TSP 1099-R Tax Guide 2026: How to Report Your Withdrawals

Last Updated: January 17, 2026 Reading Time: 7 min

If you took any money from your TSP last year, whether a withdrawal, rollover, or loan that was taxed, you'll receive a Form 1099-R. This form tells the IRS what you received and determines how much tax you owe.

Here's how to read your 1099-R, report it correctly, and avoid common mistakes.

Key Takeaways

• TSP 1099-R forms arrive mid-January by mail and mid-February in your My Account inbox
• Traditional TSP withdrawals are fully taxable as ordinary income
• Roth TSP withdrawals are tax-free only if you meet the qualified distribution rules
• Rollovers are reported on your return but not taxed if done correctly
• NEW for 2026: Roth in-plan conversions generate their own 1099-R and are taxable

When Your TSP 1099-R Arrives

TSP mails Form 1099-R in mid-January for distributions from the prior calendar year. You can also access your form online in My Account by mid-February.

Important deadline: Withdrawals processed before noon ET on December 29, 2025 count as 2025 income. Withdrawals after noon on December 29 count as 2026 income.

If you received multiple distribution types (withdrawal plus rollover, for example), you may receive multiple 1099-R forms.

Understanding Your 1099-R Boxes

Your TSP 1099-R has several important boxes. Here's what they mean:

Box	Label	What It Shows
1	Gross Distribution	Total amount distributed from your account
2a	Taxable Amount	The portion subject to income tax
2b	Taxable Amount Not Determined	Checked if TSP can't calculate taxable amount
4	Federal Income Tax Withheld	Amount already sent to IRS on your behalf
7	Distribution Code	Type of distribution (see codes below)

Box 7 Distribution Codes

The code in Box 7 tells the IRS why you received the distribution:

Code	Meaning
1	Early distribution (before age 59½), subject to 10% penalty
2	Early distribution, exception applies (no penalty)
7	Normal distribution (age 59½ or older)
G	Direct rollover to IRA or qualified plan
H	Direct rollover from Roth TSP to Roth IRA
B	Designated Roth distribution (Roth TSP)

If you see code 1 and you separated from service at age 55 or older, you may qualify for the age 55 exception. You'll need to claim this on your tax return since TSP may not apply it automatically.

How Traditional TSP Withdrawals Are Taxed

Traditional TSP withdrawals are fully taxable as ordinary income. This means the entire amount in Box 1 adds to your wages, pension, and other income for the year.

Example: If you withdraw $50,000 from Traditional TSP and your marginal tax bracket is 22%, you'll owe approximately $11,000 in federal income tax on the withdrawal alone.

TSP withholds 20% by default on lump sums. If your actual tax rate is higher, you may owe additional tax when filing. If lower, you'll get a refund.

State Taxes Vary

Some states fully tax TSP withdrawals. Others exempt all or part of federal retirement income:

State Tax Treatment	States
No state income tax	FL, TX, NV, WA, WY, TN, SD, AK, NH
Full federal pension exemption	PA, IL, MS, AL
Partial exemption	Many states with varying limits
Fully taxable	CA, NY, and most others

Check your state's rules before planning large withdrawals.

How Roth TSP Withdrawals Are Taxed

Roth TSP taxation depends on whether your distribution is qualified or unqualified.

Qualified Roth Distribution (Tax-Free)

A Roth distribution is qualified if both conditions are met:

1. You are at least 59½ years old
2. At least 5 years have passed since January 1 of the year you first contributed to Roth TSP

If qualified, the entire distribution is 100% tax-free. Box 2a will show $0 taxable.

Unqualified Roth Distribution (Partially Taxable)

If you don't meet both conditions:

• Your contributions come out tax-free (you already paid tax on them)
• Your earnings are taxable as ordinary income
• You may also owe the 10% early withdrawal penalty if under 59½

TSP tracks your contribution basis and reports the taxable earnings on your 1099-R.

Example: You contributed $100,000 to Roth TSP over the years, and it grew to $140,000. You withdraw at age 55 (unqualified). The $100,000 contribution portion is tax-free. The $40,000 earnings portion is taxable and potentially subject to the 10% penalty.

Rollovers: Taxable or Not?

If you rolled TSP money directly to an IRA or new employer's 401(k), it's called a direct rollover and is not taxable.

Your 1099-R will show:

• Box 1: Total amount rolled
• Box 2a: $0.00 (not taxable)
• Box 7: Code G (Traditional) or H (Roth)

You still must report the rollover on your tax return, but no tax is owed.

Indirect (60-Day) Rollovers

If TSP sent you a check and you deposited it into an IRA within 60 days:

• TSP withheld 20% for taxes
• You must deposit the full original amount to avoid taxation
• You'll reclaim the 20% withholding as a refund when you file

Example: You request $100,000. TSP sends $80,000 (withheld $20,000). To avoid taxes, you must deposit $100,000 into your IRA, using $20,000 from your own funds. You'll get the $20,000 back when you file taxes.

If you only deposit $80,000, the remaining $20,000 is a taxable distribution.

NEW for 2026: Roth In-Plan Conversions

Starting January 28, 2026, TSP allows Roth in-plan conversions. You can move money from your Traditional TSP balance to your Roth TSP balance without leaving the plan.

Tax implications:

• The converted amount is taxable income in 2026
• TSP does NOT withhold taxes on conversions
• You must pay taxes via estimated payments or W-4 adjustments
• You'll receive a 1099-R showing the conversion amount

Planning tip: If you convert $50,000 from Traditional to Roth, that $50,000 adds to your 2026 taxable income. Make sure you have funds to pay the tax bill.

The 10% Early Withdrawal Penalty

If you're under 59½ and take a TSP distribution, you may owe an additional 10% penalty on the taxable amount.

Exceptions to the 10% Penalty

Exception	Requirements
Age 55 separation	Separated from federal service during/after year you turned 55
Age 50 for special provisions	LEO, firefighter, ATC who separated at 50+
Substantially equal payments	72(t) periodic payments for 5 years or until 59½
Disability	Permanent and total disability
Death	Payment to beneficiary
Medical expenses	Unreimbursed medical over 7.5% of AGI
IRS levy	Only if levied by IRS

The age 55 rule is one of the best reasons to leave money in TSP rather than roll to an IRA, which requires age 59½ for penalty-free access.

Common 1099-R Mistakes to Avoid

1. Not Reporting a Rollover

Even though direct rollovers aren't taxable, you must report them on your return. The IRS sees your 1099-R. If you don't report it, expect a notice.

2. Missing the Age 55 Exception

TSP may code your distribution as "early" even if you separated at 55+. You'll need to claim the exception on Form 5329 when filing.

3. Confusing Contribution vs Earnings

For unqualified Roth distributions, only earnings are taxable. Make sure you (or your tax software) correctly identify the contribution basis.

4. Forgetting State Taxes

Your federal refund might be offset by a state tax bill. Plan for both.

5. Not Waiting for Corrected Forms

If TSP sends a corrected 1099-R, wait for it before filing. Filing with incorrect numbers causes problems.

How to Report on Your Tax Return

For most people using tax software:

1. Enter your 1099-R when prompted
2. Software calculates taxable amount based on codes
3. If you claimed an early withdrawal exception, Form 5329 is generated

If you had multiple TSP distributions or complex situations (partial rollovers, Roth conversions, etc.), consider professional tax help.

Calculate Your TSP Strategy

Planning your withdrawals can minimize taxes over time. Use our free TSP Calculator to model different withdrawal scenarios and see how they impact your balance.

Frequently Asked Questions

When will I receive my TSP 1099-R?

TSP mails 1099-R forms in mid-January for the prior tax year. You can also access a copy in your My Account secure mailbox by mid-February. Forms must be mailed by January 31 per IRS rules.

Is my TSP withdrawal fully taxable?

Traditional TSP withdrawals are fully taxable as ordinary income. Roth TSP withdrawals are tax-free if qualified (age 59½+ and 5 years since first Roth contribution). Unqualified Roth withdrawals have tax-free contributions but taxable earnings.

What is a qualified Roth distribution?

A Roth distribution is qualified if you are at least 59½ years old AND at least 5 years have passed since January 1 of the year you made your first Roth TSP contribution. Qualified distributions are 100% tax-free.

How do I report a TSP rollover on my taxes?

Direct rollovers to an IRA or new employer plan are not taxable and appear in Box 2a with $0 taxable. You still report the rollover on your tax return but owe no tax. The 1099-R will show distribution code G in Box 7.

What happens if I don't report my 1099-R?

The IRS receives a copy of your 1099-R. If you don't report it, expect a notice and potential penalties. Always report the distribution, even if it was a tax-free rollover or qualified Roth distribution.

Related Resources

• TSP Calculator: Model your TSP withdrawals and growth
• TSP Guide 2026: Complete guide to TSP funds and contribution limits
• TSP Roth In-Plan Conversion Guide: New 2026 conversion rules explained
• FERS Retirement Calculator: Estimate your federal pension

Sources

• TSP Tax Rules Publication (PDF)
• IRS Publication 721: Tax Guide to U.S. Civil Service Retirement Benefits
• FedWeek: TSP Announces Schedule for Tax Notices
• TSP.gov News and Resources