If you decide to roll over your TSP assets to an IRA, you can choose either a traditional IRA or Roth IRA. No taxes are due if you roll over assets from a traditional TSP account to a traditional IRA, or if you roll over your contributions and earnings from a Roth TSP account to a Roth IRA.
Is TSP considered traditional IRA for tax purposes?
Both the TSP and IRAs (traditional IRAs and Roth IRAs) are tax-favored retirement accounts. The TSP is classified as a “defined contribution” retirement plan. It is similar to a private company-sponsored 401(k) qualified retirement plan or non-profit organization 403(b) qualified retirement plan.
Are traditional TSP contributions tax deductible?
No Tax Deduction You can’t deduct contributions to traditional TSPs because they’re deducted directly from paychecks. When your employer sends you your W-2, your taxable income won’t include your TSP contributions.
Can a TSP account be rolled over to an IRA account?
Unfortunately, many Thrift Savings Plan (TSP) participants and federal employees who have traditional IRAs frequently do not perform proper rollovers of their accounts. When ineligible rollovers occur, two bad things may happen.
Can a TSP be rolled to a Tira?
If you do a direct rollover from TSP to Roth IRA, it goes on line 16 and Form 8606 does not apply. But if you want only a portion of the TSP to go to the Roth IRA, you would roll it to a TIRA first, then select the amount of the TIRA that you want to convert.
Can you make both traditional and Roth TSP contributions?
To help you decide which contributions are right for you, check out our videos, “Is Roth TSP Right For Me?” for civilian and uniformed services at You also may want to try our Contribution Comparison Calculator. You can make both traditional and Roth contributions if you want.
What are the fees to invest in a TSP account?
For example, in the private sector you can expect to pay anywhere between 0.5%-2% to invest in an index fund or mutual fund. If we compare those fees to the remarkably low TSP fee of 0.04%, it is night and day. It is very easy to find funds on the private side that have fees that are 10 to 20 times the fees of the TSP.
