Federal employees can now move pre-tax retirement savings into Roth accounts

The Federal Retirement Thrift Investment Board proposes to let federal employees convert money from their traditional, pre-tax retirement accounts into Roth accounts. This means federal workers can now pay taxes on their retirement savings today, so their withdrawals in retirement are tax-free.

For years, federal employees could not move money from their traditional Thrift Savings Plan (TSP) accounts to Roth TSP accounts. This change gives them more flexibility in how they manage their retirement savings and their tax burden. It aligns the federal government's retirement plan with options already available in many private sector 401(k) plans.