How to Roll Over Your TSP to an IRA: Step-by-Step Mechanics

This guide covers the execution — how to actually move your TSP balance to an IRA without triggering unnecessary taxes or penalties. If you're still deciding whether to roll over at all, start with the TSP Stay vs. Rollover decision guide, which covers the G Fund, the Rule of 55, and when to keep money in TSP.

Step 0: Confirm you're eligible to roll over

You can initiate a TSP rollover in two situations:

• After separating from federal service — at any age, for any reason (voluntary retirement, RIF, resignation, VERA, disability). The separation is what makes your account distributable.
• While still employed, at age 59½ or older — TSP allows age-based in-service withdrawals starting at 59½, up to 4 times per year. You can choose to roll these distributions directly to an IRA. See the TSP in-service withdrawal guide for full details.

If you're under 59½ and still employed, you generally cannot roll TSP funds to an IRA (hardship withdrawals are not eligible for rollover; loans are not distributions at all).

The most important concept: direct vs. indirect rollover

The distinction between a direct and indirect rollover determines whether you lose 20% to mandatory withholding before the money ever reaches your IRA.

Direct rollover (what you want)

In a direct rollover, the TSP transfers funds directly to the IRA custodian — no check made out to you, no withholding. The money moves institution-to-institution. You never touch it, so the IRS does not require withholding.

This is the only method you should use for a TSP rollover. It eliminates the most common and most costly mistake in the entire process.

Indirect rollover (avoid this)

In an indirect rollover, the TSP issues a check payable to you. Federal law requires the TSP to withhold 20% of the taxable portion for federal income taxes before sending the check.¹

Here's the trap: you have 60 days to deposit the full pre-withholding amount into an IRA to avoid taxation. If your TSP sent you a check for $160,000 (having withheld $40,000 from a $200,000 distribution), you must deposit $200,000 — not $160,000 — into the IRA within 60 days to complete the rollover tax-free. You have to come up with the $40,000 out of pocket and wait to recover it on your tax return.

If you deposit only $160,000, the $40,000 gap is treated as a taxable distribution. You'll owe income tax on it (plus a 10% early withdrawal penalty if you're under 59½). The 20% withheld will show up as a credit when you file, but the tax liability on the gap is real.

Scenario 1: Traditional TSP to a Traditional IRA

This is the most common rollover — moving pretax traditional contributions and earnings to a traditional (pretax) IRA. No taxes are owed at the time of the rollover; the money stays pretax and is taxed when you take distributions in retirement.

Step-by-step

1. Open a traditional IRA at your custodian. If you already have a traditional IRA at Fidelity, Schwab, Vanguard, or another custodian, you can roll into the existing account. If not, open a new one. Get your account number and the custodian's rollover instructions (usually a mailing address or routing number for direct transfers).
2. Log into My Account at tsp.gov. Navigate to "Withdrawals and Changes to Installment Payments." Select a full or partial withdrawal. On the distribution method screen, choose direct rollover to an IRA — not a check payable to yourself.
3. Enter the receiving IRA information. You'll provide the IRA custodian's name, account number, and mailing address. TSP will make the check payable to the custodian (e.g., "Fidelity Investments FBO [Your Name]") rather than to you personally. This is what makes it a direct rollover.
4. Select the amount. You can roll the full balance, a specific dollar amount, or a specific percentage. If you want a partial rollover, enter the exact amount to transfer.
5. Choose which account source. If you have both traditional and Roth TSP balances, you can specify which source to roll. You can roll only traditional, only Roth, or both — the TSP handles them separately because they go to different IRA types.
6. Submit and wait. TSP processes most online requests within 5–10 business days. The check is mailed to the IRA custodian. Allow up to 3–4 weeks for the full process, including the custodian posting the funds to your IRA account.
7. Confirm with your custodian. After a few weeks, log into your IRA account and verify the funds appear as a rollover contribution (not a regular contribution, which has annual limits).

Tax treatment

The entire direct rollover from traditional TSP to traditional IRA is a non-taxable event. TSP will send you a Form 1099-R in January showing the distribution amount in Box 1 and the taxable amount in Box 2a, with distribution code G (direct rollover) in Box 7. You report this on your tax return using Form 4972 or by entering the 1099-R in your tax software — the rollover treatment eliminates the tax.

Scenario 2: Traditional TSP to a Roth IRA (conversion rollover)

Rolling traditional TSP to a Roth IRA is not a simple transfer — it's a taxable conversion. The entire amount you roll from traditional TSP to a Roth IRA is treated as ordinary income in the year of the distribution.

This is functionally identical to withdrawing the traditional TSP, paying income tax, and contributing the remainder to a Roth IRA — except that with a direct rollover, you don't have to write a check to the IRS separately, and you're not subject to the Roth IRA annual contribution limit ($7,000 in 2026).

Before choosing this path, consider the tax impact carefully:

• Large traditional TSP balances ($500K+) rolled to a Roth IRA in a single year can push you into the 32% or 37% bracket for that year.
• The IRMAA Medicare surcharge is based on income from two years prior — a large Roth conversion in 2026 affects your 2028 Medicare Part B premium.
• TSP now offers in-plan Roth conversions (launched January 28, 2026), which let you convert traditional TSP to Roth TSP without leaving the TSP. If your goal is simply to build up Roth assets, the in-plan conversion route may be more efficient than a full rollover to a Roth IRA.

Multi-year partial rollover: A common strategy is to roll a portion of traditional TSP to a Roth IRA each year — filling your current tax bracket without pushing into the next one. This requires rolling specific dollar amounts rather than the full balance, and requires annual planning against your projected income from FERS pension, FERS supplement, other wages, and Social Security.

Scenario 3: Roth TSP to a Roth IRA

If you have a Roth TSP balance, you can roll it directly to a Roth IRA. This is a non-taxable direct rollover — you're moving after-tax money to an after-tax account.

Step-by-step

Same process as Scenario 1, but you select the Roth account source and provide a Roth IRA as the receiving account. The TSP will not roll Roth money to a traditional IRA — if you mistakenly provide a traditional IRA account number, the custodian will typically reject the deposit or the TSP will flag the mismatch.

The 5-year clock issue — important warning

Here is the part that catches many people off guard: the 5-year period your money spent in the Roth TSP does not carry over to the Roth IRA.²

The Roth IRA has its own 5-year clock for "qualified distributions" — the period starts on January 1 of the first year you made any contribution to any Roth IRA. If you're rolling Roth TSP to a Roth IRA for the first time and you've never had a Roth IRA before, your Roth IRA 5-year clock starts the year you open it.

The practical impact:

• If you already have an existing Roth IRA that you opened and contributed to more than 5 years ago: the 5-year requirement is already satisfied. Distributions from the rolled-over balance will be treated as qualified (tax-free) once you're over 59½. No issue.
• If you're opening a Roth IRA for the first time to receive the Roth TSP rollover: your Roth IRA clock starts now. For the first 5 years, distributions from the Roth IRA are not "qualified" — which means the earnings portion is taxable if you withdraw before age 59½ (though the contribution and conversion basis comes out first, tax-free, under the ordering rules).

For most federal employees rolling Roth TSP to a Roth IRA after separation at or after 59½, this is largely a non-issue — you can take qualified distributions immediately after the 5-year requirement is met, and if you're already past 59½, you just need to wait out the clock. But for feds who retire early (Rule of 55, VERA), understand that rolling Roth TSP to a fresh Roth IRA starts a new 5-year timer on the earnings inside it.

Partial rollovers: keeping some in TSP while rolling the rest

You are not required to roll your entire TSP balance. You can roll a specific dollar amount and leave the remainder in TSP indefinitely.

Common reasons to do a partial rollover rather than a full one:

• Rule of 55 preservation: If you separated at age 55–58, you can withdraw from TSP penalty-free under the Rule of 55 until 59½. Money you roll to an IRA immediately loses this protection — those rolled funds are subject to the 10% penalty if withdrawn before 59½. Keep the portion you might need before 59½ in the TSP; roll only what you won't touch until later.
• G Fund access: The G Fund (principal-protected, intermediate-Treasury-yield) doesn't exist in IRAs. If you want to keep a portion in the G Fund as a principal-protected bond allocation, you have to keep that portion in TSP.
• Staged Roth conversion: Roll a fixed amount each year — sized to fill your current tax bracket — rather than all at once. Requires keeping a traditional TSP balance available to pull from each year.

To do a partial rollover, simply enter the specific dollar amount you want to roll (rather than selecting "full account") when you initiate the distribution at tsp.gov. The TSP will distribute that amount and leave the remainder invested in your current allocation.

Choosing an IRA custodian

For a direct rollover from TSP, the custodian choice matters primarily for four reasons: investment options, fees, advisor access, and convenience.

TSP processing timeline

Most online distribution requests at tsp.gov are processed within 5–10 business days after the request is submitted and confirmed. Add several additional business days for the check to arrive at the IRA custodian by mail and for the custodian to post it to your account.

Plan for 3–4 weeks total from initiating the request at tsp.gov to the funds appearing in your IRA. In practice, many rollovers complete faster, but give yourself a month of buffer if you're counting on the funds being available by a specific date.

If TSP requests additional documentation (for example, a notarized signature or beneficiary confirmation in certain circumstances), the timeline extends. Check the status of your distribution request by logging into My Account at tsp.gov — it will show whether the request is pending, in process, or completed.

What changes after the rollover

Once money leaves TSP and enters an IRA, the rules governing it change permanently:

• Rule of 55 is lost on rolled funds. Even if you separated from federal service at age 55 and rolled your TSP to an IRA the same week, those IRA funds are subject to the 10% early withdrawal penalty until age 59½. The Rule of 55 applies to money in the TSP; it does not transfer to an IRA.
• G Fund access is gone. The G Fund is TSP-exclusive. The closest IRA equivalent — stable-value funds, money market funds, short-term Treasury ETFs — does not replicate its principal-protected intermediate-yield structure.
• TSP does not accept rollovers back from IRAs. This is not reversible. You can roll an old employer's 401(k) into TSP while you're still employed at the same federal agency. But you cannot roll an IRA back into TSP. Once the money leaves, it's outside the federal system permanently.
• RMD rules are the same. Traditional IRA RMDs start at age 73 (born 1951–1959) or 75 (born 1960+) — identical to the TSP RMD schedule. Roth IRA has no lifetime RMDs, the same as Roth TSP under SECURE 2.0 § 325.
• Investment universe expands. You can now access any mutual fund, ETF, individual stock, REIT, bond, or other investment your custodian supports — not just the TSP's 5-fund menu.
• Beneficiary designations are separate. Any TSP beneficiary designation (TSP-3 form) does not transfer to the IRA. You must designate beneficiaries separately at your IRA custodian. Do this on day one.

Common mistakes and how to avoid them

When to roll, when to wait

The mechanics above tell you how to roll. The timing of when to roll — immediately at separation, after a year, or only after 59½ — depends on your FERS pension income, FERS supplement, Social Security plans, Roth conversion strategy, and whether you might need pre-59½ access to TSP funds.

A few general rules:

• If you separated before 59½: pause before rolling. Confirm you won't need penalty-free access to the rolled funds before 59½. Even if you're confident, consider a partial rollover rather than full.
• If you're 59½ or older: the Rule of 55 is irrelevant (you're past the IRA threshold anyway). The decision comes down to G Fund access, advisor management preferences, and Roth conversion plans.
• If you have a large traditional TSP and are planning Roth conversions: consider whether to roll to a traditional IRA first, then convert at your pace. Or use TSP's own in-plan Roth conversion feature (launched January 28, 2026) to avoid leaving the TSP at all.

1. 20% mandatory withholding on TSP distributions not directly rolled over: TSP Publication TSPBK26 — Tax Rules about TSP Payments; IRS Rollover Chart — Eligible Plans and Withholding Rules. The 20% withholding requirement for distributions that are "eligible rollover distributions" not rolled directly is governed by IRC §3405(c).
2. Roth TSP 5-year period does not carry over to Roth IRA: IRS Retirement Plans FAQs on Designated Roth Accounts — Q&A specifically addressing the 5-year rule at rollover. Exception: if the Roth IRA receiving the rollover already has a 5-year clock running (from an earlier Roth IRA contribution), that earlier date governs.
3. TSP rollover eligibility and mechanics: TSP Fact Sheet TSPFS05 — Rollovers from the Thrift Savings Plan to Eligible Retirement Plans. Covers eligible receiving plans, withholding rules, and traditional vs. Roth treatment.
4. Rule of 55 — applies to TSP only when money remains in TSP at the time of distribution, not after rolling to an IRA: IRC §72(t)(2)(A)(v); IRS Notice 87-13. SECURE 2.0 § 325 (no Roth TSP RMDs starting 2024): Pub. L. 117-328 § 325.
5. TSP in-plan Roth conversion (launched January 28, 2026): TSP.gov — Roth In-Plan Conversions. Minimum $500 eligible balance; maximum 26 conversions per year; irrevocable.

Values and rules verified as of June 2026. TSP processing timelines, withholding rules, and IRA mechanics are governed by federal law and IRS regulations; verify specifics at tsp.gov and irs.gov before initiating a rollover.