Starting in late January 2026, TSP participants and spousal beneficiaries will be able to convert money from a traditional balance to Roth within their TSP account. This transaction is called a “Roth in-plan conversion.”
When a participant converts money from their traditional TSP balance, the taxable Roth in-plan conversion amount will become part of the participant’s taxable income for the year. This means that they’ll pay income tax on the taxable conversion amount based on their income tax rate.
We strongly recommend that participants speak to a tax advisor before requesting a Roth in-plan conversion.
Roth in-plan conversions are irrevocable – Once the transaction is processed, the transaction cannot be reversed or changed.
This bulletin describes the activities associated with this change, and how this change may impact agencies, services, and payroll offices.
Roth In-Plan Conversion Details
Participant Eligibility
Active and Separated Participants:
Active and separated participants with a total eligible vested balance of at least $500 are eligible to request a conversion. Participants must maintain at least $500 (“hold back amount”) in each non-Roth payroll account source. If a source is below the $500 minimum balance, the source will not be eligible and will not be included in the calculation/conversion.
Spousal Beneficiaries:
Spousal beneficiaries with a balance of at least $500 are eligible to request a conversion. Spousal beneficiaries are not subject to the $500 “hold back amount.”
Frequency
Eligible participants can request a maximum of 26 Roth conversions per account in a calendar year. If a participant has both Civilian and Uniformed Services accounts, and meets the above account balance limitations, they can request 26 conversions per account per year.
Requesting a Roth In-Plan Conversion
Eligible participants and spousal beneficiaries can request a Roth in-plan conversion via My Account. Requests can be made as a specific dollar amount (the default option), or as a percentage of the participant’s eligible funds. The minimum amount that can be converted is $500 (note: if a participant chooses a specific dollar or percentage and the amount falls to less than $500 after the market closes, the conversion will still be processed for the amount available). Spousal consent is not required to complete a conversion.
Roth in-plan conversions requested before noon eastern time will be processed after market close on the same business day. Conversions requested after noon eastern time will be processed after market close on the next business day.
Source Funds
The minimum total amount that can be converted in a single request is $500. Eligible participants in an Active or Separated employment status must leave $500 in each non-Roth payroll account source (Traditional, Tax-exempt, Automatic 1%, and Agency Match accounts) to support potential future payroll corrections. The Rollover source does not have a hold back amount.
Example: A participant has the following vested balances and amounts eligible to convert to Roth (assuming a $500 restriction on each non-Roth payroll account source):
| Source | Vested Balance | Amount Eligible to Convert to Roth |
|---|---|---|
| Traditional | $6,000 | $5,500 |
| Tax-Exempt | $500 | $0 |
| Match | $3,500 | $3,000 |
| Automatic 1% | $1,000 | $500 |
| Tax-Deferred Rollover | $2,000 | $2,000 |
If they elect to convert $10,000 from traditional to Roth, the balances would be converted as follows, with the eligible sources converted on a pro rata basis:
| Source | Amount Eligible to Convert to Roth | Converted Balance |
|---|---|---|
| Traditional | $5,500 | $5,000 |
| Tax-Exempt | $0 | $0 |
| Match | $3,000 | $2,727.27 |
| Automatic 1% | $500 | $454.55 |
| Tax-Deferred Rollover | $2,000 | $1,818.18 |
The calculation for the pro rata conversion is: ((source balance after $500 hold back amount / total eligible amount) * total elected conversion amount)
Once a participant converts traditional funds to Roth, the transaction cannot be reversed or changed, per IRS rules.
Account Mapping for Roth In-Plan Conversions
When an eligible participant completes a Roth in-plan conversion, the newly converted funds will map to their account as follows:
| Available Account | Amount Available | Account Converted Into |
|---|---|---|
| Traditional (Tax-Deferred) Note: also includes historical tax-exempt from payroll corrections. |
Any vested balance* | Roth |
| Tax-exempt | Any vested balance* | Roth |
| Match | Any vested balance* | Restricted Roth Agency ** |
| Automatic (1%) | Any vested balance* | Restricted Roth Agency |
| Tax-deferred Rollover | Any vested balance | Roth Rollover |
