The Thrift Savings Plan (TSP) posted information about a new option that will be available in My Account section of a TSP participant’s account on January 28, 2026.
You have the option to convert a portion of money from your traditional (pre-tax) balance to your Roth (after-tax) balance in your TSP account. This is called a “Roth in-plan conversion.” If you don’t have a Roth TSP balance in your TSP account, your first Roth in-plan conversion will create one.
The first questions you should ask yourself when you consider doing a Roth in-plan conversion are about the immediate effects on taxes you would owe:
- How will it affect my taxable income for the year?
- How much income tax will I need to pay on the amount of money I convert?
- Will this conversion raise my federal marginal tax rate?
- Do I have enough money to pay the income tax on the conversion?
Roth in-plan conversions are complex, and there’s more to think about than what’s covered here. This page highlights some key points, and we strongly recommend that you consult a tax advisor to plan your conversion strategy.
Once you do a Roth in-plan conversion, it cannot be reversed or changed.
Paying taxes on a Roth in-plan conversion
When you convert pre-tax money from your traditional TSP balance, your Roth in-plan conversion amount becomes part of your taxable income for the year. This means that you’ll owe income tax on the conversion amount at your income tax rate. Because the conversion adds to your total income, it could push you into a higher tax bracket.
You must pay the income tax on the conversion amount using personal funds from another source, such as a savings account. You cannot use part of the amount you’re converting to pay taxes.
The conversion amount is taxable at the time of conversion. Because there is no withholding on Roth in-plan conversions, you may be required to make estimated tax payments to the IRS. We’ll report the total amount of conversions you make during the year to the IRS, to the appropriate state tax agencies if applicable, and to you on IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
For help with how much and when you need to pay taxes on a conversion, you should consult a tax advisor to avoid IRS underpayment penalties. The TSP cannot provide tax advice.
Eligibility for Roth in-plan conversions
You’re eligible to do a Roth in-plan conversion if you have a vested traditional balance in your TSP account. You must also be able to meet the minimum amounts explained in this section.
Who can do a Roth in-plan conversion
Roth in-plan conversions are available to all TSP participants:
- Active participants (current federal civilian employees and uniformed services members)
- Separated and retired participants
- Spouse beneficiary participants
Non-spouse beneficiaries are not eligible for Roth in-plan conversions.
Parts of your traditional balance you can convert
Contributions and earnings in your traditional TSP balance are eligible for conversion. When you choose your conversion amount, the money will be taken proportionally from your eligible contribution sources:
- Your own traditional payroll contributions
- Agency/Service Matching Contributions (if applicable)
- Agency/Service Automatic (1%) Contributions (if applicable)
- Traditional rollover contributions you’ve made
You can find your traditional TSP contribution sources and your balance for each source listed in My Account and on your account statements. We keep track of contribution sources in your TSP account because some transactions are only available for certain sources. For example, you cannot take a loan or hardship withdrawal from agency/service contributions.
For uniformed services members with tax-exempt contributions
If your traditional balance includes a nontaxable amount, such as tax-exempt contributions from serving in a combat zone, your conversion amount will include a nontaxable amount in the same proportion as taxable and nontaxable amounts in your traditional balance. For example, if your traditional balance is $100,000 with a $10,000 nontaxable amount, then 10% of your traditional balance is nontaxable. If you convert $10,000 to your Roth TSP balance, then $9,000 of the conversion amount would be from the taxable portion and $1,000 would be from the nontaxable portion.
Minimum conversion amount
The minimum amount for each Roth in-plan conversion is $500.
Leave-behind amount
For contribution sources that include your own payroll contributions and agency/service contributions, there must be a minimum of $500 left in each source after a Roth in-plan conversion. If one of the sources in your traditional balance has $500 or less, then the conversion amount will be taken only from the other sources in your account.
Rollover contributions don’t have a minimum leave-behind amount.
Spouse beneficiary participant accounts aren’t subject to a leave-behind amount.
There is no maximum limit to how much you can convert other than the leave-behind amounts that apply to your account.
Up to 26 Roth in-plan conversions per calendar year
You can make up to 26 Roth in-plan conversions per calendar year. If you have more than one TSP account, this limit applies to each account separately. For example, if you have both a civilian TSP account and a uniformed services TSP account, you can make up to 26 conversions in each account.
Spousal consent not required
Spousal consent is not required to complete a Roth in-plan conversion.
Required minimum distributions (RMDs) must be taken before conversion
If you are subject to RMDs, you must withdraw the RMD amount before you can do a Roth in-plan conversion each year. You cannot satisfy the RMD amount by converting money from your traditional TSP balance to your Roth TSP balance.
Mutual fund window investments not eligible
You can only convert money invested in TSP funds, so you cannot directly convert money you’ve invested in the mutual fund window. If you want to do a Roth in-plan conversion with money in your mutual fund window account, you need to sell shares and then request a transfer back to your TSP funds before doing a Roth in-plan conversion.
Deciding whether a Roth in-plan conversion is right for you
You can do a Roth in-plan conversion at any time while working and in retirement. A tax advisor can help you decide whether a Roth in-plan conversion would be an advantage to you and when the best time would be to do one. For example, many people choose to do conversions during years that they have less income and have a lower marginal tax rate.
There is a lot more to consider before doing a Roth in-plan conversion. You should consult a tax advisor to discuss the advantages and disadvantages specific to your situation.
Five-year rules that apply to Roth in-plan conversions
After you do a Roth in-plan conversion, there are two separate five-year rules that apply to withdrawals from your Roth TSP balance.
The rules seem similar, which may be confusing, so it’s important to understand the key differences:
The first five-year rule applies only to the earnings in your Roth TSP balance. This rule determines whether you pay income tax on those Roth earnings.
The second five-year rule applies only to the money converted from your traditional balance to your Roth TSP balance. This rule determines whether you pay a 10% early withdrawal penalty on converted money.
Five-year rule for Roth earnings
The first five-year rule only applies to the earnings in your Roth TSP balance and determines whether you can withdraw those earnings tax-free. Earnings refer to money that has accrued over time from your TSP investments—so earnings on Roth TSP contributions and earnings on Roth in-plan conversions. Roth earnings aren’t taxed if the distribution is “qualified.” Roth earnings become “qualified” and can be withdrawn tax-free when they meet both these IRS requirements:
5 years have passed since January 1 of the calendar year in which you made your first Roth TSP contribution (or your first Roth in-plan conversion if your first conversion creates your Roth TSP balance).
You have reached age 59½, have a permanent disability, or are deceased.2
If earnings don’t meet both requirements, then they aren’t qualified, and you’ll pay income tax when you withdraw them.
Five-year rule for converted amounts
The second five-year rule applies only to money converted from your traditional TSP balance to your Roth TSP balance. Each Roth in-plan conversion you do starts a five-year clock that begins on January 1 of the year of each conversion. If you make a withdrawal that includes converted money within five years of conversion, you must pay a 10% early withdrawal penalty tax to the IRS unless an exception applies, such as being age 59½ or older.1
This five-year rule only applies to the money you converted, not the earnings on that money. This IRS rule is designed to prevent people under the age of 59½ from avoiding the early withdrawal penalty by converting to Roth. It’s separate from the five-year rule that determines whether your Roth earnings are qualified and can be withdrawn tax-free.
1. You can find the full list of exceptions for the 10% early withdrawal penalty tax in the TSP tax booklet, Tax Rules about TSP Payments.
2. We cannot certify to the IRS that you meet the IRS definition of disability when your taxes are reported. You must provide the justification to the IRS when you file your taxes. “Deceased” means that Roth earnings inherited after your death automatically meet this condition—your Roth account must still meet the 5-year condition for earnings to be considered “qualified” and tax-free for beneficiaries