Jill on Money with Jill Schlesinger Should I Convert My TSP?
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Mar 2, 2026 Joe, a retired prior military service member with a pension and a $600k TSP, calls in about retirement planning. He outlines his income mix and low living costs. Conversation centers on whether to convert TSP to Roth, tax-bracket timing, converting gradually, and practical ways to pay conversion taxes while planning estate and simple investing steps.
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Joe's Retirement Income Snapshot
- Joe is a 65-year-old prior military retiree with a $55k pension, $600k TSP, $24k spousal Social Security, $21k tax-free VA disability, and $12k net rental income.
- He lives on ~$4,500/month, owns his home outright, has $70k in high-yield savings, and worries about TSP taxes and RMDs.
Conversion Trades Current Tax For Future Tax Relief
- Converting TSP to Roth can reduce future RMD and tax/Medi‑care impacts but will trigger taxable income now.
- Because Joe's current AGI (~$85k–$90k) places him near the 22% bracket, conversions would push him into 24% quickly.
Convert Gradually And Use Savings To Pay Taxes
- Do partial Roth conversions over multiple years and pay the taxes from liquid savings to avoid depleting retirement principal.
- Jill suggests converting amounts like $50k/year and using high-yield savings to cover the tax bill.