The Thrift Savings Plan will allow participants to convert traditional funds to Roth funds within their TSP account beginning Wednesday, Jan. 28.
This is known as a Roth in-plan conversion.
Traditional retirement contributions are those that are taken from employee paychecks on a pretax basis, which can lower your taxable income for the year. You are taxed later when the funds are withdrawn.
Roth retirement contributions are considered taxable in the year they are made and are taxed before they are deposited into your TSP account. However, qualified withdrawals from Roth accounts are tax-free. Unlike traditional funds, Roth funds are not subject to Internal Revenue Service rules on required minimum distributions.
If you’re considering doing a Roth in-plan conversion, the Postal Service strongly encourages you to consult a tax advisor to start planning how it would affect your taxable income and estimate how much you may need to pay in taxes.
When you convert pre-tax money from your traditional TSP balance, your Roth in-plan conversion amount will become part of your taxable income for the year. This means that you’ll pay income tax on the conversion amount based on your income tax rate.
You must pay the income tax on the conversion amount using personal funds from another source, such as a savings account. You cannot use part of the conversion amount in your TSP account to pay taxes.
The TSP website has more information about traditional and Roth IRAs.
Employees with questions can email the TSP or call 877-968-3778, Monday-Friday from 7 a.m. to 9 p.m. Eastern.
Participants will need their six-digit TSP PIN to access their account.
For telecommunications assistance, dial 711 from any phone.
Employees with questions can also email the USPS Benefits and Wellness team.
