Thrift Savings Plan Guide
You built your TSP over a career of service. The next decision — what to do with it — matters more than any single year of contributions.
See what changed ↓New as of January 28, 2026
For the first time in the plan's history, you can convert traditional TSP dollars to Roth without leaving the plan. 26 times a year. $500 minimum. No income limits.
Biggest change to the TSP in a generation, and it landed with all the fanfare of a parking notice.
Here's why it matters. Every traditional dollar you own is pre-taxed. The IRS holds a claim on it and hasn't told you how big. It collects when RMDs start — 73 if you were born 1951 to 1959, 75 if you were born in 1960 or later. You don't pick the year. You don't pick the rate.
Roth dollars, the IRS is done with. Permanently.
26 conversions a year isn't a feature. It's a ladder. You can move money in pieces small enough to stay inside your bracket instead of taking one brutal hit. That's the entire game — and almost nobody is running that math for federal employees.
One more thing, and it's the part that should make you suspicious of everyone else. Most people in this business get paid when your money moves. Which is why every other TSP page you'll read ends the same way.
We'll show you the math. Sometimes the math says a ladder inside the plan beats anything we could sell you. When that's the answer, that's the answer you'll get.
Doing nothing is a decision too. It's just the one the IRS is counting on.
Most feds decide what to do with it in one meeting. Here’s what’s on the table.
$24,500
2026 Contribution Limit
Plus $8,000 catch-up at 50+, and $11,250 for ages 60–63. Every dollar matters — but the exit strategy matters more.
5%
The Full Match
Agency automatic 1% plus matching on your first 5%. Free money while you work — gone the day you separate.
Age 55
The TSP's Secret Weapon
Separate from service in the year you turn 55 or later and TSP withdrawals are penalty-free — four and a half years before an IRA allows it.
73 or 75
The RMD Clock
Required Minimum Distributions start at 73 (born 1951–1959) or 75 (born 1960 or later). Traditional TSP balances are on that clock. Roth balances are not.
26/yr
New for 2026
The TSP now allows in-plan Roth conversions — up to 26 per year, $500 minimum. Powerful, brand new, and almost nobody is explaining it. We do.
Read this before you roll
But that exception does not follow the money.
If you roll your TSP into an IRA, the age-55 rule does not come with it. You go back to waiting until 59½. Separate at 56, roll out, and take a withdrawal — and you owe a 10% early-withdrawal penalty you would not have owed inside the TSP.
(Age 50, or 25 years of service, for law enforcement, firefighters, air traffic controllers, and CBP.)
Sometimes the right answer is to leave the money in the TSP, or to move only part of it. That is a real conversation and it happens before anything moves.
Direct rollover only
Direct rollover only.
If the TSP sends the money directly to your IRA custodian, nothing is withheld and nothing is taxable. If the TSP cuts you a check instead, they are required to withhold 20% for federal taxes. To complete the rollover you then have to replace that 20% out of your own pocket within 60 days and wait until you file your return to get it back.
There is never a reason to do it the second way.
Two retirement systems. Two completely different plans.
Hired before January 1, 1984
The classic system. One big leg: a pension that can reach roughly 80% of your high-3 salary after a full career. The trade-offs: your federal service generally didn’t earn Social Security credits, and the government never matched your TSP contributions — you could contribute, but every dollar in it is yours alone.
CSRS retirees who also worked under Social Security in other jobs got a major win recently: the Social Security Fairness Act repealed the WEP and GPO provisions that used to slash those benefits. If you’re CSRS and were ever told “your Social Security will be reduced,” that answer has changed — and your plan should be re-run.
Hired 1984 or later
The three-legged stool: (1) the FERS basic annuity — generally 1% of your high-3 per year of service, 1.1% if you retire at 62+ with 20+ years; (2) Social Security, which your service fully earns; and (3) the TSP, with the automatic 1% plus matching up to 5% of pay. For FERS employees, the TSP isn’t a supplement — it’s the leg that does the heavy lifting, because the pension replaces far less than CSRS did.
A CSRS retiree has a large guaranteed pension and a smaller, unmatched TSP — their planning centers on taxes, survivor elections, and what the recent Social Security changes restore. A FERS retiree has a modest pension, full Social Security exposure (including the 2032 trust fund question), and a TSP that must produce income for decades — their planning centers on converting that balance into guaranteed, tax-efficient income. Same employer. Opposite playbooks.
We’ll tell you what the TSP does brilliantly. Then we’ll tell you where it stops.
Where the TSP Wins
While you’re employed, contribute to the full match — always. Anyone who tells a working fed to stop contributing is selling something.
Where the TSP Stops
You can now convert traditional TSP money to Roth inside the plan — up to 26 conversions a year, $500 minimum each. This is a genuinely good tool, and for some feds it’s the right move.
But know its limits before you use it: the converted amount is fully taxable in the year you convert, the tax must effectively come from money outside the TSP, and there’s no offsetting credit — the plan gives you the conversion, not a war chest to pay for it. A rollover-based strategy can pair the same conversion math with a premium bonus that helps absorb the tax bill. Which route wins depends on your numbers — which is exactly why we model both before recommending either.
Keep it, roll it, or split it. The answer is math, not opinion.
Contribute to the full match, minimum. Decide traditional vs. Roth TSP based on your bracket today vs. your bracket in retirement — and remember the new rule: if you earned over $150,000 last year, your catch-up contributions must be Roth.
Map the age-55 window, your FERS annuity or CSRS pension start, your Social Security timing (the trust fund is projected to pay about 78 cents on the promised dollar from late 2032 absent Congressional action), and your RMD date.
Model three paths side by side — stay in TSP, roll to an IRA/FIA strategy with guaranteed income and bonus-assisted Roth conversions, or split the balance and do both. We show you all three in real numbers, including every tax dollar, before you move anything.
No pitch. No pressure. Just the math — in plain English, verified against published IRS and TSP figures.
Everything you need to know about the Thrift Savings Plan — funds, withdrawals, rollovers, and matching.
Understanding the two-layer structure: administrator vs. asset manager
FRTIB
The Federal Retirement Thrift Investment Board is an independent government agency that oversees the plan. A five-member board appointed by the President governs it.
BlackRock & State Street
For the C, S, I, and F Funds — the actual buying and trading is outsourced to Wall Street. BlackRock has managed TSP assets for decades. In 2021, State Street Global Advisors was added as a second manager to reduce concentration risk.
FRTIB-Managed Internally
The G Fund holds non-marketable U.S. Treasury securities not available to the public. Because of this unique structure, it is managed entirely in-house by the FRTIB — not outsourced to BlackRock or State Street.
The core TSP funds are trust funds regulated by the OCC, not registered investment companies under the SEC. This means they are not publicly traded on any exchange and therefore have no ticker symbols — even though they track well-known public indices like the S&P 500 (C Fund) or Bloomberg Aggregate Bond Index (F Fund). Clients sometimes get confused by this; it's worth explaining proactively.
Key statistics about the Thrift Savings Plan
7.2M+
Participants
$1 Trillion+
Assets Under Management
approx. 0.05%–0.08%
Net Expense Ratios
5 + L Funds
Core Funds
Expense ratios per tsp.gov/expenses
Who We Serve
We work with feds across every agency — from your first agency match to the day you decide what your TSP does for the rest of your life.
See the full list of agencies we serveWe’ll run all three paths — stay, roll, or split — on your actual TSP balance and show you the difference to the dollar.
Built for what’s next. Strategy for the world that’s coming — not the one that’s gone.
Disclosures
Smart Life Financial LLC is an independent insurance agency. Scott Borhauer, NPN 20016169.
Smart Life Financial is not affiliated with, endorsed by, or authorized by the United States Government, the Office of Personnel Management, the Social Security Administration, the Department of Veterans Affairs, the Federal Retirement Thrift Investment Board, or the Thrift Savings Plan.
Any references to guaranteed income refer to insurance contracts. Guarantees are subject to the claims-paying ability of the issuing insurance company. Not bank deposits, not FDIC insured, not insured by any federal government agency, and may lose value in the case of early surrender.
This material is for informational purposes and does not constitute tax, legal, or investment advice. Rollovers, Roth conversions, and required minimum distributions carry tax consequences. Consult a qualified tax professional and attorney regarding your specific situation.
Smart Life Financial LLC · 8530 Eagle Point Blvd, Suite 100, Lake Elmo, MN 55042 · (952) 592-3900