How to Rollover a Thrift Savings Plan to an IRA

The Thrift Savings Plan (TSP) is designed to help federal employees and military service members save for retirement on a tax-advantaged basis. If you decide to leave federal employment, you will have to decide what to do with your TSP balance. Completing a Thrift Savings Plan rollover to an IRA can ensure that your retirement funds are not left behind, but first, there are a few things you need to know.

A financial advisor can help create a financial plan for your retirement goals.

What Is the Thrift Savings Plan?

The Thrift Savings Plan is a retirement plan offered to federal employees and members of the military. In terms of contribution limits and taxation, it is the federal equivalent of a 401(k) plan.

For 2025, eligible employees can save up to $23,500 in a TSP account (up from $23,000 in 2024). If you are 50 or older, you can make a catch-up contribution of up to $7,500. However, if you are between 60 and 63 years old, you can make a larger catch-up contribution of up to $11,250, thanks to a provision of the SECURE 2.0 Act.

These contributions are made through elective salary deferrals. TSPs also allow for employer matching contributions.

You may take qualified distributions from a TSP beginning at age 59 ½. Withdrawing money from your plan early could result in a 10% early withdrawal penalty. Once you turn 73 (75 if you were born in 1960 or later), you are obligated to take required minimum distributions (RMDs) from a pre-tax Thrift Savings Plan.

Calculating your RMDs doesn’t have to be complicated. Plan your retirement withdrawals more effectively using our RMD calculator:

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

You can set up a TSP either as a traditional or Roth account. Traditional TSP contributions are made using pre-tax dollars. Qualified distributions are subject to ordinary income tax.

However, with a Roth designation, you save with after-tax dollars. That means you will not pay tax on qualified Roth distributions in retirement. Roth accounts are also not subject to RMD rules.

How a Thrift Savings Plan Rollover to IRA Works

A rollover involves moving money from one retirement plan to another. If you decide to leave federal employment or if you retire, you have the option of rolling over money from your TSP.

The IRS establishes guidelines for rollovers, including which types of accounts you can move money between. If you have a TSP, where you can roll the money over depends on whether you chose a traditional or Roth designation.

With traditional TSPs, you can roll the money into several types of accounts:

Another employer’s pre-tax retirement plan (including a 401(k), 403(b) or 457)
Traditional IRA
Roth IRA

If you convert your Thrift Savings Plan to a Roth account, the options are different. In that case, you could transfer your balance to your new employer’s Roth account or roll it over to a Roth IRA.

Traditional and Roth IRAs generally follow the same tax rules as traditional or Roth TSP accounts. A traditional IRA is funded with pre-tax dollars, and qualified distributions are taxable. RMDs are also required beginning at age 73, or 75 starting in 2033.

Roth IRAs are funded with after-tax dollars, so you will pay no tax on qualified distributions. You do not get a tax deduction for contributions like a traditional IRA, but there are no RMDs for Roth IRAs.

How to Complete a TSP to IRA Rollover

In order to complete a TSP to IRA rollover, you must decide where to send the funds and how to complete the rollover.

Decide Where to Direct Funds

If you want to roll money from your Thrift Savings Plan, you first need to direct the funds. A popular option is a direct rollover, which can help minimize taxes.

If you have a traditional TSP, this would mean rolling it into a traditional IRA, and if you have a Roth TSP, you roll it into a Roth IRA. However, if you roll traditional TSP funds into a Roth IRA, you will end up paying tax on the rollover amount, immediately reducing your retirement savings.

Choose the Type of Rollover

The next step is deciding how to complete the rollover. You can roll money from a Thrift Savings Plan directly or indirectly.

In a direct rollover, your plan administrator or custodian moves your TSP savings to a new account for you. All you have to do is provide the details for where the money should go, such as a new employer’s plan or a new IRA you have opened at a brokerage.

Indirect rollovers allow you to receive a check from your TSP, but it is then your responsibility to deposit those funds into your new employer’s plan or your IRA There is a caveat, however: you must deposit the funds within 60 days of the original distribution, or the entire sum is treated as a taxable distribution.

Choosing an indirect rollover also means that your plan withholds 20% of your savings for federal income tax. It can make a direct rollover the more attractive choice, since it allows you to avoid the withholding.

Does a Thrift Savings Plan Rollover to IRA Make Sense?

A woman reviewing how to complete a thrift savings plan rollover to IRA.

If you leave federal employment, you are not required to complete a rollover. You can leave your TSP savings right where it is for the time being, as long as your balance is $200 or more.

There are a few reasons why you may decide against a TSP rollover to an IRA.

Your existing plan is already ideal: Leaving your TSP as-is could make sense if you are satisfied with your plan’s investment options and its fees. You cannot make any new contributions to the plan, but you still benefit from tax-deferred growth. The Thrift Savings Plan has relatively low administrative expenses, so you do not have to worry about fees eating into your retirement savings.
You can still add to your TSP savings: You can roll money into TSPs, so if you have a traditional IRA, you can roll those funds into your TSP. You can also transfer funds from an eligible employer-sponsored retirement plan. Roth TSPs do not accept rollovers, but they do accept transfers from other employer-sponsored Roth-designated accounts, serving as a backdoor to increase TSP savings when you cannot make direct contributions.

Keep in mind that you may be able to take penalty-free withdrawals from your TSP if you are between the ages of 55 and 59 ½. The catch is that in order to avoid a tax penalty, you must have left your job after turning 55.

After Rolling Over Your TSP

An IRA allows you to enjoy greater flexibility in retirement. With a wider selection of investments available, you can easily expand your portfolio and begin earning passive income.

However, remember that even with a rollover, you will still need to take your RMDs, and the same deadlines apply. For example, those who were 73 in 2024 will need to take their first RMD by April 1, 2025, and their second by December 31, 2025.

While the right investment strategy is critical, it also helps to enlist the help of a financial advisor or robo-advisor who can provide crucial guidance while ensuring you meet RMD guidelines.

Bottom Line

Man reading a book how to do a thrift savings plan rollover to IRA.

Executing a Thrift Savings Plan rollover to an IRA is not necessarily complicated, but it does require planning. Specifically, you should think carefully about where the money should go. If you are opening a new IRA, for instance, consider what kind of investment options the brokerage offers and its fees. Additionally, be sure to account for any tax implications resulting from an indirect rollover or a transfer between a traditional TSP to a Roth IRA.

Retirement Planning Tips

Consider talking to a financial advisor about how to handle TSP funds if you’re planning to change jobs or retire. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s free tool Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re interested in moving money into a TSP, there are a few additional rules to know. For instance, you can’t transfer money from a rollover IRA or Roth IRA into a Thrift Savings Plan account. Transfers from inherited IRAs are also prohibited. You generally won’t pay tax at the time that you roll the money into your IRA. But any rolled-over amounts would still be subject to income tax when making qualified withdrawals.