Roll Over TSP to IRA: Step-by-Step Guide for Veterans
When you leave the military, one of the most common questions about your Thrift Savings Plan (TSP) is whether to roll over your TSP to an IRA. It's not always the right move, but when it is, the process is straightforward as long as you avoid a few costly mistakes.
How to Roll Over Your TSP to an IRA: Step by Step
Before you start
Verify your employment status is "Separated" in My Account > Profile > Personal Information > Personal Details
You must be separated from federal service or be age 59½ to roll over TSP funds
1. Open your IRA first
Open a traditional IRA (or Roth if converting) with a brokerage of your choice. Fidelity, Charles Schwab, Vanguard, USAA, and Navy Federal Credit Union are common options for veterans. Get your account number and the institution's mailing address from them.
If you have both traditional and Roth balances in TSP and want to roll them over, you'll need to submit separate rollover requests for each, since they must go to their respective account types.
2. Add your IRA to TSP's Financial Institutions list
Log in to My Account at TSP.gov. Go to the Profile icon (top right) and select "Financial Institutions." Click "Add" for "Rollover Mailed to Institution." Enter your IRA account type, account number, and the institution's mailing address. Save it.
3. Wait 7 days
TSP requires a mandatory 7-day security waiting period after you add a new financial institution. You cannot initiate a rollover to that institution until the 7 days have passed.
4. Go to Withdrawals and Rollovers
After the 7-day wait, log back into My Account and select "Withdrawals and Rollovers Out" from the top menu. Click the blue "Get Started" button under "Partial Distribution" to begin the rollover process.
5. Complete the rollover screens
You'll work through a series of screens:
Confirm your marital status. If you're married, your spouse will receive an email during this step requesting their electronic signature to consent to the withdrawal — this is a legal requirement
Choose "Roll Over an Amount to an IRA or Another Employer's Plan"
Select your account type (IRA or Roth IRA)
Specify the amount you want to roll over
Select your IRA from the list of destinations you pre-registered
Review and confirm the rollover details
Acknowledge the Payment Rights Notice
Verify your identity (via Okta app or text message code)
6. Confirm completion
Once you submit, you'll get a confirmation page with the effective date. TSP will mail a paper check directly to your IRA custodian's address via USPS. Expect the check to arrive within 10 calendar days after TSP processes the request. There's no way to track the check while in transit.
Important note: If you have an outstanding TSP loan when you request a rollover, you must either repay it in full first or accept foreclosure. A foreclosed loan balance is treated as a taxable distribution for that year and may incur a 10% early withdrawal penalty if you are under age 59½.
Should You Roll Over Your TSP to an IRA?
Staying in TSP is a legitimate option and often the right one. TSP's expense ratios are among the lowest in the industry (0.034% - 0.051%, depending on the fund ), and the G Fund, which earns bond-level interest with no risk of loss, is not available anywhere else. Veterans who separated during or after the calendar year they turned 55 also get penalty-free withdrawals from TSP before 59½, an exception that does not carry over to an IRA.
Rolling over to an IRA makes more sense when you want access to a broader range of investments, need to consolidate multiple retirement accounts, or want more flexibility in how and when you take withdrawals.
Direct vs. Indirect Rollover: Use the Right Method
When you move money from TSP to an IRA, you have two options. The difference between them is significant: one is straightforward, while the other carries real risk.
Direct Rollover
TSP transfers your funds directly to your IRA custodian. No taxes are withheld, there's no 60-day deadline, and the transaction is not treated as taxable income. This is the clean, low-risk method and the one most veterans should use.
Indirect Rollover
TSP sends a check directly to you. By law, TSP must withhold 20% of the amount upfront for federal taxes. You then have 60 days to deposit the full original amount (including the withheld 20% out of your own pocket) into a qualifying IRA. Miss the 60-day window, and the entire distribution becomes taxable income for that year. If you're under 59½, a 10% early withdrawal penalty applies on top of that.
Tax Implications: Traditional vs. Roth
The tax treatment of your rollover depends entirely on what type of account you're rolling into. Here's how each scenario works.
Traditional TSP to Traditional IRA
A direct rollover is a non-taxable event. Your money continues to grow tax-deferred, and you'll pay ordinary income tax on distributions in retirement. RMDs apply at age 73 under current law, same as in TSP.
Traditional TSP to Roth IRA
This is a taxable conversion as opposed to a tax-free transfer. The converted amount is added to your taxable income for the year, which can push you into a higher bracket depending on the size of the rollover. There's no early withdrawal penalty on the conversion itself, but the income tax is unavoidable.
In-Plan Roth Conversion Alternative
As of January 2026, TSP now allows in-plan Roth conversions, meaning you can convert traditional TSP dollars to Roth TSP without rolling out of the plan at all. If tax diversification is your goal rather than investment flexibility, this may be a better route than a rollover. Talk to a tax professional before deciding.
Conclusion
Rolling over your TSP to an IRA can make sense if you want more investment flexibility or need to consolidate accounts. But it comes with real trade-offs: you'll give up TSP's exceptionally low fees, lose access to the G Fund, and potentially lose the age-55 penalty exception depending on when you separate.
If you do roll over, use a direct rollover. Initiate it through My Account at TSP.gov, ensure your IRA is open and ready to receive funds, and resolve any outstanding TSP loans first.
FAQs
How long does the entire rollover process take from start to finish?
About 3 to 4 weeks: 7-day wait after adding your institution, then TSP processes immediately and mails the check via USPS (10 calendar days to arrive).
What if my TSP balance changes while I'm waiting for the check to arrive?
If the balance drops below your requested rollover amount due to market losses, the rollover won't process. The amount must still be available when TSP sends it. If you select "all available funds," the amount adjusts based on the current balance.
Can I change my mind after submitting a rollover request?
Once submitted and accepted by TSP, you cannot cancel. Call the ThriftLine immediately if you need to try, but don't count on it. Plan carefully before submitting.
Do I need to file anything with the IRS after a direct rollover?
TSP will issue a Form 1099-R, but a direct rollover uses distribution code 'G,' meaning it is not taxable income. You should still enter it on your tax return where prompted. Your tax software will show it as a $0 taxable event.
What if I have combat zone contributions in my TSP?
Combat zone contributions are tax-exempt. If your IRA doesn't accept tax-exempt balances, TSP will pay that portion directly to you as a separate check. Since these were tax-exempt contributions, they are not taxable income, but you'll lose the opportunity to shelter them in a tax-advantaged account.
