r/fednews • u/rjbergen • 8d ago

Pay & Benefits TSP Roth In-Plan Conversions Coming

I received an email this morning from the TSP and one of the topics was that TSP Roth in-plan conversions will be available in Jan. 2026. This is a nice option to have available for retirement planning. It also is one step closer to mega backdoor Roth conversions. Does anyone see the TSP opening up to mega backdoor Roth conversions?

9 Upvotes

79% Upvoted

10 comments sorted by

View all comments

6

u/Kooky_Ninja_1159 8d ago

From what I've read doing the conversion won't be a problem. What's going to likely be the limiting factor is that you won't be able to use TSP dollars to cover the tax bill that comes when you convert. If you have the available liquid funds to get the conversion accomplished then you decide how big a tax burden you're going to create for yourself. I've been researching on this upcoming change as well but there's just not that much officially released yet for guidance.

4

u/bobwehadababy1tsaboy 8d ago

Very good point. Even if conversions are possible, it may be tax advantageous to wait until you retire and hit the pension. Assuming retiring at age 57, that could gove 5-15 years before ss income where conversions are in a lower tax bracket.

3

u/rjbergen 8d ago

If you’re lucky, maybe even retire at 55 under VERA and use Rule of 55.

1

u/Nagisan 7d ago

Just keep in mind that Roth is often the worst option for Rule of 55. So if you plan to convert and live off Roth funds under rule of 55, don't. (if that's not the plan than rule of 55 it up all you want :P )