Last Updated: November 8, 2026 Reading Time: 8 min

You left federal service with most of your TSP in Roth and a smaller traditional balance, and you want all of it in a Roth IRA. Rolling TSP to a Roth IRA is allowed, but the pre-tax part of the traditional money is taxed in the year it moves, and three different five-year clocks decide when the earnings come out tax-free.

There's also a newer option. Since January 28, 2026, the TSP lets you convert traditional money to Roth inside the plan. It can't empty your traditional balance, though, and that one rule is why a rollover is sometimes the only way to finish the job.

Which route is open to you: rollover or in-plan conversion

Start here, because your employment status and age decide which door you can use.

Your situation Roll to a Roth IRA In-plan Roth conversion
Employed, under 59½ Not open Open, leaves $500 in each pre-tax source
Employed, 59½ or older Open, up to four age-based withdrawals a year Open
Separated, any age Open Open
Separated in or after the year you turned 55, now under 59½ Open, but the money that leaves loses the age 55 exception Keeps the money in the plan
Required minimum distribution due this year Take the RMD first; it can't be rolled Take the RMD first; the TSP won't process the conversion until it's satisfied

While you're still working, the regulation opens TSP withdrawals at 59½: "A participant who has reached age 59 1/2 and who has not separated from Government service is eligible" for age-based withdrawals, and you get four of them per calendar year (5 C.F.R. § 1650.31). Each withdrawal has a $1,000 minimum unless the request takes your entire vested account balance, your entire vested traditional balance, or your entire vested Roth balance.

Under 59½ and still on the payroll, there's no rollover route to a Roth IRA. A post-employment withdrawal isn't paid unless TSP records show you've separated.

Why the $500 rule pushes some people to a rollover

The TSP's in-plan conversion rule took effect January 28, 2026 (91 FR 1669). It lets you request up to 26 conversions a calendar year. Each one has to be at least $500, and Mutual Fund Window money has to move back to a core fund first.

The catch is in 5 C.F.R. § 1650.60(d): participants "must retain at least $500 in each of their tax-deferred employee contribution, tax-exempt contribution," agency automatic and agency matching balances. The board's stated reason is to cushion payroll errors and corrections. The text doesn't exempt people who have already left.

So an in-plan conversion can't move your whole traditional balance. A rollover has no such floor. The TSP will roll "all or any portion" of an eligible distribution directly to another plan or IRA (5 C.F.R. § 1650.25).

A worked example

This is an illustration, not a recommendation. Say you're 28, you've left federal service, and your $16,000 TSP is 63% Roth. Your own contributions all went to Roth, so the traditional 37% is agency money: automatic 1% and matching.

Route Traditional amount moved to Roth What stays in traditional
In-plan conversion About $4,920 at most $500 in automatic, $500 in matching
Rollover to a Roth IRA About $5,920 (37% × $16,000) Nothing, if you roll it all

Either way, the pre-tax traditional amount you move is income for the year. The rollover also starts your Roth IRA clock if you've never had a Roth IRA, and it starts a separate five-year clock on the converted traditional money.

How the tax works on each kind of TSP money

Traditional (pre-tax) money. The amount you roll over, less any after-tax amounts, is included in your income that year (26 U.S.C. § 408A(d)(3)(A); Notice 2020-62). The IRS model notice says that "in general, the 10% additional income tax on early distributions will not apply" to the rollover itself.

Roth TSP money. It moves without tax. Income limits on Roth IRA contributions don't block a Roth TSP rollover; the regulation allows it "even if such individual is not eligible to make regular contributions or conversion contributions" (26 C.F.R. § 1.408A-10).

  • If your Roth TSP money was already qualified when it left, all of it, earnings included, becomes withdrawable basis in the Roth IRA.
  • If the distribution wasn't qualified, the balance still moves without tax, but the contributions stay basis and the earnings stay earnings in the Roth IRA. (A distribution qualifies after the five-year period through age 59½, disability or death.)

Ask for a direct rollover. A check payable to you means 20% is held back from a traditional payment (IRS rollover rules). With a nonqualified Roth payment paid to you, 20% of the earnings is held back, and you'd have to replace it from other funds to roll the whole amount.

The withholding trap. Only the amount that lands in the Roth IRA gets rollover treatment. Any part taken out for tax instead is a plain withdrawal, and under 59½ with no exception it can owe the 10% tax too. Pay the tax from savings.

In-plan conversions work the same way on tax, with one difference. Nothing is withheld. The final rule says "participants must use personal funds from another source, such as a savings account, to satisfy their tax obligations." Plan for it at tax time.

The three five-year clocks on a TSP to Roth IRA rollover

Rolling TSP into a Roth IRA involves three separate five-year clocks, and they're easy to mix up.

Clock Starts How many Moves to the Roth IRA? What it controls
1. Roth TSP Generally Jan. 1 of your first Roth TSP contribution year; a qualifying direct rollover can carry an earlier start One, inside the plan No Whether a Roth TSP payment is qualified when it leaves
2. Roth IRA Jan. 1 of the tax year for which you first contributed to, converted to or rolled into any Roth IRA One per person, across all Roth IRAs A rollover can start it Whether Roth IRA earnings come out tax-free
3. Conversion Jan. 1 of each conversion or taxable rollover year One per conversion Yes The 10% tax on pulling converted money out early, before 59½

Clock 1, Roth TSP. To be tax-free, Roth TSP earnings need both: five tax years, generally counted from your first Roth TSP contribution year (a qualifying direct rollover from another plan's designated Roth account can supply an earlier start), and age 59½ (or disability or death) (26 U.S.C. § 402A(d)(2)).

Clock 2, Roth IRA. You have one Roth IRA clock, not one per account. Your Roth TSP years don't carry over: "the period that the rolled-over funds were in the designated Roth account does not count toward the 5-taxable-year period" (IRS designated Roth FAQ). If you have no older Roth IRA, the clock starts the year of the rollover. If you already have one, the rollover uses that older start date.

Clock 3, each conversion. Each traditional-to-Roth move starts its own five-year clock. Take that money out sooner, before 59½, and the 10% tax can apply even though you already paid income tax on it (26 C.F.R. § 1.408A-6). A 2026 in-plan conversion has its own five-year clock too, and rolling the money to a Roth IRA later doesn't erase it. For a 2026 conversion, that period runs to January 1, 2031.

Roth IRA withdrawals come out in a set order: contributions, then conversions, oldest first, then earnings. That ordering is why Clock 3 matters less to someone who has plenty of contributions in the account.

Three traps before you move anything

1. Leaving at 55 or later and rolling out before 59½. The 55 rule works in the TSP, not in an IRA. If you separate during or after the year you turn 55, TSP withdrawals avoid the 10% tax, but money you move to an IRA loses that exception (IRS exceptions table). Qualified public safety employees, including some federal roles, have an earlier version based on age 50 or 25 years of service under the plan, whichever comes first. Confirm that your occupation and service qualify on the IRS list. Keep what you may need before 59½ in the TSP.

2. Thinking 59½ makes everything tax-free. Age is only one of the tests. After a rollover, whether a Roth IRA withdrawal is qualified depends on the Roth IRA's five-year period plus a qualifying condition such as age 59½; the old TSP period doesn't also have to run out. The conversion clock is a separate rule about the 10% tax, with exceptions that include reaching 59½.

3. Treating it as reversible. It's a one-way door. Roth IRA money can't go back into the TSP. There's no recharacterization for an in-plan conversion either, so treat it as permanent.

RMDs are not a reason to roll Roth TSP out. Roth TSP has had no required minimum distributions during your lifetime since 2024, and Roth IRAs have none either. If you owe an RMD on traditional money this year, it can't go into the Roth IRA. It stays taxable income.

Timing: what has to happen by December 31

A rollover or conversion has to be a 2026 distribution to count in 2026 income. The TSP's process can take time, so start well before December 31 if you want the income in this tax year.

If you hold combat-zone tax-exempt money, ask the receiving firm first whether it accepts tax-exempt funds. The TSP rolls it only if the IRA or plan accepts it.

You can also choose which money moves. A withdrawal can come from your traditional balance only, your Roth balance only, or both pro rata. Traditional and Roth can go to different places, but each balance goes to one institution, and the TSP tells the receiver your Roth start date and contributions.

Estimate the tax before you move traditional money

Use the TSP Roth Conversion Calculator: for taxable amounts of at least $500, enter the traditional amount you plan to move and how many years to spread it over, and it estimates the federal tax on the conversion under its stated assumptions, your top bracket, and the IRMAA risk if you're near Medicare age. Its $500 input minimum comes from the in-plan conversion rule; it isn't a rollover minimum.

If you're past 63, check the IRMAA Cliff Calculator too, since a large rollover can raise Medicare premiums two years later. For money you plan to withdraw instead, the TSP Withdrawal Tax Calculator shows the tax on a straight withdrawal.

Frequently Asked Questions

Can I roll my traditional TSP straight into a Roth IRA?

Yes, if you're separated or 59½ or older. The pre-tax part of what you roll counts as income for that year (any tax-exempt combat-zone money is excluded), and the rollover itself carries no 10% early withdrawal tax.

Why can't I convert my whole traditional balance inside the TSP?

The in-plan rule requires at least $500 to stay in each pre-tax source you hold, so a rollover is the only way to move the whole traditional balance to Roth.

Does my Roth TSP 5-year clock move to the Roth IRA?

No. The Roth IRA has its own clock. If you have an older Roth IRA, its start date applies; if not, the clock starts the year of the rollover.

Should I have tax withheld from the rollover?

Paying from savings is cleaner. Anything taken out for tax instead of rolled over is a regular withdrawal, and under 59½ it can owe the 10% tax.

I left at 56. Should I roll to a Roth IRA?

Think first. The age 55 exception works in the TSP, not in an IRA, so keep what you may need before 59½ in the plan.

Do I need to roll Roth TSP out to avoid RMDs?

No. Roth TSP has no required minimum distributions during your lifetime.

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