Can I Transfer My Roth IRA To My Roth TSP?

TSP participants cannot transfer a Roth IRA into a Roth Tsp. However, you can transfer the Roth TSP into a Roth IRA. Learn why.
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roth ira transfer tsp
Table of Contents
  1. The TSP Does Not Accept Roth IRA Transfers
  2. Can Roth IRAs be Transferred?
  3. Here’s a Better Way
  4. How to Transfer an IRA Into a TSP
  5. The Pros and Cons of Rolling Over Your IRA Into a TSP

Investments in Roth accounts, including Roth IRAs or the Roth TSP, earn favorable tax treatment. You pay taxes on the money when you earn it, but your investments will grow without the drag of taxes until you reach retirement age when you can also make tax-free withdrawals from these funds. In short, you pay the taxes once upfront, and never pay taxes on those investments again.

However, Roth investments have different rules than traditional retirement plans, especially when it comes to the Thrift Savings Plan.

The TSP Does Not Accept Roth IRA Transfers

Here’s a great reader question on getting the most out of your Thrift Savings Plan:

I frequently read your website and find your advice very helpful, and I am looking to make some money moves that I’m not sure are possible. I have a Roth IRA with a lot of money in it, and a Roth TSP with a lot less money in it. I like the simplicity and low expenses of the TSP, and I would like to move the funds from my Roth IRA to my Roth TSP, if possible.

My search brought up the TSP-60-R form, but in bold at the top states “The TSP does not accept transfers from Roth IRAs.”

Are there any tricks or a way for me to accomplish this? Could I convert my Roth IRA to a Traditional IRA, and then use the TSP-60-R form?

Also, since using the Roth TSP, I can’t figure out how to send money directly into my account. In other words, I have my allocation set up to deduct a certain percentage from my pay, which is automatically invested in the funds I have picked. But let’s say I get a $1000 tax refund at the end of the year and want to put that in my TSP. I haven’t figured out a way to do that. Do you know if that’s possible?

First, congratulations on being way ahead of more than half of the military’s servicemembers who haven’t even signed up for the TSP. You’re also way ahead of your peers for asking advanced questions about moving your IRA into the TSP.

It’s also important to state upfront that your financial situation is unique to you, and you should work closely with your financial advisor (if you have one) to get the best possible and most current information regarding your financial affairs.

You’re right about not being able to move your Roth IRA into your Roth TSP. I’m not sure why that can’t be done (maybe that prohibition is in the legislation and the tax code) but perhaps it’s because the Roth TSP is known as a “designated Roth account” and a Roth IRA is not. The difference is important to the Internal Revenue Service (and to financial planners & advisers) because the Roth TSP is still subject to required minimum distributions while a Roth IRA is not.

Because of this, transferring a Roth IRA into your TSP account is not an option. But you may have other options for your Roth IRA. Let’s look at some of those options and some of the associated pros and cons.

Can Roth IRAs be Transferred?

The answer is yes, Roth IRAs can be transferred.

But I wouldn’t convert a Roth IRA to a traditional IRA to move it to the traditional TSP because there are better ways to achieve your goal. The other issue with that type of conversion is that when you eventually started to make withdrawals from your traditional account, the gains of your traditional IRA (and traditional TSP) would be taxable.

You could avoid some of those taxes after you left the military if your taxable income is low enough to do annual incremental Roth IRA conversions in the 0% tax bracket. It’s a challenge to calculate whether you’d pay more taxes on the gains than you’d pay in expenses, and the tracking and conversion effort would be substantial. Luckily, there’s a better choice which I’ll explain in a few paragraphs.

You’re also right about not being able to send your savings or investments directly to your TSP account. Again, federal law permits non-Roth after-tax contributions to designated Roth accounts but few employers offer this option. The TSP does not offer this because they’re not willing to pay the expenses (computer systems, tracking, audits, payroll) of this feature either. It’s part of the reason they’re able to keep their expense ratios so low.

The most practical way to contribute to the TSP is through your base pay. (You could also contribute special pay, incentive pay, and bonuses.) Increase your myPay deduction to the TSP for a few months (to maximize your contributions) and then live off your money in your non-TSP accounts.

For example, you could live off your $1000 tax refund while raising your Roth TSP contribution by an extra $1000.* Once you reach $1917/month in deductions to the TSP you’ll meet the annual $23,000 limit (for 2024). If you happen to exceed $23,000 for some reason, the TSP’s computer systems will kick back anything over $23,000. When you’re deployed to a combat zone, that limit is $69,000 (for 2024).

Another (not very effective) way to get some of your Roth IRA into the TSP would be to withdraw your Roth IRA contributions. The tax code allows withdrawing Roth IRA contributions at any time for any reason (you’ve already paid tax on them). You could raise your paycheck deductions to the TSP while living off the Roth IRA contributions. But I wouldn’t recommend this choice either, because there’s still a better way.

Let’s get back to your original goal: minimal expenses with simplicity.

Here’s a Better Way

The easiest way to replicate the TSP’s simplicity and low expenses is to put your Roth IRA in similar funds that are available from large financial institutions.

The TSP’s equity funds replicate indexes that include the stocks of large American companies (the S&P500 index), the stocks of medium and small American companies (the rest of the market, not in the S&P500), and the stocks of international companies. The TSP’s executive board pays a subcontractor financial firm named Blackrock to manage the funds.

You can find similar passively-managed equity index funds with low expense ratios at other large financial firms.

For example, the TSP’s C, S, and I funds have expense ratios of about 0.055%. (Read the footnotes at that link to learn the details of how the world’s largest index funds can have such low expenses.) Vanguard, Fidelity, and USAA offer similar funds that you can buy in your Roth IRA and your taxable accounts. (Check this fund comparison chart at the Bogleheads Wiki.) They don’t all have the rock-bottom expenses of the TSP but they’ll be lower than most other fund companies.

Right now Vanguard’s version of the TSP’s C fund actually offers an expense ratio of 0.020%, even lower than the TSP C fund. The catch is that you’d have to deposit $100M (the “Warren Buffett” level!) to achieve that expense ratio, but Vanguard’s 500 Index Fund has an expense ratio of 0.04% for balances over $3,000. Fidelity’s Spartan 500 Index Fund has a similar expense ratio for the same minimum balance.

Take a look at Morningstar’s latest report on mutual fund fees. Considering how the rest of the industry is “servicing” its customers, you’ll pay low fees with whichever of the above three makes you happiest.

Boost your TSP contributions to the maximum allowed (depending on your deployment situation), maximize your contributions to your Roth IRA in those other funds, and then invest even more in taxable accounts with those same index funds.

You can easily transfer your Roth IRA from your current company to Fidelity, Vanguard, or USAA. Set up an account on their website and they’ll do the entire transfer for you, including contacting your current Roth IRA custodian to handle the details. You would have no tax impact if you chose to replace your current funds in your Roth IRA with the Fidelity/Vanguard/USAA TSP equivalents. If you sold your current funds in your taxable accounts to buy those other funds then you might have to pay capital gains tax on the realized gains of your current funds. From then on, though, you’d be paying lower expenses in your new funds.

One more tweak: passively-managed index funds invested in international stocks tend to have higher expense ratios than index funds owning American stocks. If your asset allocation includes international equities (for diversification) then put your international allocation in the TSP’s I fund. You can make up your asset allocation to American stocks with equity index funds in your Roth IRAs and taxable accounts.

People are frequently reluctant to contribute “too much” to the TSP because they might want that money before they reach the age of 59.5 for penalty-free withdrawals. However, the federal tax law has several other penalty-free ways to tap the funds in the TSP before age 59.5, and they only require a little advance planning. (Before tapping the TSP, you’d also withdraw your contributions to your Roth IRAs.)

The reality is that if you maximize your Roth TSP funds contributions every year, maximize your Roth IRA funds contributions, and save even more in taxable accounts, then you’ll have plenty of funds to live on after the military while you’re getting ready to tap your TSP. Most of my older readers have reported that they won’t even need to touch it before age 70, let alone age 59.5 because they have income from bridge careers or military pensions, or they’re already financially independent. I’d suggest that younger readers should maximize their TSP contributions every year before that opportunity is lost forever.

If these manipulations seem a little daunting– or if you just want a second opinion– then I recommend contacting a fee-only financial planner (fee-only means no products or commissions or upsells).

For those readers with other types of tax-deferred investment accounts:

  • The Roth TSP will happily accept your transfer of your Roth 401(k) and your Roth 403(b).
  • The traditional TSP will accept your transfer of your 401(k), your traditional IRA, your SIMPLE IRA, your 403(b), or your 457(b).
  • See this two-minute video on the TSP’s YouTube channel.

* (You could also adjust your W-4 withholding to receive smaller income-tax refunds, but right now you’re “close enough” with a $1000 refund on your current salary. Optimizing your tax withholding (and minimizing your refund) is always a good idea if you have the time to project your annual income and estimate the tax bill. However, you’d rather get a small refund than a large bill, especially if that bill has late-payment penalties and interest.)

How to Transfer an IRA Into a TSP

Although you can’t move money from a Roth IRA into your TSP account, you can move money from a traditional IRA into your TSP account. There are two ways to do this.

You can have your traditional IRA money transferred directly into your TSP. This is also often referred to as a transfer or direct rollover. You initiate the transaction but you don’t deposit the money yourself. It’s done between your IRA plan custodian and the TSP.

The other way is for you to roll over your money. In this case, the payment is made to you from your traditional IRA and you will must deposit it yourself into the TSP within 60 days after you receive your payment.

You cannot roll the following types of funds into either the Roth or Traditional balance of your TSP:

  • Money that is not in a qualified plan;
  • Money in a Roth IRA;
  • The contributions component from a traditional non-deductible IRA; and
  • Any money that is not yours, even if it is in a qualified plan (e.g., money in the qualified plan of a spouse, etc.).

To transfer or roll over a traditional IRA into your TSP account, you and the IRA custodian must complete Form TSP-60, Request for a Transfer Into the TSP.

Tax rules regarding transfers and IRA adn TSP rollovers can be complicated. You should consult a qualified tax advisor to ensure that you are fully informed about the tax consequences of this kind of transaction.

You can roll these types of funds into the traditional balance of your TSP:

  • Money from a traditional employer-sponsored plan, such as a traditional 401(k) that you had either before or after your federal career;
  • Money from a traditional IRA where you have the option of deducting your IRA contributions from your federal income tax (called a “traditional deductible IRA”); and
  • The earnings component from a traditional IRA where you haven’t been able to deduct your IRA contributions from your federal income tax (called a “Traditional non-deductible IRA”).

The Pros and Cons of Rolling Over Your IRA Into a TSP

It’s important to consider the impact on your retirement savings plan when you change jobs. The options for your 401(k) plan or your TSP account are:

  • leave it with your old employer
  • roll it over to your new employer’s 401(k) or TSP
  • roll it over into an individual retirement plan account
  • cash it out

Here are some things to consider if you’re contemplating rolling over your IRA into a TSP.

With an IRA, you have greater control over investments. With the TSP, you are restricted to a combination of five funds. If you’re a novice investor, restricting your choices makes it less likely you’ll make a mistake that could cost you dearly.

The TSP has a limited amount of low-cost investment options. You cannot trade individual stocks other mutual funds as a TSP participant. There also are not any alternative investments such as commodities and gold.

IRAs provide for greater portability. You can roll over from one custodian to another and typically keep your existing investments. The funds are only offered in the plan with a TSP, and no other custodian has them.

In an IRA, a professional investment advisor will directly manage IRA investments. This can benefit those who value the advice of an investment manager. However, this investment advice comes at a price in the form of fees that are charged against the IRA. For example, if the fee is 1% of your assets, that could cost you $20,000 a year if you have a $2 million account. Conversely, the TSP has the lowest expense ratios in index funds at around 0.04%.

IRAs have less protection from creditors than TSP accounts.

Moving your funds from one investment vehicle to another is a difficult choice. In all cases, you should consult with a financial planner to ensure you make the right decision for your circumstances.

Military Guide to Financial Independence

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  1. Joe Stokes says

    “You do not have to take a Required Minimum Distribution at age 72 with a TSP.” This is not correct. TSP Traditional and TSP Roth 401k are subject to RMD’s. Roth IRA’s are not subject to RMD’s.

  2. Elena says

    Hi Doug,

    I was trying to find your contact e-mail but I hope this comment will reach you. I read your response about a TSP and Vanguard question and I am learning so much.

    I am a military spouse and my husband is currently an E-6. Of course, he contributes to the Traditional TSP and is trying to max the $18K yearly limit. (You can imagine a lot of meal planning and save/spend-wisely tricks in the process!)

    My questions are:
    1. Can he still open and contribute to a Roth IRA such as one offered at Vanguard even if he is already maximizing the $18K Traditional TSP limit?
    2. If he can still open and contribute to a Roth IRA at Vanguard, can he still contribute up to the $6,500 limit?

    I would appreciate your input, comments, suggestions. Thank you very much.

    • Doug Nordman says

      Good question, Elena, thanks for posting it here!

      Fantastic job on maximizing your TSP contributions. I wish more military families made it a priority. It’s challenging at that income, but your high savings rate will greatly accelerate the compounding.

      Yes, you can absolutely contribute to a Roth IRA in addition to the TSP. In fact you can also contribute his income to your (spousal) Roth IRA as well, even if you do not currently have any earned income in your name. Keep in mind that there are limits at higher incomes and you have to have enough earned income to make the contributions.

      For those under 50 years of age, the contribution limit to a Roth IRA is $5500/year. If you have at least $29K of taxable earned income (W-2 or 1099) then you can maximize your TSP and Roth IRA contributions of $18K + $5500 + $5500.

      You can see all of the TSP contribution limits here (including the $54K limit for deploying to a combat zone):
      and you can see the Roth IRA contribution limits here:
      Note that the $6500 “catch up” limit applies only if the person turns 50 (or older) during that contribution calendar year.

      Vanguard is an outstanding custodian for your IRA accounts… and for saving/investing even more in taxable accounts.

      By the way, feel free to e-mail me at NordsNords at Gmail.

      • Elena says

        Thank you so much, Doug. Budgeting and saving and investing wisely are all so hard to do but I do hope and pray it will pay off in the long run. Lots of leftovers to eat and lots of questions to ask!

        Based from your response and from previous comments, my follow up questions are:
        1.) Can my husband on Active Duty Navy contribute to Roth TSP and max it at $18K and still open, contribute and max a Vanguard Roth IRA at $5500 at the same time or within the same year (provided we have money to spare)?
        2.) Is the Spousal Roth IRA you mentioned through TSP or Vanguard (for example)? I am asking because I am currently figuring it out how to open one.

        I got your email and I responded to it. I’d love to speak with you…

        Elena Abundo

      • Doug Nordman says

        Good questions, Elena, and the answers are “Yes” and “Vanguard”.

        During the same calendar year you can maximize the contributions to your Roth TSP ($18K), your spouse’s Roth IRA ($5500), and your Roth IRA ($5500). You can do that as long as he or you (individually or combined) have at least $29K of earned income (military salary W-2 or other W-2s or 1099s).

        DFAS takes out the TSP contributions during the calendar year, so their last payroll deduction for a 2017 contribution would be in December, but the Roth IRA contributions for 2017 could be made as late as 15 April 2018. Those details are in IRS Publications 590-A and 590-B. If any of that reading raises more questions then comment here or e-mail me or consult an Accredited Financial Counselor on the military base or at a Navy-Marine Corps Relief Society office.

        The spousal Roth IRA can be opened with any IRA custodian. It’d be a separate account at Vanguard, or Fidelity, or USAA, or Schwab, or just about any other financial institution. If you already have your spouse’s Roth IRA at Vanguard then it’s easier and more convenient to open yours there too. You’d have one Roth IRA account under his name (and Social Security number) and another Roth IRA account under your name (and SSN). These are both completely separate from your military TSP account.

  3. Doug Nordman says

    Peter, if your Vanguard funds were the equivalent asset classes of the TSP’s funds, and if the Vanguard funds had a higher expense ratio, then the returns of the Vanguard funds would have lagged the TSP’s performance by about the difference in expense ratios.

    If the Vanguard funds returned more than the TSP then they were probably invested in different asset classes with different risks. Hopefully the higher returns were enough compensation for taking the higher risks.

    They’re both good organizations to invest with, but the Roth TSP allows servicemembers (and federal civil servants) to build much more tax-deferred wealth. (I wish it had been available during our days.) And with the impending TSP matching starting in 2018, even Vanguard can’t compete.

  4. peter gregory says

    23 years active duty Navy, never made it to Hawaii. Did a Brunswick Mane tour though. It was Hawaii with snow, moose and rocks.

    Unfortunately my active duty career arc (1985-2008) never really got into TSP or saw it as a viable career or investment option. Hind-site 20/20 I likely would have. Though have been a Vanguard investor since “83, and contributed monthly. I think apples to apples, my money has been treated better ,and returns higher due to their business model over time, if I had invested the same amount in the TSP over a similar time frame.

    Vanguard vs. TSP-now that’s a good discussion.

  5. Doug Nordman says

    Thanks, Mel!

    I heard your Pro Bowl comments from a lot of readers, and I’ve been passing them on to USAA.

    I can confirm that the Pro Bowl’s pre-game event planning was hampered by geography and not by USAA. (I put quite a few miles on my car that week even though I’m in Central Oahu.) I think the biggest issue is that years ago the NFL (or the players?) moved the players out of Waikiki lodging to Ko’olina. When the renovations caused a move to Turtle Bay, it created a 90-minute bus ride from just about everywhere.

    The events didn’t seem to have a lot of promotion outside of active-duty commands, although the schedule on the NFL site had the dates & times. Saturday’s football practice was open to the public, but I think the NFL logistics staff did not understand what the Volcom Pipeline Pro surf contest does to North Shore traffic.

    If there’s a “good” side to this, I saw many happy servicemembers & families at Naval Station, Wheeler, Schofield, and Kaneohe Marine Corps Base. There’s an undercurrent of sentiment that too many previous Pro Bowl pregame events were at Hickam and not enough at other military commands.

    I don’t know what the right balance of events and locations would be, but two of USAA’s execs are aware of the issues. Next week (once the Super Bowl commotion dies down), I’ll send an e-mail to USAA’s Communications people with anonymous reader feedback. Hopefully next year’s Pro Bowl events will be even more military-friendly.

    That’s a great rule of thumb on account contributions. A 401(k) match will generally be more valuable than an unmatched TSP contribution, but not every family has both– and not every year. And then when you add in entrepreneurs with SEP IRAs or HSAs… someone could write a book and run dozens of spreadsheets to optimize all of the decisions.

    I think everyone (who’s “older”) wishes they cared more about financial planning when they were younger. But you’ve proved (once again) that a high savings rate can overcome a lot of investing mistakes!

  6. vanguard23 says

    Thanks for the refresher. I also wanted to thank you for your efforts in covering the recently concluded NFL Pro Bowl. It just seemed like there wasn’t as much information on events and “open” practices like there was when the players practiced at Hickam as well as Kapolei HS, and not just private practices at Turtle Bay. Of course, with the Four Seasons (formerly Marriott) in Ko Olina under massive renovation, there weren’t any players staying in that area. I read some forums wherein some folks who traveled to Hawaii for the Pro Bowl were a bit disappointed (and that’s putting it mildly) they didn’t have as much opportunity to see the players prior to the actual Pro Bowl…heck there wasn’t even an Ohana Day like there used to be. I wonder if this is a function of USAA being the lead sponsor for the event.

    In any case, I thought it was also worth adding the “rule of thumb” for prioritizing one’s investments for retirement as follows:
    1. Contribute to the TSP/401(k)/403(b) up to the Match…which in the case of the uniformed services, there is no “company” match…at least not yet. I suppose this can be subjective…or would you recommend something like a 5% (similar to the match FERS employees get) or 6% contribution to mimic typical civilian company 401(k) matches
    2. Maximize contributions to IRA/Roth IRA
    3. Contribute up to the maximum limit of TSP/401(k)/403(b)
    4. Contribute to taxable accounts
    Of course, all these contributions are ideally into low-cost, well diversified mutual funds (or TSP).

    Being one of the may “older” readers you mentioned, I was fortunate enough to actually follow the advice of maximizing contributions to the TSP (especially when my wife and I were both deployed to a combat zone) and IRA/Roth IRA, and contributing additional funds to taxable accounts…and that was not by design. I just knew the funds were better invested than just sitting in a bank account, with meager interests that trailed inflation. I just wished I had interest in and knew more about financial planning early in my career to avoid certain mistakes along the way. Despite some pitfalls, however, my wife and I were still able to achieve financial independence mainly due to our proclivity for living below our means and our saving habits.


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