Roth In-Plan Conversions TSP with Brain "ALF" O'Neill #211

Starting January 28, 2026, military members can finally convert their traditional TSP to Roth while still serving...and if you're deployed to a combat zone, you could convert tens of thousands at near-zero tax rates. Brian "ALF" O'Neill from Wingman Wealth breaks down the game-changing TSP in-plan conversion feature and reveals why this could be a 6- or 7-figure lifetime tax savings for service members who get the strategy right. Main Points Roth vs Traditional Basics- Roth is "tax insuranc" against future taxation Why Military Tax Rates Are So Low What Are TSP In-Plan Conversions? New feature launched January 28, 2026 Convert traditional TSP to Roth TSP while still serving (previously had to wait until separation or age 59½) Can do up to 26 conversions per year Entire converted amount added to taxable income for that year Critical: TSP does NOT allow tax withholding; must have cash set aside externally Conversions are irreversible (no recharacterization allowed) The Combat Zone Golden Opportunity CZTE (Combat Zone Tax Exclusion) drops taxable income to near-zero Can convert large traditional TSP balances at 0-12% tax rates during deployment year Don't have to convert while physically in combat zone—any time during that tax year Example: E-5 deployed full year could convert $50,000+ at minimal tax cost Combat zone contributions also pro-rata (10% CZTE balance = only 90% of conversion taxable) This opportunity disappears after separation—can't replicate as civilian Tax Planning Essentials Paying the Tax Bill Strategic Timing for Conversions Best time #1: End of year (November-December) when you know actual income Best time #2: During market downturns—pay tax on lower value, convert more shares Example: $10,000 balance drops to $5,000, convert at 12% = $600 tax vs. $1,200 Don't tie conversions to deployment timing—tie to when you can see full-year income picture Can dollar-cost-average with multiple conversions throughout year (but probably unnecessary) The "2-1-0" Framework (Advanced) Two: Optimize for two spouses, married filing jointly, similar lifespans One: Optimize for surviving spouse facing higher single tax rates (widow/widower penalty) Zero: Optimize for heirs—prepay tax bill, leave Roth money to children Advanced strategy: High-earning children gift parents money for Roth conversions at parent's lower rate Who Should Convert and How Much Five-Year Rules and Withdrawal Restrictions Common Mistakes to Avoid Implementation Details Related Strategies When Professional Help Makes Sense First-time converters with 5-figure amounts Complex family situations (multiple income sources, kids in college) High-income earners considering large conversions Anyone uncertain about tax projections Use MFAA advisors, Military Tax Experts Alliance, or fee-only CFPs Resources & Links Wingman Wealth: wingmanwealth.com Military Financial Advisors Association (MFAA): militaryfinancialadvisors.org Fighter Pilot Finance Facebook Group (managed by Alf) Nectarine: hellonectarine.com (fee-only advisor consultations) Military Tax Experts Alliance: militarytaxexperts.org IRS Estimated Tax Payments: irs.gov Dinky Town Calculators (free tax projection tools): dinkytown.net/taxes.html Related Podcast Episodes: Episode 2: TSP Deep Dive (most popular episode) Various TSP fund analysis episodes Key Takeaways TSP in-plan conversions launched January 28, 2026—military members can now convert traditional TSP to Roth while still serving without waiting for separation Combat zone deployments create once-in-a-lifetime opportunities—CZTE income drops taxable income to near-zero, enabling $50,000+ conversions at 0-12% tax rates You must have external cash for taxes—TSP does NOT allow withholding from conversions; need savings, refund, or estimated payments ready Most military members face higher retirement tax rates—pension + civilian job + Social Security likely pushes you into 22-24% brackets, making Roth conversions at current 10-12% rates a no-brainer Conversions are irreversible—no recharacterization allowed, so measure twice and do tax projections before converting Market downturns are conversion opportunities—when account value drops 50%, you pay tax on half the value but convert the same number of shares BRS members have automatic conversion candidates—5% government match always goes traditional, creating ongoing conversion opportunities if you're in low brackets State residency matters enormously—converting while legal resident of Texas saves 5-13% vs. high-tax states like California or New York This could be six-figure lifetime tax savings—depending on account size, career length, and strategy execution, potential $10,000-$100,000+ in tax savings November is optimal conversion month—you know actual income for the year, can calculate exact bracket room, and avoid year-end surprises Spencer and Jamie offer one-on-one Military Money Mentor sessions. Get your personal military money and personal finance questions answered in a confidential coaching call. militarymoneymanual.com/mentor Over 20,000 military servicemembers and military spouses have graduated from the 100% free course available at militarymoneymanual.com/umc3 In the Ultimate Military Credit Cards Course, you can learn how to apply for the most premium credit cards and get special military protections, such as waived annual fees, on elite cards like The Platinum Card® from American Express and the Chase Sapphire Reserve® Card. https://militarymoneymanual.com/amex-platinum-military/ https://militarymoneymanual.com/chase-sapphire-reserve-military/ Learn how active duty military, military spouses, and Guard and Reserves on 30+ day active orders can get your annual fees waived on premium credit cards in the Ultimate Military Credit Cards Course at militarymoneymanual.com/umc3 If you want to maximize your military paycheck, check out Spencer's 5 star rated book The Military Money Manual: A Practical Guide to Financial Freedom on Amazon or at shop.militarymoneymanual.com. Want to be confident with your TSP investing? Check out the Confident TSP Investing course at militarymoneymanual.com/tsp to learn all about the Thrift Savings Plan and strategies for growing your wealth while in the military. Use promo code "podcast24" for $50 off. Plus, for every course sold, we'll donate one course to an E-4 or below- for FREE! If you have a question you would like us to answer on the podcast, please reach out on instagram.com/militarymoneymanual.