Frequently asked questions about Roth in-plan conversions
You can find an overview of key information about Roth in-plan conversions on our website, and the details are available in the TSP booklet mentioned above. It’s a complex topic, and we encourage you to take time to understand it fully.
Participants have asked many questions about Roth in-plan conversions over the past few months. Here are answers to some of the most common ones.
Are Roth in-plan conversions required?
No. You don’t have to take any action if you prefer to keep your TSP account as it is.
Why would someone do a Roth in-plan conversion?
The main reason to consider a conversion is that it changes when you pay taxes. Here’s the trade-off: you pay taxes now on the amount you convert so that future growth and withdrawals from your Roth balance can be tax-free.
To understand why this matters, remember the difference between traditional and Roth money at withdrawal:
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Traditional TSP: Money in your traditional balance hasn’t been taxed yet because taxes were deferred when contributions went in. When you take money out, you’ll pay taxes on both contributions and earnings.
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Roth TSP: Money goes into your Roth balance after you pay taxes on it. When you withdraw from your Roth balance, you won’t owe taxes on contributions or money you've converted. Earnings on those contributions and any money you've converted can also be withdrawn tax-free if they meet IRS requirements.
I’m retired. Can I do Roth in-plan conversions?
Yes. All TSP participants, including those who have separated from federal and uniformed service, can do Roth in-plan conversions. Your traditional balance must meet eligibility rules.
Can I do a Roth in-plan conversion if I don’t already have a Roth TSP balance?
Yes. If you don’t have a Roth TSP balance, your first Roth in-plan conversion will create one in your TSP account.
Can I satisfy my required minimum distribution (RMD) for the year by converting it to Roth?
No. If you are subject to RMDs, you must withdraw and receive the RMD amount for the year before you can do a Roth in-plan conversion. The IRS doesn’t allow conversion of RMD amounts. This means that you cannot satisfy the RMD amount by converting money from your traditional TSP balance to your Roth TSP balance.
Will Roth in-plan conversions be available after 2026 so that I can space out smaller conversion amounts over several years?
Yes. You’ll have the option to do a Roth in-plan conversion as long as you have a TSP account and meet eligibility rules.
Can I convert tax-exempt contributions I made from combat zone pay?
Yes. However, you can’t choose to convert only tax-exempt contributions. The IRS requires that conversions include a proportional amount of taxable and nontaxable money based on the proportions in your traditional TSP balance.
Can I choose different investment funds for my Roth TSP balance?
No. When you do a Roth in-plan conversion, the money you convert will remain invested in the same TSP fund(s) they were invested in before the conversion. You cannot choose a separate investment allocation for money in your traditional TSP balance and money in your Roth TSP balance.
Can I still withdraw money I convert if it hasn’t been more than 5 years?
Yes. If you’re eligible to make a withdrawal from your TSP account, a withdrawal from your Roth TSP balance may include money you converted within 5 years. The IRS 5-year rules for Roth withdrawals determine whether you’ll owe income tax on earnings and whether you’ll owe a 10% early withdrawal penalty tax on money you converted. These rules don’t prevent you from accessing your money.
Can I talk to someone at the TSP about Roth in-plan conversions?
Yes. If you have questions about Roth in-plan conversion rules and how they apply to your TSP account, you can contact the ThriftLine. ThriftLine Service Representatives have specialized training on this information and can explain the rules.
Keep in mind that they cannot give financial or tax advice. If you need help deciding whether to convert, when to convert, how much to convert, or how to handle taxes on a conversion, you should consult a tax advisor.
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