Big Changes to the Thrift Savings Plan in 2026

Do you have a civilian or military-sponsored Thrift Savings Plan (TSP)? If so, there is an important new update you should know about for this incoming tax year.

What is the TSP?

The Thrift Savings Plan (TSP) is an employer sponsored retirement savings plan similar to a 401(k) but designed specifically and only for federal government employees and members of the armed forces.

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What’s new?

As of January 2026, the TSP now allows participants to convert funds from traditional (pre-tax) balances into Roth (after-tax) balances within their TSP account. This is called a Roth conversion.

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Why does this matter?

This new feature gives you more flexibility in managing your retirement taxes. When you convert traditional funds to Roth, you pay income taxes on the converted amount today. In exchange, qualified withdrawals in retirement can be tax-free.

There are no fees to complete a conversion, but it’s important to evaluate whether this strategy makes sense for your specific situation. The key consideration is whether it’s more beneficial to pay taxes now or later.

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Is it the right move for me?

That depends on numerous factors such as your current tax bracket, expected future income, and long-term retirement goals. A Roth conversion can be a powerful strategy, but it’s not right for everyone. Be sure to talk to a financial or tax professional before making any decisions - we’re here to help.

If you’re unsure whether this move fits your financial plan, our team is here to help. We can run a personalized analysis to determine if this strategy could benefit you best today or in future tax years.

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For those who want to explore this on their own, the TSP offers a helpful step-by-step calculator:

Roth In-Plan Conversion Calculator | Thrift Savings Plan (TSP)

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You can also learn more by reviewing the full TSP article:

Roth in-plan conversions | The Thrift Savings Plan (TSP)

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