal households convert as a multi-year sequence.
Work with Q3 Advisors
Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
Frequently asked questions
Can you convert traditional TSP to Roth TSP?
Yes. Since January 28, 2026, the TSP allows in-plan Roth conversions, so you can move traditional (pre-tax) TSP dollars into your Roth TSP balance without rolling money out of the plan. You request the conversion in the My Account portal on TSP.gov, in amounts of at least $500. The converted amount is taxed as ordinary income for that year.
How much tax will I pay on a TSP Roth conversion?
You pay ordinary income tax on the full converted amount at your marginal federal rate, plus any state tax. In 2026, a federal employee in the 22% bracket who converts $50,000 owes roughly $11,000 in added federal tax; at 24%, about $12,000. The TSP withholds nothing, so you pay the bill from funds outside the plan.
Is there a limit on how many times you can convert TSP to Roth?
Yes. You can request up to 26 in-plan Roth conversions per calendar year, a limit tied to the TSP biweekly cycle. There is no cap on the total dollars you convert across those transactions, though each conversion must be at least $500 and must leave at least $500 in every traditional source it draws from.
What is the 5-year rule for Roth TSP?
For Roth TSP earnings to come out tax-free, two tests must be met: you must be at least age 59 and a half, and five years must have passed since January 1 of the year of your first Roth TSP contribution. If a conversion establishes your Roth TSP, that first conversion starts the five-year clock for the earnings test.
Do you have to pay taxes on a TSP Roth conversion?
Yes. The entire amount you convert is added to your taxable income for the year and taxed as ordinary income; a conversion is not tax-free. The TSP does not withhold tax on in-plan conversions, so you pay through estimated payments or increased withholding from outside funds. Qualified withdrawals from the Roth balance later are tax-free.
Can federal retirees do a Roth conversion inside the TSP?
Yes. Retirees and separated participants with a traditional TSP balance can request in-plan Roth conversions in 2026, the same as active employees; spouse beneficiaries are also eligible. Retirees subject to a required minimum distribution must take the RMD for the year first, because a conversion cannot count toward or include an RMD.
Do I have to take my RMD before a TSP Roth conversion?
Yes. If you have reached your required beginning date (age 73, or 75 for those born in 1960 or later), you must take your full RMD for the year before converting. The rules do not allow a Roth conversion to satisfy the RMD, and an RMD amount itself cannot be converted, so the RMD comes out first as a taxable distribution.
