For many federal employees and members of the uniformed services, the Thrift Savings Plan (TSP) is a cornerstone of retirement planning. In 2026, a TSP partial rollover can offer greater flexibility and control over your retirement savings, helping you manage distributions and future investment decisions more effectively. This article explains how TSP partial rollovers work, highlights important IRS limits announced in November 2025, and explores strategic considerations to help you plan your retirement.

What Is a TSP partial rollover?

A TSP partial rollover allows a saver to withdraw a portion of their TSP balance while leaving the remainder invested in the TSP. Unlike a full rollover, where the entire account is moved to another eligible retirement plan, a partial rollover gives you the option to take out only some funds to meet specific financial needs or to diversify your retirement accounts.

Commonly, partial rollovers involve transferring part of the balance to an IRA or another employer’s qualified plan, while keeping the rest in the TSP. This can help manage Required Minimum Distributions (RMDs), allow access to different investment options, or offer more flexible withdrawal scheduling.

How Does a TSP partial rollover Work in 2026?

To perform a partial rollover in 2026, you must first be eligible to make TSP withdrawals. Typically, participants can withdraw after separation from federal service or upon reaching age 59½ while still employed, depending on the withdrawal option selected.

Once eligible, the process usually involves these steps:

  • Request the Partial Withdrawal: Use the TSP online portal or submit a withdrawal form specifying the amount to roll over and the receiving account.
  • Choose the Receiving Account: You may roll over your funds into a Traditional IRA, Roth IRA (tax implications apply), or another qualified retirement plan if the plan accepts rollovers.
  • Transfer of Funds: The rollover is generally processed as a trustee-to-trustee transfer, which avoids tax withholding. Direct-rollovers minimize tax complications and penalties.
  • Taxes and Penalties: If you withdraw funds in a way other than a direct rollover, federal income tax withholding applies, and early withdrawal penalties may occur unless exceptions apply.

Keep in mind, partial rollovers do not reset contribution limits for other accounts; they simply move existing funds from one place to another.

IRS Contribution Limits Affecting Your TSP and Rollovers in 2026

Understanding IRS limits is important when considering a TSP partial rollover alongside other retirement savings strategies. Here are the key 2026 figures from the IRS announcement issued in November 2025:

  • Employee Deferral Limits: The limit for TSP contributions (as well as 401(k), 403(b), and 457 plans) is $24,500. For participants age 50 and older, the catch-up contribution limit is $8,000. Special catch-up options for ages 60 to 63 allow up to $11,250.
  • IRA Contribution Limits: The combined contribution limit for Traditional and Roth IRAs is $7,500. If you are age 50 or older, you can contribute an additional catch-up amount of $1,100, bringing the total to $8,600.
  • Roth IRA Contribution Phase-Outs (MAGI): For single or head-of-household filers, contributions phase out between $153,000 and $168,000. For married filing jointly, the range is $242,000 to $252,000.
  • Traditional IRA Deduction Phase-Outs: If covered by a workplace plan like the TSP, single taxpayers face a deduction phase-out between $81,000 and $91,000 of modified adjusted gross income. Married couples filing jointly have a range of $129,000 to $149,000.
  • Required Minimum Distributions (RMDs): RMDs now begin at age 73 for most, with a future increase to age 75 for those born in 1960 or later.

These limits affect your overall retirement savings strategy and highlight why a partial rollover can be an effective tool for managing your funds between different account types with their own rules and benefits.

Benefits of a TSP Partial Rollover

Performing a partial rollover from your TSP offers several advantages worth considering for your 2026 retirement plan:

Diversification of Your Retirement Accounts

Rolling over a portion of your TSP to an IRA or another qualified plan can expand your investment choices beyond the TSP’s core funds. IRAs often provide access to a broader array of mutual funds, ETFs, and other assets, giving savers more control over portfolio allocation.

Flexibility in Withdrawals

Partial rollovers allow you to separate funds by purpose or distribution timing. For example, you might keep a portion of your funds in the TSP to grow tax-deferred and roll over another portion to an IRA to take advantage of Roth conversions or specific withdrawal rules.

Managing Tax Implications

A partial rollover can be structured to control when taxes are incurred. For example, you may choose to roll over only the traditional balance to a Traditional IRA to delay tax payments or convert some funds to Roth IRA contributions to address tax diversification.

Maintaining Access and Liquidity

Since RMDs start at age 73 (or later depending on birth year), rolling over some funds to an IRA can simplify managing these withdrawals. Partial rollovers can also provide improved access to funds if the IRA permits penalty-free withdrawals under certain conditions.

Considerations and Trade-Offs When Rolling Over Part of Your TSP

While partial rollovers offer flexibility, there are important trade-offs and details to keep in mind:

Costs and Fees

TSP currently offers some of the lowest administrative fees among retirement plans. Rolling funds out to an IRA or other plan may expose your balance to higher fees or fund expense ratios. Savers should research costs carefully before rolling over portions of their account.

Effect on Creditor Protections

The TSP benefits from federal protections against creditor claims, which may differ when moved to an IRA depending on your state laws. This is an important consideration for savers concerned about asset protection.

Withdrawal Rules

TSP has certain withdrawal options and exceptions that might not be available in IRAs or other plans. For example, TSP loans and specific early withdrawal allowances might be lost when amounts are rolled over.

Rollover Timing and Complexity

A partial rollover requires careful timing to avoid unintended tax withholdings or penalties. Direct trustee-to-trustee transfers are recommended. Additionally, multiple accounts can increase administrative complexity during retirement.

How Fixed Indexed Annuities Can Complement Your Retirement Strategy

As you manage your TSP partial rollover and build diversified retirement income, you might consider annuity products like fixed indexed annuities (FIAs) offered by companies such as FixedIRAs.com. FIAs provide growth linked to a stock market index with a 0% floor, meaning your principal will not decline during down years. While FIAs have returns capped or subject to participation rates, they offer guaranteed income options and can be a valuable complement to your retirement plan for longer time horizons.

Unlike multi-year guaranteed annuities (MYGAs), which offer a fixed rate of return over a set period and are simpler to understand, FIAs offer potential for higher growth that may help offset inflation over time. However, FIAs typically involve rider fees and surrender charges, so it’s important to carefully review product features and suitability with a knowledgeable advisor.

Frequently Asked Questions About TSP Partial Rollovers

Can I rollover only part of my TSP balance?

Yes, a partial rollover allows you to move a portion of your TSP funds to another eligible plan or IRA, leaving the rest invested in your TSP account.

Are partial rollovers taxable?

If done as a direct rollover, these transfers are generally not taxable. However, withdrawing funds without rolling them over may trigger taxes and penalties.

Will rolling over affect my contribution limits?

No. Rollovers move existing funds and do not affect annual contribution limits to TSP or IRAs. Your 2026 limits for employee deferrals and IRAs remain separate.

When can I make a partial rollover?

You usually must be separated from federal service or have reached age 59½ to be eligible for most TSP withdrawals and rollovers. Specific rules vary by circumstance.

Can I roll over to a Roth IRA?

Yes, but rolling over from a traditional TSP to a Roth IRA is a conversion subject to income tax on the amount converted.

Conclusion

A TSP partial rollover in 2026 is a powerful retirement planning tool that offers savers increased flexibility to better manage their savings, taxes, and retirement income streams. By understanding the latest IRS contribution limits, withdrawal rules, and rollover procedures, you can make informed decisions that align with your retirement goals.

Combining your TSP strategy with complementary products like fixed indexed annuities from FixedIRAs.com may further enhance your income planning with index-linked growth potential and optional lifetime income features. For those balancing multiple retirement accounts, partial rollovers offer an effective way to diversify and tailor your retirement landscape as you prepare for the future.

Additional Educational Resources

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For more background, see our IRA Rollovers resource.

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