In-Plan Roth Conversions for Your Thrift Savings Plan: A Guide for Scott Air Force Base Personnel
Written by Andy Branz – Sr. Wealth Advisor at Clark Wealth Partners
If you are part of the team at Scott Air Force Base, whether active duty Air Force or a civilian with DITCO, DISA, USTRANSCOM, or DOD) our firm is local to the area. We understand the demands: extended hours maintaining national defense operations, from communications to transportation logistics. As you approach the 50+ age range, retirement planning becomes a priority. This guide explores in-plan Roth conversions within the Thrift Savings Plan (TSP). It serves as a resource for effective tax strategies, based on experience assisting base personnel in optimizing their financial futures.
At Clark Wealth Partners, we focus on simplifying complex financial matters into practical strategies. Our in-house CPA and Wealth Advisor, Jake McKinney, handles detailed analyses for proactive tax strategies. With the TSP’s in-plan Roth conversion feature available since late January 2026, it may present planning opportunities depending on individual circumstances in O’Fallon and surrounding areas. Conversions can now occur directly within the TSP, without transferring to an IRA. This overview explains the concept, its importance, and its potential for long-term tax savings.
What Exactly Is an In-Plan Roth Conversion in the TSP?
An in-plan Roth conversion involves transferring funds from a traditional TSP balance to a Roth TSP balance (without leaving the plan). Effective January 28, 2026, up to 26 conversions are permitted annually, with a minimum of $500 each. The TSP imposes no fees, but the converted amount is added to taxable income for that year. The process is irrevocable (no reversals are allowed) so careful planning is essential.
Eligibility includes active participants (such as those at DISA or USTRANSCOM), separated or retired individuals, or spouse beneficiaries with at least $500 in a vested traditional balance. Non-spouse beneficiaries are excluded. If no Roth balance exists, the initial conversion establishes one automatically.
The rationale is strategic: For individuals who believe their future tax rates may be higher, conversions may warrant evaluation to enable tax-free growth indefinitely. This mitigates the impact of potential future tax increases on withdrawals.
Short-Term Effort for Long-Term Benefit
Consider this analogy: After work one day, you tend to your garden. Pull weeds when they are small, requiring effort now but resulting in a thriving space later. Or, you ignore them, providing immediate ease but leading to an overgrown mess that demands far more work to fix.
Roth conversions follow a similar principle: The immediate tax obligation (potentially increasing the current bracket) yields substantial advantages. Convert pre-tax funds early to avoid accumulating taxable income in retirement. As Abraham Lincoln observed, “Things may come to those who wait, but only the things left by those who hustle.” Act proactively for a streamlined retirement.
Lifetime Tax Savings: Optimizing Resources for Meaningful Purposes
Financial resources support relationships like family vacations and charitable contributions. Roth conversions help retain more funds for these priorities.
In straightforward terms: Taxes are paid upfront, but subsequent growth and qualified withdrawals (after age 59½ and a five-year Roth holding period) are tax-free. In some circumstances and depending on future tax law and personal income levels, this strategy may reduce lifetime taxes. It is generally recommended to do conversions during lower-income periods to leverage rate differences. Anyone about to retire with a substantial traditional TSP has a unique window to fill up their current tax bracket with Roth conversions and continue to do so in small strategic amounts for as many years as it makes sense.
Slashing Future RMDs: Mitigating Tax Obligations
Under current law, Required Minimum Distributions (RMDs) generally begin at age 73 for individuals born between 1951–1959 and age 75 for those born in 1960 or later. For base personnel, this combines with pensions and Social Security, potentially elevating tax brackets.
Roth accounts have no lifetime RMDs. Conversions reduce the traditional balance, decreasing mandatory withdrawals. For a $1 million TSP at age 75 (half traditional: approximately $40,000 taxable RMD versus $80,000 if fully pre-tax). This results in annual savings, preserving more for essential priorities.
For beneficiaries (particularly non-spouses) Roth inheritances allow tax-free distributions over 10 years, unlike taxable traditional ones. As Charlie Munger advised, “Invert, always invert” (anticipate to reduce future complications).
Dodging IRMAA Surcharges: Managing Medicare Expenses
Substantial RMDs increase taxes and activate Income-Related Monthly Adjustment Amounts (IRMAA) for Medicare Parts B and D. For married couples filing jointly, income exceeding $218,000 (2026 levels) incurs surcharges (up to $487 monthly for Part B in 2026).
Conversions lower RMDs and modified adjusted gross income (MAGI), potentially avoiding or reducing IRMAA. The initial tax cost is comparable to a pitcher’s warm-up (effort to prevent later issues).
How to Execute: Step-by-Step for Base Personnel
To proceed, access tsp.gov, go to “Account Access,” then “Roth Conversions,” select the amount, and confirm. Strategic implementation is critical; consult professionals like our team at Clark Wealth Partners. We employ Right Capital, financial planning software, for tailored projections.
For USTRANSCOM veterans in O’Fallon, periods of lower earnings after separation are optimal. Convert to occupy brackets without exceeding thresholds. Monitor adjusted gross income for additional impacts.
Potential Pitfalls and Professional Advice
Conversions affect adjusted gross income, influencing credits and deductions. The TSP does not withhold taxes (submit estimated payments to prevent penalties). For those under 59½, a 10% penalty applies to earnings on early withdrawals (conversions themselves are not penalized).
Distribute conversions across years, particularly during market declines (convert at reduced values for enhanced tax-free recovery).
Conclusion: Advancing Toward Financial Security
Personnel at Scott Air Force Base deserve a stable retirement. In-plan Roth conversions provide short-term commitment for long-term advantages, addressing current obligations for future efficiency. Our team in O’Fallon is available for guidance; contact us to discuss and develop your strategy. Financial planning centers on relationships, not accounts. Prioritize accordingly.
Disclosure: This material is provided for general informational and educational purposes only and does not constitute personalized investment, tax, or legal advice. Any examples provided are hypothetical and for illustrative purposes only. Actual results will vary based on individual circumstances, income levels, tax law changes, and other factors. Roth conversions may not be appropriate for all investors and may result in immediate tax liabilities. Clark Wealth Partners, LLC is an independent registered investment adviser and is not affiliated with the U.S. Department of Defense, the Thrift Savings Plan, or Scott Air Force Base. Investing involves risk, including the possible loss of principal.