TSP Roth In-Plan Conversion: 2026 Rules, Tax and FRTIB Data

What the rule says and when it started

The FRTIB proposed the rule on October 15, 2025 (90 FR 48267; comments due November 14, 2025) and finalized it on January 15, 2026 (91 FR 1669), effective January 28, 2026. A January 26, 2026 correction changed one term, “Roth initiation date”, to “Roth begin date” and nothing else. The final rule says 36 individuals and entities commented. It gives the demand evidence: in the 2024 TSP Participant Satisfaction Survey, 35 percent of respondents familiar with Roth contributions said they were “likely” or “extremely likely” to use an in-plan conversion if offered.

The legal definition is short: a Roth in-plan conversion is “a taxable rollover to a designated Roth account as stated in 26 U.S.C. 402A(c)(4)”. That Code paragraph is what sets the tax result: the amount is included in gross income, and section 72(t) (the 10 percent additional tax) does not apply to the conversion itself.

Who can convert, and how often

Requests are made in My Account. TSP bulletin 25-4 says a request made before noon Eastern is processed after the market closes the same business day, and a later one on the next business day. The 26-a-year cap is far above real use: 30,913 conversions by 26,439 people is 1.17 per person (our arithmetic).

The tax: no withholding, personal funds, Form 1099-R code G

Three documents agree. The FRTIB says in the final rule that, under IRS guidance, “no withholding applies to a Roth in-plan conversion of an otherwise nondistributable amount”, so participants “must use personal funds from another source, such as a savings account”. IRS Notice 2013-74 Q&A-4 is the source: no withholding under section 3405 and no voluntary withholding under section 3402(p), and the employee “may need to increase his or her withholding or make estimated tax payments to avoid an underpayment penalty”. The TSP page adds that you cannot use part of the amount you are converting to pay the tax.

One wrinkle for readers. The FRTIB's January 27, 2026 minutes summarize the tax as due “when the participant files a tax return for the year of conversion”, while the TSP's own booklet says “you may be required to make estimated tax payments to the IRS”. The second is the safer reading: a large conversion with no withholding can create an underpayment problem before the return is due.

On the form: the TSP issues Form 1099-R the following January and conversions carry Distribution Code G in Box 7; the conversion has no effect on your W-2 (TSP bulletin 25-4). The IRS instructions for Forms 1099-R say the total amount allocable to an in-plan Roth rollover is reported in box 10. A 2026 conversion appears on a Form 1099-R issued in January 2027 and goes on your 2026 return.

The five-year rules, in the TSP's words

The TSP page describes two clocks. The first decides whether Roth earnings are tax-free: five years from January 1 of the year of your first Roth contribution or first conversion that creates the Roth balance, plus age 59½, disability or death. The second applies only to converted money: each conversion starts its own five-year clock on January 1 of the year of the conversion, and a withdrawal of converted money inside that window carries the 10 percent additional tax unless an exception, such as age 59½, applies. Converted money comes out before contributions, and the oldest conversion comes out first (TSPBK26, 10/2026). For the same clocks in an IRA, see our guide to the Roth IRA 5-year rules.

A practical consequence: a conversion in December 2026 gets the same January 1, 2026 start date as one in January. The last business day of 2026 is Thursday, December 31; a request made after noon Eastern is processed the next business day, so a late-December request can slip into 2027 and a 2027 tax year.

Required minimum distributions

TSPBK35 says Roth balances “aren't subject to RMDs during your lifetime”, which is why converting lowers future RMDs. For birth years before 1960 the RMD age is 73; for 1960 or later it is 75 (TSPBK26, 10/2026). Two cautions from the FRTIB. First, if you are subject to an RMD you must receive it before converting, because the IRS does not allow conversion of RMD amounts; installment payments may leave a remainder you need to take first. Second, a conversion does not count as your RMD, because the money does not leave the TSP. Beneficiary participant accounts follow different rules: the Roth balance there is included in the RMD calculation.

What the FRTIB has published about use

This is the part no other TSP guide has with dates. The FRTIB reports usage to its Board, and the documents are public.

Who converted, as of April 30, 2026 (slide 8 of the May report, which is a chart image we transcribed): 58 percent civilians and 42 percent uniformed services members; 70 percent active participants and 30 percent separated; 32 percent under age 35, 45 percent aged 35 to 59 and 23 percent over 59. That is not the profile of a feature used only by people near retirement: 77 percent of converters were under 59 and 70 percent were still active.

What the numbers say, in our arithmetic. The mean conversion in the first four months was about $22,120 ($683,799,809 divided by 30,913), 2.2 times the $9,932 median. Half of conversions were under about $10,000, and a minority of large ones carry the dollars. The August figures imply about $20,408 a conversion, with both inputs rounded in the minutes. Roughly seven million people participate in the TSP and the Agency told the Board it had no numeric goal for conversions, so 26,439 converters by April is about 0.4 percent of participants (our arithmetic).

What is not published, as far as we could find on November 9, 2026: a count after the August 25 meeting (the September 22 minutes carry none), the split of dollars by age or account size, and how many converters moved more than $100,000. The October 2026 minutes were not posted at compile date, so the next figure will most likely appear in them or in the next participant-experience report.

Worked example: a federal couple and a single filer (our arithmetic)

Inputs, each from a saved document: the 2026 tax tables and standard deductions are from Rev. Proc. 2025-32 (section 4.01 Tables 1 and 3, section 4.14: $32,200 married filing jointly, $16,100 unmarried); the IRMAA tiers and amounts are from the CMS fact sheet on 2026 Medicare Parts A and B premiums (Part B and Part D amounts added); the two-year lookback is from SSA POMS HI 01101.020 (“tax return two years prior”). The assumptions are ours: other adjusted gross income of $180,000 (married filing jointly) or $80,000 (single), no tax-exempt interest, no state tax, no credits, no Social Security, and no additional senior deduction. The traditional TSP balance is $400,000 and the converted amount leaves the rest in place. Federal tax is on the filer's total taxable income, so the added tax is the difference between two full calculations.

How to read it. The couple's taxable income before the conversion is $147,800 ($180,000 less $32,200), which sits in the 22 percent bracket (over $100,800 to $211,400). A $50,000 conversion takes taxable income to $197,800, still under $211,400, so all of it is taxed at 22 percent and the average rate is 22.00 percent. A $100,000 conversion puts about $36,400 of the amount (from $211,400 to $247,800 of taxable income) in the 24 percent bracket.

The IRMAA column is the second bill. The 2026 conversion enters MAGI for 2026, and premiums for 2028 are set from the 2026 return (the TSP booklet says Social Security “looks at tax returns from two years earlier”). The 2028 thresholds are not published, so we use the 2026 table as a yardstick; the single and joint thresholds rose from $106,000 in 2025 to $109,000 in 2026 (SSA POMS HI 01101.020), so a higher 2028 table would make the effect somewhat smaller than shown. The cliff is the point: with $180,000 of other MAGI a couple has $38,000 of room before passing $218,000, and a single filer with $80,000 has $29,000 of room before $109,000 (our arithmetic). The IRMAA amounts in the table are Part B plus Part D surcharges and apply only if you are enrolled in Medicare in 2028. Our IRMAA brackets page has all six tiers and the life-changing-event rule, and our Roth conversion calculator guide maps the other thresholds a conversion can cross.

On RMDs, with the same $400,000 balance held flat at age 75 and the IRS distribution period of 24.6 (TSPBK26): the RMD is $16,260.16; after a $50,000 conversion it is $14,227.64; after $100,000 it is $12,195.12, a drop of $4,065.04 (our arithmetic). Real balances grow, so treat this as the shape of the effect, not a forecast.

What a reader can do with this

These are choices, not recommendations; the right one depends on facts only you and your tax preparer have.

• Check where the tax will come from first. The conversion itself must be paid with money from outside the TSP, and there is no withholding. If you do not have it in cash or taxable accounts, the FRTIB's own rule says the plan cannot help.
• Find your IRMAA cliff before you pick an amount. If you will be on Medicare within two years of the conversion year, the 2026 table above is a yardstick, not a promise. If a life event has cut your income, SSA has a re-determination process.
• Use the 26 conversions. Nothing requires one big request. Many smaller ones across a year let you watch income, and each carries the same January 1 clock.
• Take the RMD first if you are of RMD age. The FRTIB requires the RMD to be received before a conversion is processed.
• If you are under 59½, note the clocks. Converted money withdrawn within five years can carry the 10 percent additional tax; the clock is by conversion.
• Remember it cannot be undone. The TSP says a conversion cannot be reversed or changed once processed, and its page tells you to talk to a tax advisor first.

FAQ

Sources, read and saved on November 9, 2026: Federal Register, “Roth In-Plan Conversions”, final rule, January 15, 2026 (91 FR 1669, FR Doc. 2026-00765), correction January 26, 2026 (FR Doc. 2026-01450) and proposed rule October 15, 2025 (90 FR 48267, FR Doc. 2025-19538); TSP bulletin 25-4 and the TSP “Roth in-plan conversions” page on tsp.gov; TSP booklets TSPBK35 (7/2026) and TSPBK26 (10/2026); FRTIB Board minutes of January 27, May 28, August 25 and September 22, 2026, the Roth In-Plan Conversion Update (January 27, 2026) and the Office of Participant Experience Annual Report (May 2026); 26 U.S.C. 402A; IRS Notice 2013-74; IRS Instructions for Forms 1099-R and 5498; Rev. Proc. 2025-32; CMS fact sheet on 2026 Medicare Parts A and B premiums and deductibles; SSA POMS HI 01101.020. Slide 8 of the May 2026 report is a chart image that we transcribed. Examples and means are our arithmetic.