The Roth TSP feature operates along the lines of Roth 401(k)-type features that have become increasingly popular in the private sector in recent years.

Unlike in a Roth IRA, there are no income limits on eligibility to participate in the TSP Roth feature. Thus, for higher-earning employees, the TSP Roth feature may be the only opportunity to make Roth-style investments. If you are eligible to invest in a Roth IRA, making Roth investments in the TSP will not affect that IRA.

An employee may participate in the traditional design, the Roth design or both and may designate how much of ongoing investments to invest in each. However, the combined total investment in both may not exceed the IRS-set maximum in a given year (see above).

Similarly, what the TSP calls “catch-up contributions”—additional investments allowed for those age 50 or older in a year—can be made into both types of balance but the total of both, Roth and traditional, may not exceed the separate limit ($7,500 in 2024) for them.

For investors who have both types of balances, the allocation of ongoing investments among the TSP’s investment funds applies to both, as does any transfer between funds of money already on account. The employing agency is responsible for properly accounting for the tax status of investments; there are procedures for correcting errors in how investments are designated.

Like traditional investments, Roth investments typically have to be made from ongoing pay. The exception is that the TSP also accepts transfers of Roth balances from other similar employment-based retirement savings accounts, such as the 401(k) plan from a worker’s previous employer (this option does not apply to holders of beneficiary accounts; however, their accounts can contain Roth investments made by their deceased spouse, and the associated earnings). These must be direct account-to-account rollovers; the TSP will not accept Roth money distributed from any plan after the participant has received the money. Nor will the TSP accept a transfer or rollover from a Roth IRA.

The TSP also will transfer out traditional and Roth balances separately for employees who separate from government service for retirement or other reasons and who wish to transfer their money into an IRA or another employer’s retirement savings plan.

Agency contributions on behalf of employees covered by the Federal Employees Retirement System are based on the employee’s total percentage of salary investment, traditional and Roth investments combined, but agency contributions are made only under the traditional design.

Money in a traditional TSP balance cannot be converted into a Roth TSP balance

The TSP (along with similar retirement savings programs) is authorized, but not required to allow such conversions. Carrying out that policy, if it is put in place at all, was projected to be a long-term project for the TSP. Read the FEDweek newsletter at for the latest information.

For newly hired employees, the default personal investment of 5 percent of salary goes into a traditional balance by default, although they may designate that investment to a Roth balance. (Note: They may also choose an investment level other than 5 percent, to either or both types of balance, including declining to invest personal money. Those who don’t invest from their pay receive no matching contributions from the government but they do receive the automatic investment equaling 1 percent of salary that is paid regardless of whether a FERS employee invests personal money.)

The TSP separately accounts for all Roth balance investments, gains, and losses in order to determine the taxable and nontaxable portions of a distribution from a participant’s account.

A participant with both traditional and Roth balances may choose to take all forms distributions from only one type of balance or on a prorated basis from both. Those choosing to withdraw their accounts as annuities have to buy separate annuities for each type of balance if they wish to annuitize their entire amount, and have to elect the same annuity options for each.

On withdrawal, Roth investments are tax-free. Their associated earnings also are tax-free if: the withdrawal is made at least five years after the beginning of the year in which the first Roth investment was made; and the participant is at least 59 ½ years old, disabled or deceased. For this purpose, an IRS definition of disability is used, not the federal retirement or Social Security definitions.