TSP to IRA Rollover: Rules, Steps, and Trade-Offs for Federal Employees

The Thrift Savings Plan (TSP) is the retirement plan for federal employees and members of the uniformed services. When you leave federal service, or reach 59½, you can move retirement savings from your existing TSP account into an IRA.

This guide is for federal employees, retirees, and service members deciding whether a TSP to IRA rollover makes sense for their retirement savings. It covers Thrift Savings Plan rules and forms, not every rollover rule. For general rollover mechanics, see our 401(k) to IRA rollover guide.

Sources: TSP.gov booklets “Withdrawing From Your TSP Account” (TSPBK25), “Tax Rules About TSP Payments” (TSPBK26), and “Loans” (TSPBK04), fact sheet TSPFS05, TSP.gov fund and fee pages, 5 CFR 1650, and the IRS rollover chart.

A navy binder, a brass desk lamp, a jar of coins, and a folded blank paper on a polished oak office desk, suggesting a federal employee reviewing a TSP rollover.
Federal employees and service members can roll a TSP account into an IRA.

What is a TSP to IRA rollover?

A TSP rollover moves money from your TSP account to an IRA or to one of the other eligible employer plans, such as a new employer’s 401(k). Done as a direct rollover, a TSP rollover moves retirement savings without a tax bill.

Understanding TSP rollovers

TSP transfers and rollovers both appear in My Account. Either way, the TSP sends the money to your IRA custodian, and the IRA reports it as rollover contributions.

Who can roll a TSP account into an IRA?

You need a rollover distribution, meaning a payment that is eligible for rollover. TSP fact sheet TSPFS05 lists payments after separation, installments for less than 10 years, age-59½ withdrawals, and death benefits paid to a spouse.

Can I roll over my TSP to an IRA while still employed?

Yes, once you reach 59½. TSP.gov lets you take an age-based withdrawal from your vested balance while still in federal service, up to four per calendar year. The minimum is $1,000 or your entire vested balance. You can roll it to a traditional IRA, a Roth IRA, or an eligible employer plan.

Hardship withdrawals can’t be rolled over.

Eligibility criteria after leaving federal service

After you separate, you can withdraw your entire TSP account or part of it. Partial withdrawals must be at least $1,000.

The TSP needs your agency to report your separation, which can take up to 30 days. If you’re rehired by a federal agency within 31 days of leaving, you aren’t eligible for a post-separation withdrawal.

TSP funds vs IRA investment choices in other retirement plans

The TSP offers the G Fund, F Fund, C Fund, S Fund, and I Fund, plus L Funds. The F, C, S, and I Funds are index funds. There is also a mutual fund window, which costs extra.

An IRA usually gives a broader range of investment choices, including individual stocks, mutual funds, and ETFs. Some IRA options also include paid investment management. If you want different investment options, compare investment options and costs before moving money.

TSP funds are a short menu of index funds, which some retirement plans and IRAs mirror with low-cost mutual funds. Choose based on your risk tolerance.

The G Fund stays in the TSP

The G Fund is invested in U.S. Treasury securities specially issued to the TSP. Its principal and interest are guaranteed by the U.S. government. No IRA offers the G Fund, so a full rollover gives it up.

A steady stack of silver coins under a clear glass bell jar on gray stone, suggesting the G Fund, which protects principal and is only available inside the TSP.
The G Fund is invested in Treasury securities issued only to the TSP.

Expense ratios and other fees

TSP.gov reports 2025 total expense ratios of 0.034% for the G Fund, 0.035% for the F and C Funds, 0.051% for the S Fund, and 0.048% for the I Fund. For the C Fund, that is 35 cents per $1,000 invested.

IRA expense ratios vary widely by fund and provider, and some IRAs charge other fees. Check both before you decide, since lower costs leave more money invested for your financial future.

An antique brass balance scale holding one coin in one pan and a tall stack of coins in the other on a walnut desk, suggesting comparing TSP expense ratios with IRA costs.
Compare TSP expense ratios with what the IRA funds would cost.

Traditional TSP and Roth TSP balances

Your existing TSP account can hold a traditional balance and a Roth balance. When you take money out, you can choose traditional only, Roth only, or a proportional (pro rata) share.

TSPBK25 gives an example. If $150,000 is 80% traditional and 20% Roth, a $10,000 pro rata payment is $8,000 traditional and $2,000 Roth.

Two wooden trays side by side, one with copper coins and one with silver coins, split by a brass divider, suggesting traditional TSP and Roth TSP balances rolled separately.
Traditional and Roth TSP money go to separate destinations.

Moving a traditional TSP account

Money from a traditional TSP account is tax deferred money. Roll it to a traditional IRA to defer taxes, or to one of the eligible employer plans that accepts rollovers. Each source can go to one destination, but traditional and Roth money can go to different places.

Moving a Roth TSP account to a Roth IRA

Your Roth balance in the TSP comes from after-tax contributions. It can roll only to a Roth IRA or a Roth account in another eligible employer plan. It can’t go to a traditional IRA.

The Roth IRA has its own five-year clock. Time in the Roth TSP doesn’t carry over, so if this is your first Roth IRA, the clock starts on January 1 of the year of your first Roth IRA contribution. Our Roth 401(k) guide covers designated Roth accounts.

Can I transfer my TSP to a Roth IRA without penalty?

Yes. There’s no 10% penalty for a rollover. Roth money moves tax free. Traditional TSP money can go to a Roth IRA, but the amount is taxable that year, like a Roth conversion. Plan how you’ll pay taxes on it from outside the account.

The TSP now also offers Roth in-plan conversions, which are taxed the same way.

Direct and indirect rollovers from the TSP

The TSP pays a rollover in one of two ways. Direct and indirect rollovers differ in withholding and risk.

Direct rollover

In a direct rollover, the TSP pays your IRA custodian. No tax is withheld, and the money isn’t taxed as income. It is the simplest way to avoid taxes, and the IRS requires no 60-day deposit.

Indirect rollover and the 20% withholding

In an indirect rollover, the TSP pays you. It must withhold 20% for federal income tax. TSPBK26’s example: of a $10,000 payment, $2,000 is withheld.

To finish the indirect rollover, deposit the full $10,000 in a traditional IRA within 60 days, using $2,000 of other money. A direct rollover avoids this step. Whatever you don’t deposit is taxable. Our IRA transfer vs rollover guide explains the 60-day rule and self-certification for late deposits.

The TSP rollover process for moving money, step by step

The rollover process uses TSP forms, not your IRA’s:

  1. Open the IRA with the IRA custodian you choose, traditional or Roth.
  2. Get the receiving details: account number and payee name.
  3. Request the rollover in My Account or through the ThriftLine. TSP.gov says not to use forms from the new plan or financial institution.
  4. Confirm the IRA accepts the money. TSPFS05 says the institution must certify it will accept the rollover.
  5. Check the deposit in your IRA and set your asset allocation.

If you use the mutual fund window, move that money back into TSP funds before the withdrawal.

A closed laptop with a sealed white envelope on it beside a clipboard of blank paper and a pen on a desk by a window, suggesting requesting a TSP rollover online.
Request the rollover in My Account or through the ThriftLine, not on IRA forms.

Rollover contributions on the IRA side

Your IRA custodian reports rollover contributions on Form 5498, and the TSP reports the withdrawal on Form 1099-R. Rollover contributions don’t count toward IRA contributions limits, and the new retirement account keeps your retirement savings tax deferred.

Spouse rights

If you’re in FERS or the uniformed services and your balance is over $3,500, your spouse generally must consent to a withdrawal. CSRS participants’ spouses get notice.

How to avoid taxes and penalties

A few TSP rollover rules can create tax consequences if you miss them.

TSP loans when you leave

You don’t have to pay off a TSP loan before a rollover. After separation, you can keep repaying it by check or direct debit. If you don’t repay by the deadline, the loan is foreclosed and becomes taxable. You can roll over the foreclosed amount with your own money by your tax return due date, including extensions.

Required minimum distributions

Required minimum distributions can’t be rolled over. If you’re subject to RMD rules, the TSP pays your RMD first. See our IRA required minimum distributions guide.

The 10% early withdrawal tax

Payments before 59½ may face a 10% early withdrawal tax. TSPBK26 lists exceptions, including separation in or after the year you turn 55, or 50 for public safety employees. That age-55 exception doesn’t carry into an IRA.

Should you roll over TSP into an IRA?

It depends on your investment strategy, costs, retirement goals, and how you’ll draw retirement income.

Reasons to keep your retirement savings in the TSP

  • Very low expense ratios on TSP savings.
  • The G Fund.
  • Penalty-free access after separating at 55 or later.
  • Fewer investment options to manage.

Reasons for a TSP into an IRA move

  • More investment choices, including individual stocks, to fit your investment strategy.
  • Account consolidation of multiple retirement accounts, since multiple accounts are harder to track.
  • More withdrawal options than the TSP’s installment, partial, and annuity choices.

What is the best thing to do with your TSP when you retire?

No single answer fits. Many federal employees keep TSP savings in the plan for low costs and steady retirement income, while others want one IRA for their whole financial life. A TSP rollover is only one of several choices; you can also take a lump sum distribution, installments, or an annuity. Moving money the other way works too: you can roll other retirement accounts and retirement plans into the TSP after separating, except Roth IRAs.

A financial advisor or tax professional can weigh tax implications and tax consequences; a financial advisor or financial professional can check the fit with your financial goals.

Tax planning for retirement funds and retirement plans

Retirement funds held in traditional accounts are taxable when withdrawn, while qualified Roth money is tax free. Tax-exempt combat zone money can roll over tax free too, but a traditional IRA must certify it accepts it, and the TSP rolls it only once no taxable money is left. TSP funds don’t hold employer stock, so net unrealized appreciation rules don’t apply. For other plans, see our 403(b) to IRA rollover and inherited 401(k) guides, and our gold IRA rollover guide for metals.

The bottom line

A TSP to IRA rollover can widen your investment options and simplify a financial plan. Use a direct rollover, plan for moving money in separate traditional and Roth pieces, request it through My Account or the ThriftLine, and weigh the TSP’s low costs and the G Fund against your financial goals.

Written by Tim Schmidt and reviewed for tax and account accuracy by Sean Webster, CPA. Last reviewed November 10, 2026 (America/New_York). This guide is for general education, not tax, legal, or investment advice, and not a recommendation to roll over or move any account. IRAInvesting.com is not affiliated with the TSP or the Federal Retirement Thrift Investment Board, and is not a custodian, broker-dealer, plan administrator, tax preparer, or investment adviser. Talk with a licensed tax professional before you act, and confirm current rules on TSP.gov and IRS.gov. Investing involves risk, including possible loss of principal.