New TSP option for 2026

TSP Roth in-plan conversion: rules and tax checklist

A Roth in-plan conversion moves eligible Traditional TSP money to the Roth balance inside the same account. The transaction can create a current-year tax bill, so verify the amount, eligibility, RMD status, and tax-payment plan before submitting the irreversible request.

Effective: January 28, 2026
Minimum request: $500
Verified: August 25, 2026

This is a tax-timing decision, not a contribution election

A conversion does not increase retirement savings by itself. It changes the tax treatment of money already in TSP and can raise taxable income for the year. This guide is general information, not individualized tax or investment advice. TSP recommends consulting a tax advisor before deciding whether, when, or how much to convert.

The 2026 rules at a glance

Available

The TSP option took effect January 28, 2026 and is available through My Account.

Eligible people

Active participants, separated or retired participants with TSP accounts, and spouse beneficiary participants may request a conversion when their balance is eligible.

Request rules

The request and vested account balance must each meet the $500 minimum. The final rule permits up to 26 requests per calendar year.

Tax payment

The taxable conversion amount is income for the conversion year. TSP says taxes must be paid from personal funds outside the converted amount.

RMD order

A required minimum distribution cannot be converted. A participant subject to an RMD must receive the year’s required amount before converting.

No undo

IRS guidance does not permit recharacterizing an in-plan Roth rollover back to Traditional.

Eligibility and balance constraints

Passing the $500 request minimum does not mean the entire Traditional balance is available. The final rule protects source balances used for payroll corrections and restricts money that is not currently in a core TSP fund.

Rule	What to verify in My Account
Eligible account holder	Active, separated, or spouse beneficiary participant; not a non-spouse beneficiary or alternate payee.
$500 minimums	At least $500 vested in the account at request time and at least $500 in the conversion request.
Retained source balances	At least $500 remains in each applicable tax-deferred employee, tax-exempt, agency automatic (1%), and agency matching contribution balance.
Mutual Fund Window	Amounts must return to one or more TSP core funds before conversion.
Administrative hold	A hold under the TSP rules can prevent a request until the restriction is resolved.

TAX CHECK

What becomes taxable

The taxable part of a direct in-plan Roth conversion is generally included in gross income for the calendar year of the conversion. Traditional pre-tax money has not yet been taxed, so converting it normally accelerates that income into the current year.

Tax-exempt contributions can be included, but TSP does not let a participant pick only tax-exempt dollars. The request proportionally includes taxable and nontaxable Traditional money based on the account composition. Review the TSP estimate rather than multiplying the request by a marginal rate without checking basis.

No tax is withheld from the direct conversion. Plan the payment from outside TSP and determine with a qualified tax professional whether payroll withholding or an estimated tax payment needs to change. Also model any income-sensitive effect relevant to your return instead of looking only at the nominal tax bracket.

Open the official TSP conversion calculator

BEFORE SUBMITTING

A seven-record conversion checklist

1
Confirm eligibility
Verify the account type, vested Traditional balance, retained source balances, Mutual Fund Window status, holds, and remaining annual request count.
2
Resolve the RMD first
If an RMD applies, confirm that the required amount for the year has been distributed before requesting a conversion.
3
Capture the taxable estimate
Save the TSP estimate, identify taxable and nontaxable portions, and verify the calendar year in which the conversion will be reported.
4
Model the full return
Review federal and state tax, withholding or estimated-payment needs, and any income-sensitive items relevant to your circumstances.
5
Identify outside tax funds
Do not plan to use part of the TSP conversion amount to pay the resulting tax.
6
Review withdrawal timing
Understand the designated Roth qualified-distribution rules and the separate five-year recapture rule that can affect an early distribution of converted money.
7
Save the confirmation
Keep the request, confirmation, year-end tax form, basis record, and advice used for the decision.

Keep adjacent TSP decisions separate

New 2026 contributions

Use the contribution-limit planner for payroll deferrals, catch-up capacity, and remaining pay periods. A conversion does not replace a contribution.

Plan 2026 TSP contributions

Future tax treatment

Compare Roth and Traditional employee elections separately from converting an existing balance.

Compare Roth vs. Traditional TSP

Roth balance projection

Project employee Roth contributions and Traditional agency deposits without treating a future balance as a conversion recommendation.

Project a Roth TSP balance

Required minimum distributions

Check the separate RMD timing and amount before assuming Traditional money is available for conversion.

Estimate a TSP RMD

TSP Roth conversion FAQ

Who can do a TSP Roth in-plan conversion?

Active federal civilian and uniformed-services participants, separated or retired participants who maintain TSP accounts, and spouse beneficiary participants may request a conversion if the traditional balance meets TSP rules. The final rule says non-spouse beneficiaries and alternate payees are not eligible.

What is the minimum TSP Roth conversion?

The request must be at least $500, and the participant or spouse beneficiary participant must have a vested account balance of at least $500. Separate retained-balance rules can further limit how much is available to convert.

How many TSP Roth conversions can I make in 2026?

The final TSP rule allows up to 26 Roth in-plan conversion requests per calendar year. It does not restrict a participant to one request per pay period.

Does a Roth conversion use my 2026 TSP contribution limit?

No. An in-plan conversion is a taxable rollover of money already inside the plan, not a new payroll contribution. The separate annual employee contribution limits still apply to Traditional and Roth contributions combined.

Can TSP withhold the tax from the amount I convert?

TSP says no: the conversion amount remains in the plan and the tax must be paid from other personal funds. IRS guidance notes that a participant may need additional withholding or estimated tax payments to avoid an underpayment penalty.

Can I convert a required minimum distribution to Roth TSP?

No. An RMD is not eligible for conversion. TSP instructs participants subject to an RMD to receive the required amount for the year before requesting an in-plan conversion.

Can I convert only combat-zone tax-exempt contributions?

No. TSP permits eligible tax-exempt money to be included, but the conversion must contain taxable and nontaxable traditional money in proportion to the participant’s traditional balance under the applicable pro-rata rule.

Does converted money move to different TSP funds?

No. TSP says the converted money remains invested in the same TSP funds. Traditional and Roth balances cannot use separate investment allocations. Mutual Fund Window money must first move back to one or more core funds before it can be converted.

Primary sources

Rules and source links were verified August 25, 2026. TSP account eligibility, transaction estimates, and official tax forms control over this summary.