Federal Workers Will Get In-Plan Roth Conversions Under New Rule

A new rule for the federal government’s retirement plan will allow enrolled workers and retirees to convert funds to Roth accounts.

The Federal Retirement Thrift Investment Board final rule released Wednesday permits civilian federal employees and uniformed service members to convert money in a traditional Thrift Savings Plan (TSP) to a Roth TSP balance. The change will go into effect on Jan. 28.

Savers will be required to pay income tax on the money converted from their traditional TSP balance, which uses pre-tax contributions, into a Roth TSP account. There is a $500 minimum for each conversion. The Roth conversions ...