TSP Opens 26 Annual Roth Conversions as 10%-24% Tax Rates Become Permanent
Updated
Updated · www.myfederalretirement.com · Aug 17
TSP Opens 26 Annual Roth Conversions as 10%-24% Tax Rates Become Permanent
1 articles · Updated · www.myfederalretirement.com · Aug 17
Summary
January 28, 2026 brought a new TSP feature letting federal employees, separated participants and spousal beneficiaries convert traditional balances to Roth inside the plan, with no IRA rollover required.
Congress strengthened the case in July 2025 by making the 2017 tax brackets permanent, locking in the 10%, 12%, 22% and 24% rates many workers use to gauge conversion costs.
The tool allows up to 26 conversions a year, with a $500 minimum and a requirement to leave at least $500 in each traditional source after converting.
Taxes cannot be withheld from the conversion, so participants must pay ordinary income tax from outside funds; the move is irrevocable once processed.
The strategy is aimed at reducing future RMD pressure at age 73 or 75 and avoiding Medicare IRMAA surcharges, which start at $109,000 for singles and $218,000 for couples in 2026.