Roth TSP contributions are taxed now and qualified withdrawals come out federal-tax free later, while traditional contributions cut your taxes now and are taxed as income when withdrawn; the better choice depends mostly on whether you expect your tax rate in retirement to be higher or lower than it is today.
Roth or traditional is one of those questions that sounds like it has a right answer you are supposed to already know. You do not need to. It comes down to one idea: you are going to pay income tax on this money once. The only question is whether you pay it now or later.
That is the whole choice. Traditional TSP is "tax later": you skip the tax today, and the IRS collects when you withdraw. Roth TSP is "tax now": you pay today, and qualified withdrawals, including all the growth, come out tax free. Picture it as paying for seeds versus paying for the harvest. With Roth, you pay tax on the seeds and keep the whole harvest.
This guide explains how each side works, the rules for tax-free Roth withdrawals, the in-plan Roth conversion that the TSP added in 2026, and the new rule that sends some catch-up contributions to Roth. It is general education from FFEBA, an education organization, not tax advice for your situation.
01What is the Roth TSP?
The Roth TSP is an after-tax balance inside your regular TSP account: you contribute money that has already been taxed, and qualified withdrawals of contributions and earnings are federal-tax free (TSP, retrieved 2026-07-05). It uses the same funds, the same contribution limits and the same payroll deduction as the traditional side.
- Traditional TSPPre-tax contributions. Lowers your taxable income this year. Withdrawals, including earnings, are taxed as ordinary income.
- Roth TSPAfter-tax contributions. No tax break this year. Qualified withdrawals, including earnings, are federal-tax free.
- Qualified Roth withdrawalA Roth withdrawal made at least five tax years after your first Roth contribution and on or after age 59 and a half, disability or death (IRS Publication 721, retrieved 2026-10-11).
- In-plan Roth conversionMoving money from your traditional TSP balance to your Roth TSP balance, paying income tax on the converted amount in that year.
You can send any percentage of your own contributions to Roth, traditional, or a split. Your agency's contributions are the exception: agency automatic and matching money always goes to the traditional balance (TSP, retrieved 2026-07-05). So even an employee who sends every dollar to Roth will retire with a traditional balance too.
02How is Roth TSP different from traditional TSP?
The difference is timing: traditional cuts your taxes today and taxes the withdrawals, while Roth taxes the contribution today and frees qualified withdrawals from federal tax. Investment returns are identical either way, because both sides hold the same funds.
| Feature | Traditional TSP | Roth TSP |
|---|---|---|
| Tax on contributions | None now; lowers taxable income | Taxed now; no deduction |
| Tax on qualified withdrawals | Ordinary income | Federal-tax free, including earnings |
| 2026 contribution limit | $24,500 combined with Roth (IRS, retrieved 2026-10-11) | Same shared limit |
| Agency contributions | Go here | Never go here |
| Required minimum distributions | Yes, starting at 73 or 75 (IRS, retrieved 2026-10-11) | None during your lifetime (IRS, retrieved 2026-10-11) |
| Effect on retirement taxable income | Raises it | Does not raise it when qualified |
| Can roll to | Traditional IRA or eligible plan | Roth IRA or a Roth plan account |
The last two rows matter more than most people expect. In retirement, your taxable income affects your bracket, how much of your Social Security is taxed, and, for higher incomes, your Medicare premiums. Roth money gives you a source of cash that does not push those numbers up.
03Which is better for me, Roth or traditional TSP?
It depends on how your tax rate today compares with your tax rate when you withdraw. Roth tends to come out ahead when your future rate is equal or higher; traditional tends to come out ahead when your future rate is lower.
Federal employees have a twist most private-sector workers do not: a FERS or CSRS pension. Your pension, Social Security, and eventually required minimum distributions all count as taxable income in retirement, which can keep your bracket higher than you might guess.
- Early career, lower bracket. If your rate is low now, paying the tax now may cost less than paying it later at a higher rate.
- Peak earning years, high bracket. A traditional deduction is worth more when your current rate is high.
- Big pension coming. A large FERS or CSRS annuity plus Social Security may keep your retirement bracket close to your working bracket.
- Married now, possibly single later. A surviving spouse files as single, often with similar income and a narrower bracket. Roth money can soften that.
- Leaving money to heirs. Roth balances have no lifetime RMDs, and qualified withdrawals by heirs are tax free.
- Unsure. Splitting contributions gives you both kinds of money to draw from later, which is flexibility in itself.
You cannot know your future tax rate, but you can give your future self more than one kind of money to work with.
04What does the Roth vs traditional math look like?
Worked example (educational estimate on the assumptions shown). Suppose you set aside $10,000 of pay, you are in the 22 percent federal bracket now, and the money doubles before you withdraw it. These are hypothetical assumptions for illustration, not a projection.
| Assumption set | Traditional | Roth |
|---|---|---|
| Amount invested | $10,000 (no tax now) | $7,800 (after paying $2,200 tax) |
| Value after doubling | $20,000 | $15,600 |
| Tax at withdrawal if your rate is 22% | $4,400, leaving $15,600 | $0, leaving $15,600 |
| Tax at withdrawal if your rate is 12% | $2,400, leaving $17,600 | $0, leaving $15,600 |
| Tax at withdrawal if your rate is 24% | $4,800, leaving $15,200 | $0, leaving $15,600 |
When the tax rate is the same at both ends, the result is identical. The winner flips only when the rate changes. The example ignores state taxes, the agency match (which is always traditional) and the fact that you can contribute the same dollar amount to either side, which in practice lets a Roth saver shelter more after-tax value under the same limit.
Your record, not our example
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05What are the Roth TSP withdrawal rules?
A Roth TSP withdrawal is completely tax free when it is qualified: at least five tax years have passed since your first Roth TSP contribution, and you are 59 and a half or older, disabled, or the payment goes to a beneficiary after your death (IRS Publication 721, retrieved 2026-10-11). Both conditions must be met.
- The five-year clock starts with your first Roth contribution to the TSP, counted from January 1 of that year. Some people make a small Roth contribution early, even while most of their money goes traditional, so the five-year clock starts sooner.
- Non-qualified withdrawals are split. Your Roth contributions come back tax free, but the earnings portion is taxable and may carry the 10 percent early withdrawal penalty if you are under 59 and a half.
- You choose the source. When you withdraw, you can take from traditional, Roth, or both proportionally. That lets you manage your taxable income year by year.
- No lifetime RMDs. Roth TSP balances do not have required minimum distributions while you are alive (IRS, retrieved 2026-10-11).
The general withdrawal rules, including the age 55 separation rule, are in our TSP withdrawal guide.
06Can I convert traditional TSP money to Roth?
Yes. The TSP began offering in-plan Roth conversions in January 2026, letting you move money from your traditional balance to your Roth balance inside the same account (Interior Business Center notice, retrieved 2026-10-11). FedSmith reported the feature went live on January 28, 2026 (retrieved 2026-10-11).
A conversion is a trade: you pay income tax now on the converted amount so that the money, and its future growth, can later come out tax free.
- 01
Estimate the tax first
The converted amount is added to your taxable income for the year (Interior Business Center notice, retrieved 2026-10-11). A large conversion can push you into a higher bracket.
- 02
Line up the cash to pay it
You must pay the tax from money outside your TSP account; you cannot use part of the converted amount to cover it (Interior Business Center notice, retrieved 2026-10-11).
- 03
Check the TSP's limits
The TSP sets a minimum conversion amount and a cap on how many conversions you can make each year; confirm both in My Account before you start.
- 04
Submit in My Account
Choose the amount and confirm. A completed conversion cannot be undone.
- 05
Plan your estimated taxes
Because no tax is withheld from a conversion, you may need to make an estimated payment or raise paycheck withholding to avoid an underpayment penalty.
Worked example (educational estimate on the assumptions shown). You convert $20,000 and all of it falls inside the 22 percent federal bracket. Your added federal tax is about $4,400, which you pay from savings. If your state taxes income, add that too. The assumptions are hypothetical; your actual bracket depends on your full return.
Conversions tend to get attention in lower-income years: the gap between retirement and starting Social Security, a year with unpaid leave, or a year after a move to a state with no income tax. They tend to make less sense if you would have to pay the tax by withdrawing other retirement money.
07What is the Roth catch-up rule for high earners?
Starting in 2026, if your wages from TSP-eligible positions were above $150,000 in 2025, any catch-up contributions you make in 2026 must go to the Roth balance (Interior Business Center payroll notice, retrieved 2026-10-11; IRS, retrieved 2026-10-11). Your regular contributions, up to the $24,500 limit, can still be traditional.
The wage test looks back one year, so a promotion this year does not change this year's treatment. The threshold is indexed and can change annually.
08Can I roll Roth TSP money into a Roth IRA?
Yes. After you separate, you can roll Roth TSP money directly into a Roth IRA without tax. Roth TSP money must go to a Roth account, and traditional money to a traditional account, unless you deliberately convert and pay the tax.
One wrinkle: a Roth IRA has its own five-year clock, separate from the TSP's. If you open your first Roth IRA at the time of the rollover, its clock starts then. Opening a small Roth IRA years earlier can avoid that wait. The TSP does not accept rollovers in from Roth IRAs, so moving Roth money out of the TSP is a one-way door.
09Moving forward with the Roth decision
Roth versus traditional is not a one-time vote. You can change your split every pay period, and since 2026 you can convert existing traditional money too. The best mix depends on your pension, Social Security timing, your spouse's situation, your state and how you plan to draw down the account. The TSP hub guide covers contributions and the match, the TSP funds guide covers where the money is invested, and our federal retirement taxes guide puts all your income sources together.
The TSP income calculator runs an educational estimate on assumptions you enter; it is not a projection or a promise.
FFEBA is an education organization. If you want someone to look at your own numbers, we can match you with a Federal Retirement Consultant (FRC), a professional trained on federal benefits. The FRC designation is listed with FINRA. The first review is free, nothing is booked until you choose a time, and you are never obligated to work with anyone we introduce. Get matched with an FRC.
10Questions federal employees ask
What is the Roth TSP?
The Roth TSP is the after-tax side of your Thrift Savings Plan. You contribute money that has already been taxed, and qualified withdrawals of both contributions and earnings are federal-tax free. It sits in the same account and uses the same funds as your traditional balance.
Is Roth or traditional TSP better?
Neither is better for everyone. Roth tends to help if your tax rate in retirement will be the same or higher than today; traditional tends to help if your rate will be lower. Many federal employees split contributions between the two to hedge.
Can I convert my traditional TSP to Roth?
Yes. The TSP began offering in-plan Roth conversions in January 2026 (Interior Business Center notice, retrieved 2026-10-11). The converted amount is taxable income for that year, and you must pay the tax from money outside your TSP account.
What are the Roth TSP withdrawal rules?
A Roth TSP withdrawal is fully tax free when it is qualified: at least five tax years have passed since your first Roth contribution and you are 59 and a half, disabled, or deceased (IRS Publication 721, retrieved 2026-10-11). Otherwise the earnings portion is taxable and may carry the 10 percent penalty.
Does my agency match go into Roth?
No. Agency automatic and matching contributions always go into your traditional balance, even when your own contributions go to Roth (TSP, retrieved 2026-07-05).
Do Roth TSP balances have required minimum distributions?
No. Roth balances in workplace plans like the TSP are not subject to required minimum distributions while the owner is alive (IRS, retrieved 2026-10-11). Beneficiaries who inherit the balance do face distribution rules.
Reviewed by the FFEBA education team. Last reviewed October 2026.
Sources
- Thrift Savings Plan, traditional and Roth contributions, retrieved 2026-07-05
- Internal Revenue Service, Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits (for 2025 returns), retrieved 2026-10-11
- Internal Revenue Service, retirement plan and IRA required minimum distributions FAQs, retrieved 2026-10-11
- Internal Revenue Service, retirement topics: catch-up contributions, retrieved 2026-10-11
- U.S. Department of the Interior, Interior Business Center notice on TSP Roth in-plan conversions (September 25, 2025), retrieved 2026-10-11
- U.S. Department of the Interior, Interior Business Center payroll notice on 2026 TSP limits (December 1, 2025), retrieved 2026-10-11
- FedSmith, Roth in-plan conversions officially launch (January 28, 2026), retrieved 2026-10-11
Every government figure on this page carries its source and retrieval date. Worked examples are educational estimates on the assumptions shown, not a projection of any person's benefit. FFEBA is an education organization, not a financial advisor.
