How to Rollover Your TSP: A Veteran's Guide
When you leave the military, your Thrift Savings Plan doesn't disappear, but your options change. You can roll over your TSP into an IRA, move it to a new employer's 401(k), convert it to a Roth, or leave it where it is. Each choice has different tax consequences, and the wrong move can trigger a bill you weren't expecting.
This guide covers all four rollover paths, when each is appropriate and how to execute them without costly mistakes.
How to Rollover Your TSP: Step-by-Step
The TSP rollover process follows the same steps regardless of where your money is going. Getting the sequence right matters, and starting a distribution before your destination account is open is one of the most common ways veterans end up in a bad spot.
Open your destination account first: Set up an IRA (Traditional or Roth) or 401(k) with your chosen provider (Vanguard, Fidelity, Schwab, etc.), making sure it matches the tax status of your TSP funds. Get your account number and have your new institution's address ready.
Register the account with TSP: Log in to My Account on TSP.gov and navigate to the Withdrawals and Rollovers section. Add your new financial institution, including your account number and institution address.
Wait seven days: TSP requires a 7-day waiting period after you add a new destination address before you can initiate the rollover. This is a mandatory hold, so plan accordingly.
Initiate the rollover: After the waiting period, return to the Withdrawals and Rollovers tab. Select Partial Distribution (unless you want to close your TSP completely) and choose Rollover Mailed to Institution.
Confirm and wait: TSP will mail a check directly to your new financial institution. The entire process typically takes 10 to 14 days. Once the check arrives, your new custodian will deposit it into your account. Verify the funds are coded as a rollover, not a contribution.
Invest your funds: Money rolled into a new account often lands in a default cash or money market position. Move it into your chosen investments rather than leaving it sitting in cash indefinitely.
Your 4 TSP Rollover Options
Each path has different tax treatment and works better in different situations. Here's what you need to know about each one before deciding.
Option 1: Roll TSP to a Traditional IRA
Best for: Veterans who want more investment options without changing their tax situation.
A traditional IRA rollover is the most straightforward move for most veterans with a pre-tax TSP balance. You get access to a broader investment menu, and nothing changes about when or how you pay taxes, so the transition is mostly about where your money lives rather than what happens to it.
There are advantages and drawbacks to rolling over your TSP into a traditional IRA that you need to be aware of before you start:
Pro: No taxes due at the time of transfer on a direct rollover from traditional TSP to a traditional IRA
Pro: Your money stays tax-deferred, meaning you pay income tax on withdrawals in retirement
Pro: You gain access to a much wider investment menu, including ETFs, mutual funds, and individual stocks
Con: Required Minimum Distributions still apply starting at age 73
Con: You lose access to the G Fund and TSP's low expense ratios
Option 2: Roll TSP to a Roth IRA
Best for: Veterans who want tax-free growth in retirement or are in a lower-income year post-separation.
The tax outcome here depends entirely on which type of TSP balance you're moving.
Roth TSP to Roth IRA
Roth-to-Roth is a clean transfer with no immediate tax consequences.
There is no immediate tax event, since your contributions were already taxed
Earnings transfer tax-free as well, provided the TSP distribution qualifies
There is no Required Minimum Distributions on a Roth IRA
If you already have an established Roth IRA, roll into that account rather than opening a new one, since the five-year clock stays with the older account
Traditional TSP to Roth IRA (Roth conversion)
Moving a traditional balance to a Roth IRA triggers a tax bill in the year you do it, but it can be a smart move if your income is temporarily lower after leaving service.
The converted amount counts as ordinary income in the year you do it, so expect a tax bill
The money grows tax-free and has no Required Minimum Distributions
Post-separation is often a good window for this if your income is lower than usual, since you'll convert at a lower rate. For large balances, spread conversions across multiple years to avoid pushing yourself into a higher bracket
Option 3: Roll TSP to a New Employer 401(k)
Best for: Veterans moving into a civilian job with a competitive 401(k) plan.
If your new employer offers a solid 401(k), rolling your TSP into it keeps your retirement savings consolidated under one account and keeps you eligible for employer matching on new contributions. Before committing, verify the plan is actually worth moving to, since private-sector 401(k) plans vary widely in quality and fees. Here's what the move looks like on paper:
No immediate tax event on a direct rollover from a traditional TSP to a traditional 401(k)
Consolidates your retirement savings into one account
You can continue contributing and receiving employer match on new money
Required Minimum Distributions still apply at age 73
Two things to verify first:
Confirm the new plan accepts incoming rollovers, since not all employer plans do
Compare the new plan's fees and investment options against TSP, since rolling into a higher-cost plan offsets any convenience you gain
Option 4: In-Plan Roth Conversion
Best for: Veterans in a lower-income year who want to shift some balance to tax-free Roth status without leaving TSP.
As of January 2026, TSP participants, including separated veterans, can convert part of their traditional TSP balance to Roth TSP without leaving the plan. This option lets you change the tax treatment of your balance while keeping the things that make TSP worth holding onto in the first place. Since SECURE 2.0, Roth TSP balances are no longer subject to required minimum distributions, so you avoid RMDs on converted amounts. The key trade-offs to know before converting:
You stay in TSP and keep access to the G Fund and low fees
The converted amount counts as taxable income in the year you convert, so plan accordingly
You need cash outside of TSP to pay the resulting tax bill; using TSP funds to cover it creates a second taxable event
Conversions are permanent and cannot be reversed, and no RMDs apply to converted Roth balances after age 73
Should You Roll Over Your TSP at All?
Before committing to any rollover, it's worth noting that staying in TSP is a legitimate option, not just a fallback. Many veterans roll over, assuming outside accounts are better, when TSP's built-in advantages are often difficult to replicate elsewhere.
Reasons to stay:
TSP has some of the lowest fees of any retirement plan available, with fund expense ratios of 0.034% to 0.051% depending on the fund (G Fund at 0.034%, C Fund at 0.035%, S Fund at 0.051%), or about $0.34 to $0.51 per $1,000 per year
The G Fund, currently paying 4.5%, is exclusive to TSP and earns long-term Treasury rates with no risk to principal; no comparable option exists in the retail market
Your balance stays invested and continues to grow without requiring any action on your part
Reasons to leave:
TSP offers only five core funds, with no access to individual stocks, sector funds, or active management outside the mutual fund window, which carries additional fees
Non-spousal beneficiaries, such as your children, have only 90 days to roll a TSP account into an inherited IRA after you pass, which is a significantly tighter window than most other plans allow
Tax Comparison at a Glance
Use this table to compare how each option treats your money for tax purposes.
Option | Tax Now? | Tax Later? | RMDs at 73? | Can Contribute After? |
|---|---|---|---|---|
Stay in TSP | No | On withdrawals | Yes | If re-employed federally |
To Traditional IRA | No | On withdrawals | Yes | Yes |
Roth TSP to Roth IRA | No | No | No | Yes |
Traditional TSP to Roth IRA | Yes | No | No | Yes |
To New Employer 401(k) | No | On withdrawals | Yes | Yes |
In-Plan Roth Conversion | Yes | On converted amount | No | If re-employed federally |
Avoid These Mistakes
Most TSP rollover mistakes come down to moving too fast, misunderstanding the indirect rollover rules, or making a large tax decision without enough planning.
Forgetting the 7-day waiting period:
After you register your destination account with TSP, you must wait 7 days before initiating the rollover. Attempting to start before that window closes will result in a rejection and force you to start over.
Taking an indirect rollover by accident:
TSP immediately withholds 20% from indirect distributions. If you don't replace that amount from your own funds within 60 days, the full original distribution becomes taxable income.
Converting your entire traditional balance in one year:
A large conversion can push you into a higher tax bracket and affect income-based programs. Spreading the conversion across multiple years keeps your taxable income more manageable.
Not confirming your new 401(k) accepts rollovers before initiating:
If you start the TSP distribution before the destination plan confirms it will accept the funds, you're left with a 60-day clock and no clear place to send the money.
Ignoring the five-year Roth IRA rule:
Rolling Roth TSP funds into a brand-new Roth IRA starts a fresh five-year clock for tax-free earnings withdrawals. Rolling into an existing Roth IRA preserves the clock you've already built.
Assuming rolling out is always better:
TSP's expense ratios and G Fund access are genuinely hard to match, and for many veterans, the case for staying put is stronger than it appears.
Your TSP After Separation is a Deliberate Choice
You now have the process down: seven days to register, 10 to 14 days to complete the move, and four rollover paths to choose from. But the real decision isn't procedural. It's whether TSP's combination of low fees and the G Fund outweighs the benefits you'd get elsewhere.
If the math says move, you know exactly how to do it. If the math says stay, you have permission to do that too. The worst choice is drifting into one without actually deciding.
FAQs
Can I roll over just part of my TSP balance?
Yes. TSP allows partial distributions, so you can move any amount you choose. TSP itself doesn't set a minimum rollover amount, but your destination institution might, so confirm with them before initiating. There are no fees for splitting your balance, and there are no restrictions on moving the remainder later.
How long does a TSP rollover take?
Two to three weeks total: seven days after you register your destination account, plus another 10 to 14 days for TSP to mail the check and your new institution to deposit it.
What happens if I miss the 60-day rollover window?
That only applies if you take an indirect rollover, meaning TSP sends the check to you rather than directly to your new institution. If you miss the 60-day window for an indirect rollover, the entire distribution is taxable income for that year. The direct rollover process covered in this guide has no such deadline.
Does a TSP rollover affect my VA disability compensation?
No. A rollover is a transfer of existing retirement funds, not new income, so it does not affect your disability compensation or any income-based VA programs.
Can a surviving spouse roll over a deceased veteran's TSP?
Yes. Surviving spouses can roll the balance into their own IRA with no immediate tax consequences. Non-spousal beneficiaries, such as adult children, have only 90 days to move funds into an inherited IRA, with a significantly tighter window than most other retirement plans allow.
Are rollover rules different for Guard and Reserve members?
The rollover process is the same. The distinction that applies to Guard and Reserve members is contribution eligibility: you can only contribute to TSP during periods of active service, but the rollover rules when you separate are identical.
What if I have an outstanding TSP loan?
You can't do a full rollover until the loan is either repaid or foreclosed by TSP. Partial rollovers are allowed in the meantime, but the outstanding loan balance can't be rolled over. It will be treated as a taxable distribution if it isn't repaid before you separate.
What's the difference between a rollover and a transfer?
A direct rollover (trustee-to-trustee transfer) sends your money straight from TSP to your new institution with no withholding. An indirect rollover means you receive the check, at which point TSP withholds 20%, and you have 60 days to redeposit it. Always request the direct option to avoid the withholding.
Can I move the money again after I roll it over?
Yes, but the timing depends on the type of move. If you did a direct rollover from TSP to an IRA, you can move it again immediately via direct transfer. If you took an indirect rollover (check to you), the one-per-year IRA rule applies only to moving between IRAs as opposed to an employer plan like TSP.
Should I open my IRA at a bank or a brokerage?
Go with a brokerage like Vanguard or Fidelity. Better fund options and lower fees.
