How to Rollover a TSP to a Roth IRA

01Executive Overview

02Eligibility Rules

Before initiating a TSP–to–Roth IRA rollover, confirm that both the source plan and the destination account meet IRS eligibility requirements.

Federal employees can access their TSP after separation from service at any age. Retired military members have separate TSP access rules. Civilian FERS employees who separate after age 55 avoid the 10% early withdrawal penalty — a one-year advantage over the standard age 59½ threshold that applies to IRAs and most other qualified plans.

— IRS Notice 2009-68 (TSP Rollover Guidance)

03Step-by-Step Rollover Process

The IRS-preferred rollover method is a direct rollover (trustee-to-trustee transfer) — the check is made payable to the new custodian, not to you. This eliminates the mandatory 20% federal withholding and the 60-day deadline risk entirely.

1. 1

   Open the Roth IRA Account First

   Open the receiving Roth IRA account before contacting your TSP plan administrator. The distributing plan needs the receiving custodian's name, mailing address, and FBO account number to process a direct rollover. Without this information, the plan cannot complete the direct rollover and may default to an indirect rollover.

   Setup time: Same day to 3 business days (online); 5–10 business days (full-service)

   You'll need:

   • Government-issued ID
   • Social Security number
   • Bank account for funding
   • IRA application
2. 2

   Request a Direct Rollover from Your TSP

   Contact your TSP plan administrator and use the words "direct rollover" explicitly. Provide:

   • The receiving custodian's full legal name
   • The FBO format: [Custodian Name] FBO [Your Full Name] Roth IRA
   • The receiving account number
   • The custodian's mailing address

   TSP direct rollovers are processed through the TSP's own distribution form (Form TSP-70 for full withdrawal or TSP-77 for partial). The TSP is administered by the FRTIB — not a commercial custodian — and has its own processing queue. Allow 7–10 business days for the TSP to process the request after receiving complete paperwork.

   TSP-specific: Use Form TSP-70 (full withdrawal) or TSP-77 (partial withdrawal) at My Account on tsp.gov. Processing takes 7–10 business days under normal conditions; allow 3–4 weeks in January–March.
3. 3

   Verify the Check Payee

   When the distribution check arrives — whether mailed to you for forwarding or directly to the custodian — verify the payee before accepting or forwarding it. The check must be payable to the new custodian, not to you personally.

   ✓ Correct

   Fidelity FBO Jane Smith IRA #123456789

   ✗ Incorrect (Triggers 20% Withholding)

   Jane Smith

   If the check is made payable to you personally, contact the plan administrator immediately. Do not deposit it into a personal bank account — doing so converts it into an indirect rollover subject to 20% withholding and the 60-day deadline.

4. 4

   Deposit as a Rollover Contribution

   When delivering the check or wire to the receiving custodian, specify it as a "rollover contribution" — not a regular annual IRA contribution. This critical coding ensures the amount is not counted against your 2026 IRA contribution limit ($7,000 for 2026).

   For Roth 401(k)/403(b) to Roth IRA: direct rollover, no tax event. For traditional 401(k) to Roth IRA: the plan may issue a direct conversion check or may require a two-step process (distribute to traditional IRA first, then convert). Confirm with both the plan administrator and the receiving Roth IRA custodian before initiating.

   Posting time after receipt: 1–3 business days
5. 5

   Confirm Tax Documentation

   In January of the following year, verify you receive:

   • Form 1099-R from the TSP plan — shows the gross distribution with Distribution Code 2 or 7. Report on Form 1040 Line 5a with the taxable conversion amount on Line 5b.
   • Form 5498 from the receiving Roth IRA custodian — issued by May 31, confirms the rollover contribution was received and properly coded.

   Form 8606 Required: File Form 8606 Part II to report the Roth conversion amount and calculate the taxable portion under the pro-rata rule if your TSP contains non-deductible contributions.

04Processing Timeline

Most TSP–to–Roth IRA rollovers complete in 7–10 business days from request submission to funds credited at the receiving institution. The timeline varies significantly by plan administrator and asset type.

05Tax & Penalty Guide

Federal employees who contributed to both FERS (the pension) and the TSP have a layered retirement income structure. The TSP rollover decision is often driven by the desire to hold alternative assets — Gold IRAs, real estate IRAs — that are not available within the TSP's index fund menu.

06IRS Reporting Requirements

Every retirement account rollover — including non-taxable direct rollovers — requires reporting on your federal tax return. Failing to report a rollover, even a tax-free one, triggers the IRS's Automated Underreporter (AUR) program to propose tax on the full distribution amount.

073 Costly Mistakes to Avoid

These are the most common — and most expensive — errors investors make when rolling over a TSP to a Roth IRA. Each is preventable with the right procedural knowledge.

08Frequently Asked Questions

Should a federal employee roll over their TSP to an IRA after retirement?

It depends on investment goals. The TSP's primary advantages are its ultra-low expense ratios (as low as 0.04%) and the unique G Fund. The primary advantage of rolling to an IRA is investment flexibility — access to individual stocks, bonds, Gold IRAs, Self-Directed IRAs, and thousands of mutual funds not available in the TSP. Most financial advisors recommend rolling if you want alternative assets or a specific investment strategy; staying in the TSP if low cost and simplicity are priorities.

Can a military service member roll over a TSP?

Yes. Uniformed service members who separate from the military can roll their TSP to a traditional IRA, Roth IRA, or another eligible employer plan. Military members who separated before age 55 are subject to the 10% early withdrawal penalty on non-rollover distributions — but rollovers to an IRA avoid this entirely.

How long does a TSP rollover take?

The FRTIB typically processes distribution requests within 7–10 business days of receiving complete paperwork. Add 3–5 business days for the receiving IRA custodian to credit the funds. Total processing time is generally 10–21 business days. Requests submitted during peak periods (January–March) may take longer.

Is there an income limit to roll over a 401(k) to a Roth IRA?

No. The income limit that applies to direct Roth IRA contributions does not apply to Roth conversions. Any participant, at any income level, can roll a 401(k), 403(b), traditional IRA, or other qualified plan to a Roth IRA. The trade-off is that the converted amount is fully taxable in the year of conversion.

What is the best age to convert to a Roth IRA?

There is no universal answer, but the 'Roth conversion window' — roughly ages 60–72 — is typically optimal for most retirees. Income is often at its lifetime low in early retirement (after earned income stops, before Social Security maximizes at 70, before RMDs begin at 73), creating a multi-year opportunity to convert at lower tax rates.

Can I roll over a Roth 401(k) to a Roth IRA without paying taxes?

Yes — rolling a Roth 401(k) to a Roth IRA is a tax-free transaction, provided the receiving account is a Roth IRA (not a traditional IRA). The 5-year clock for the receiving Roth IRA is determined by the date the Roth IRA was first established, not the rollover date.

Is there a deadline to roll over a TSP after leaving my employer?

There is no IRS deadline to initiate a rollover after a triggering event. The 60-day rule only applies once a distribution has been issued to you. However, plan administrators may force distributions for balances under $7,000 within 12–18 months of separation. Address the rollover within 60–90 days to maintain administrative control.

Does a direct rollover count against my annual IRA contribution limit?

No. Rollover contributions are separate from and do not count against the annual IRA contribution limit ($7,000 in 2026; $8,000 for those age 50+). A $400,000 rollover into a Roth IRA does not affect your ability to make a regular annual contribution to the same account.