Roll Over TSP to Roth IRA: Step-by-Step Guide for Veterans
Converting your Thrift Savings Plan to a Roth IRA is fundamentally different from a traditional IRA rollover. Unlike a traditional transfer, rolling over TSP to a Roth IRA is a taxable conversion. You'll owe income tax on the amount you convert in the year you convert it, which can significantly impact your tax bill. But for many recently separated veterans, the trade-off is worth it: tax-free growth, tax-free withdrawals in retirement, and no required minimum distributions (RMDs) during your lifetime.
This guide covers how to roll over TSP to Roth IRA, what the tax implications actually mean for your situation, and how to structure the timing of your conversion.
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
Your status must show "Separated" from federal service, or you must be age 59½ or older. If you don't see "Separated," you're not yet eligible to roll over.
1. Open your IRA first
Choose a brokerage to house your new Roth IRA. Fidelity, Charles Schwab, Vanguard, USAA, and Navy Federal Credit Union are popular with military savers. Open the account and request two pieces of information from the institution: your Roth IRA account number and their mailing address for receiving rollover checks.
If your TSP contains both traditional and Roth balances, you'll need to handle each separately by submitting distinct conversion requests to the appropriate accounts.
2. Add your IRA to TSP's Financial Institutions list
Return to My Account at TSP.gov. Click your Profile icon in the top right corner and select "Financial Institutions." Choose "Add" under the "Rollover Mailed to Institution" section. Enter your Roth IRA account type, account number, and your brokerage's mailing address. Save your entry.
3. Wait 7 days
TSP enforces a 7-day hold after you register a new financial institution before any outbound transfers can be initiated. Mark your calendar. You cannot bypass this period.
4. Go to Withdrawals and Rollovers
Once 7 days have elapsed, sign back into My Account. From the top navigation menu, select "Withdrawals and Rollovers Out." Look for the blue "Get Started" button under "Partial Distribution." (This option is correct even if you're converting your entire TSP balance.) This will launch the rollover request workflow.
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 requesting their electronic signature to consent to the withdrawal.
Choose "Roll Over an Amount to an IRA or Another Employer's Plan." Select "Roth IRA" as your account type
Specify the amount you want to roll over
Select your Roth 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
After submission, you'll receive a confirmation page showing the effective date of your request. TSP will print and mail a check payable to your Roth IRA custodian. Standard USPS delivery typically takes 10 business days from the processing date. There is no tracking mechanism available during transit.
Loan repayment requirement: If you currently owe money on a TSP loan, you must pay it back in full before the conversion can proceed. Defaulting on the loan will force a foreclosure, which TSP treats as a taxable distribution. Those under 59½ face an additional 10% penalty.
When Does Rolling Over TSP to Roth IRA Make Sense?
A Roth conversion strategy works best when:
You separated in a lower-income year and have minimal other income (meaning a lower tax bracket on the conversion)
You have time before retirement to let the converted funds grow tax-free
You want to leave money to heirs and prefer tax-free distributions over tax-deferred distributions
You want to avoid RMDs entirely during your lifetime
You don't have substantial pre-tax IRA balances outside of TSP (consult a tax pro if you do)
Veterans who separated during or after the calendar year they turned 55 should consider staying in TSP instead. TSP allows penalty-free withdrawals before age 59½, which is a unique advantage. A Roth IRA does not offer this exception. Any TSP funds you roll out permanently lose access to this exception, since Roth IRAs do not offer the age-55 penalty waiver.
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 your Roth IRA, you have two options. One is clean and straightforward. The other carries potential complications.
Direct Rollover
TSP mails a check directly to your Roth IRA custodian without sending any money to you. No taxes are withheld upfront.
Because the check goes straight to the custodian rather than through your hands, you bypass the 20% withholding requirement and the 60-day deadline that indirect rollovers trigger. This is the method you should use to roll over TSP to Roth IRA.
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 your Roth IRA.
This creates a compounding problem for Roth conversions. The 20% goes to taxes, but you still owe income tax on the full amount after conversion. If you can't cover the 20% shortfall from other funds and deposit the full amount within 60 days, the shortfall is treated as a distribution subject to the 10% early withdrawal penalty if you're under 59½. Miss the 60-day window entirely, and the entire distribution becomes taxable income for that year, plus penalties.
We tend to recommend that veterans utilize direct rollovers to avoid sticking points.
Tax Implications: Rolling Over TSP to Roth IRA
This is where Roth conversions differ fundamentally from traditional rollovers. You need to understand the tax impact before you convert.
The Conversion is Taxable Income
When you roll over TSP to Roth IRA, the full amount you convert is added to your taxable income for that year. If you convert $100,000, you'll owe federal income tax on that $100,000 in addition to any other income you earned that year. This can push you into a higher tax bracket. State income taxes also apply to the converted amount and vary significantly by state.
An Example
You're a single filer with no other income in 2026. You roll over $75,000 from your traditional TSP to a Roth IRA. After subtracting the standard deduction of approximately $15,000, your taxable income is roughly $60,000. Federal income tax on $60,000 of taxable income at 2026 rates is approximately $7,800-$8,300. You'll also owe state income tax depending on your state of residence. Some states charge nothing; others charge 5-13% on top of federal.
Before you convert, calculate both your federal and state tax liability. Situations like this are where a tax professional is worth the cost.
No Early Withdrawal Penalty on the Conversion Event
Converting from TSP to Roth IRA doesn't incur a 10% early withdrawal penalty on the conversion itself, even if you're under 59½. The income tax is unavoidable, but the penalty isn’t applied to the conversion transaction. This is an important distinction from botched indirect rollovers.
The 5-Year Rule for Roth Conversions
This is critical and often misunderstood. Roth IRA conversion amounts are subject to their own 5-year holding period. If you convert TSP funds to a Roth IRA and then withdraw those converted funds within 5 years while under age 59½, you will owe the 10% early withdrawal penalty on the converted amount, even though the conversion itself was penalty-free.
Example: You convert $75,000 from TSP to Roth IRA at age 52. Three years later, you withdraw $20,000 from that Roth IRA. You've held the Roth for 3 years, which is less than 5. You're under 59½. The $20,000 is subject to the 10% early withdrawal penalty because the 5-year clock hasn't expired on that conversion. You'd owe $2,000 in penalties. (The converted amount was already taxed at conversion, so no additional income tax applies to the withdrawal of that principal.) .
Your regular Roth contributions (money you contribute directly to a Roth IRA outside of a conversion) can be withdrawn anytime without penalty. But conversion amounts are subject to a separate 5-year restriction.
The Roth Advantage in Retirement
Once the conversion is complete and money is in your Roth IRA, all future growth and distributions are tax-free. Unlike a traditional IRA, you have no RMDs during your lifetime. Your heirs inherit tax-free distributions. This tax-free growth and withdrawal flexibility is the long-term benefit that makes the upfront tax bill worthwhile for many veterans.
If You Have a Pre-Tax IRA Balance
If you have traditional IRA accounts outside of TSP, consult a tax professional before rolling over TSP to Roth IRA. There are tax complications that arise when combining pre-tax and after-tax balances across accounts. A professional can model your specific situation and help you decide whether a direct TSP-to-Roth conversion makes sense, or whether alternative strategies are better suited to your circumstances.
Rolling Your TSP Over the Right Way
Rolling over TSP to Roth IRA opens the door to tax-free retirement withdrawals. It's a taxable conversion, so you'll need to plan, but for many veterans, the long-term benefit is worth it. If this strategy fits your situation, use a direct rollover through My Account at TSP.gov.
The entire process takes 3 to 4 weeks. Run the numbers with a tax professional first to confirm the upfront tax bill is justified by decades of tax-free growth.
FAQs
What if I'm married? Does my spouse need to consent?
Yes, your spouse needs to sign off. During the rollover process, TSP will email them requesting electronic consent. It's a legal requirement, so there's no getting around it. The good news: this gives you both a built-in checkpoint to ensure you're on the same page before the conversion. Have the conversation now and confirm they're comfortable with the strategy.
Can I convert just part of my TSP and leave the rest invested?
Absolutely. You don't have to go all in. Convert $50,000 this year and another $50,000 next year if that works better for your taxes. Many smart veterans spread their income out to stay in a lower tax bracket each year. It's called "laddering," and it's a great way to manage the tax hit.
Can I undo a Roth conversion if I change my mind?
Unfortunately, no. They got rid of that option back in 2018. Once the conversion is done, it's permanent. That's why it's worth spending an hour with a tax pro before you hit submit. Get the math right the first time, and you'll be glad you did.
Will a Roth conversion increase my Medicare premiums?
It might, and it's worth checking. The money you convert counts as income, which could push up your Medicare premiums if you're on Medicare or heading toward It soon. It's one more thing to model with your tax professional, but it's totally manageable once you know the numbers.
What if I want to convert but leave my G Fund investment in TSP?
You can specify how much to convert, but you can't cherry-pick individual funds. TSP will liquidate that amount across your entire portfolio proportionally. If you want to keep the G Fund, either convert a smaller amount that leaves your G Fund balance untouched in TSP, or stay in TSP for the G Fund portion and roll over the rest. Either way works, just plan it that way from the start.
