Roth TSP to Roth IRA: The 5-Year Trap Nobody Warns You About

Last Updated: April 19, 2026

You can roll your Roth TSP into a Roth IRA. The TSP website says so. Your HR office will confirm it. The IRS allows it.

What nobody explains clearly is that your Roth TSP 5-year clock does not come with you. When Roth TSP earnings land in a Roth IRA, the Roth IRA applies its own 5-year rule. If you don't already have a Roth IRA with a satisfied clock, you're starting over. And if you're under 59.5 or recently separated, the tax consequences can be significant.

This is the decision matrix that should exist on TSP.gov but doesn't.

Key Takeaways

• Your Roth TSP 5-year holding period does NOT transfer to a Roth IRA
• Contributions (basis) always roll over tax-free and can be withdrawn anytime
• Earnings are the problem. Their tax treatment depends on two separate 5-year clocks
• The fix is simple: open a Roth IRA and fund it with even $1 before you roll over. That starts the Roth IRA clock early.
• Direct rollover only. Indirect rollovers trigger 20% mandatory withholding on non-qualified earnings.
• Rolling over eliminates Roth TSP RMDs, which is the strongest reason to do it.

Two 5-year rules, two clocks

This is where people get lost. There are two separate 5-year holding requirements, and they run independently.

Clock 1: Roth TSP. Starts January 1 of the year you made your first Roth TSP contribution. If you started contributing Roth TSP in 2022, the clock satisfies on January 1, 2027. This clock determines whether your Roth TSP distribution is "qualified" when it leaves the TSP.

Clock 2: Roth IRA. Starts January 1 of the year you made your first-ever Roth IRA contribution or conversion, across all Roth IRAs you've ever owned. If you opened a Roth IRA in 2019, the clock is already satisfied. If you've never had a Roth IRA, the clock starts when you do the rollover.

The trap: satisfying Clock 1 does not satisfy Clock 2. They are separate systems with separate start dates.

The decision matrix

Your Age	Roth TSP 5-Year Met?	Have a Roth IRA 5+ Years Old?	Tax on Earnings After Rollover
59.5+	Yes	Yes	Tax-free
59.5+	Yes	No	Tax-free (earnings came over as basis)
59.5+	No	Yes	Taxable until TSP clock would have been satisfied
59.5+	No	No	Taxable until both clocks satisfied
Under 59.5	Any	Any	Contributions: free. Earnings: taxable + 10% penalty

The best-case scenario (row 2): If you are 59.5 or older AND your Roth TSP 5-year clock was already satisfied before you rolled over, the earnings arrive in the Roth IRA as basis, not earnings. They are immediately accessible tax-free regardless of whether the Roth IRA clock is satisfied. This is the ideal time to roll over.

The worst case (row 4): You're 59.5+, your Roth TSP clock is not yet met (started recently), and you've never had a Roth IRA. Now you need both clocks to run out before earnings are tax-free. That could mean waiting 5 years after the rollover.

The $1 fix that prevents the trap

If you don't already have a Roth IRA, open one and contribute even $1 before you roll over your Roth TSP. A contribution made by April 15, 2026, can be designated as a 2025 contribution. That sets the Roth IRA clock at January 1, 2025.

If you plan to separate in 2028 and roll over your Roth TSP then, the Roth IRA clock would already be satisfied (2025 + 5 = January 1, 2030, but the clock requirement is met after 5 tax years, which ends January 1, 2030). If you wait until separation to open the Roth IRA, the clock starts from scratch.

There is no minimum balance required to open a Roth IRA. Most brokerages (Fidelity, Schwab, Vanguard) let you open one with $0 and contribute any amount. The clock starts as soon as you make a contribution for any tax year.

Direct vs indirect: don't make this mistake

Direct rollover: TSP sends money directly to your Roth IRA custodian. No withholding. No 60-day deadline pressure. This is what you want.

Indirect rollover: TSP sends you a check. If your Roth TSP distribution is not qualified (either under 59.5 or 5-year clock not met), the TSP withholds 20% federal tax on the earnings portion. You must deposit the full amount, including the 20% that was withheld, into the Roth IRA within 60 days. That means you need to come up with the 20% out of pocket.

If you can't cover the 20%, the shortfall is treated as a taxable distribution. You'll owe income tax plus a 10% early withdrawal penalty if you're under 59.5.

There is no good reason to do an indirect rollover from Roth TSP to Roth IRA. Always request a direct transfer.

Why rolling over eliminates RMDs

Roth TSP is subject to Required Minimum Distributions starting at age 73 (75 for those born 1960 or later). This is one of the few ways Roth TSP is worse than a Roth IRA.

Roth IRAs have no RMDs during the owner's lifetime. By rolling your Roth TSP into a Roth IRA, you eliminate the RMD requirement entirely. Your Roth money can grow tax-free for as long as you live.

For someone with $200,000 in Roth TSP at age 73, the first RMD would be approximately $7,547 (using the Uniform Lifetime Table divisor of 26.5). That is $7,547 forced out of tax-free growth. Over 20 years, the cumulative forced distributions and lost growth add up to tens of thousands of dollars.

This alone is reason enough to roll over. But only if you understand the 5-year clock interaction first.

The 2026 Roth in-plan conversion wrinkle

On January 28, 2026, the TSP launched Roth in-plan conversions. If you converted traditional TSP money to Roth TSP this year, that conversion starts its own 5-year clock inside the TSP (distinct from your original Roth TSP contribution clock).

If you later roll the converted Roth TSP money to a Roth IRA, the conversion 5-year clock (Rule 3, the 10% penalty clock) travels with it. Unlike the earnings clock, the conversion clock does transfer. This means converted amounts withdrawn from the Roth IRA within 5 years of conversion AND before age 59.5 are subject to the 10% early withdrawal penalty.

For most federal employees who are 59.5+, this doesn't matter. For younger employees who did a 2026 Roth conversion and plan to separate before 2031, it could.

When to roll over (and when not to)

Roll over if:

• You are 59.5+ and your Roth TSP 5-year clock is satisfied (best case, row 2)
• You want to eliminate RMDs on your Roth money
• You want broader investment options than TSP's 5 funds + mutual fund window
• You have a pre-existing Roth IRA with a satisfied clock

Don't roll over if:

• You separated between 55 and 59.5 and want penalty-free access (TSP Rule of 55 applies, but Roth IRA early withdrawal rules are stricter)
• You want TSP's ultra-low expense ratios (0.05-0.06%) for a while longer
• Your Roth TSP 5-year clock is not met AND you don't have a pre-existing Roth IRA AND you need earnings access soon

Consider a partial rollover if:

• You want RMD elimination on most of the balance but want to keep some in TSP for the G Fund safety net

Model your TSP balance

Use the TSP Calculator to project your Roth TSP growth under different contribution and withdrawal scenarios. For pension planning alongside your TSP strategy, the FERS Retirement Calculator models your total retirement income.

Frequently Asked Questions

Does rolling Roth TSP to a Roth IRA reset the 5-year clock?

Your Roth TSP holding period does not transfer. The Roth IRA applies its own 5-year clock, starting January 1 of the year you made your first-ever Roth IRA contribution or conversion. If you already have a Roth IRA that's 5+ years old, the clock is already satisfied and the reset is a non-issue.

Can I withdraw my Roth TSP contributions after rolling to a Roth IRA?

Yes, always. Contributions become basis in the Roth IRA and can be withdrawn at any time, at any age, with no tax and no penalty. Only earnings are subject to the 5-year rules.

Should I do a direct or indirect rollover?

Direct. With an indirect rollover, the TSP withholds 20% federal tax on the earnings portion of non-qualified distributions. You must come up with that 20% out of pocket within 60 days or it becomes a taxable distribution.

Does Roth TSP have required minimum distributions?

Yes. Unlike a Roth IRA, Roth TSP is subject to RMDs starting at age 73 (75 for those born 1960+). Rolling to a Roth IRA eliminates the RMD requirement, letting your money grow tax-free indefinitely.

Can I do a partial Roth TSP rollover?

Yes. You can roll over some and leave the rest in TSP. Traditional and Roth portions are elected separately.

Related Resources

• TSP Calculator: Project your balance under different scenarios
• FERS Retirement Calculator: Model your total retirement income
• TSP Roth vs Traditional: Which account type is right for you
• Roth TSP Conversion Tax Trap: IRMAA and bracket stacking risks
• TSP Roth In-Plan Conversion Guide: The 2026 conversion option explained
• TSP Withdrawal Guide 2026: All withdrawal options compared
• TSP RMD Tax Problem: When a big TSP balance becomes a tax issue
• TSP Guide 2026: Complete TSP reference

Sources

• TSP.gov: Distributions and Rollovers (tspfs05.pdf)
• IRS Topic 413: Rollovers from Retirement Plans
• MyFederalRetirement: Roth TSP/Roth IRA Rollover Rules
• STWServe: Roth IRA Rollover 5-Year Rule Analysis
• FedSmith: Roth TSP RMD Elimination Strategy