If you’ve been reading about Roth conversions lately, it probably sounds like everyone should be doing one—and doing it soon. Roth conversions are often presented as a silver bullet for retirement taxes. But for government employees, especially those nearing retirement, the decision to convert pre-tax TSP money to Roth deserves a slower, more thoughtful approach as we head into 2026.

The rules changing in 2026 don’t eliminate Roth conversions. They simply make the planning more nuanced. And when taxes, pensions, and long-term income are involved, nuance matters.

Before rushing to convert, here are several important realities federal employees should understand.

The tax bill from a Roth conversion is immediate and permanent

One of the most overlooked aspects of a Roth conversion is that the tax cost is immediate—and irreversible. When you convert money from a traditional TSP to a Roth account, that amount becomes taxable income in the year of the conversion. Once it’s done, there’s no undo button.

For many government employees in higher pay grades, this can be a problem. GS-13s, GS-14s, GS-15s, and SES employees are often already in peak earning years. Adding a large Roth conversion on top of salary can push income into higher tax brackets.

Consider a GS-14 earning $155,000 who converts $75,000 from their Traditional TSP to Roth in 2026. That $75,000 doesn’t replace income—it stacks on top of it. The result may be a higher marginal tax rate, increased Medicare premiums later on, and more of their future Social Security benefits becoming taxable. The issue isn’t paying taxes—it’s paying more tax than necessary at the worst possible time.

Many federal employees retire into lower tax brackets

Federal employees are unique compared to much of the private sector. Retirement often comes with a predictable pension, continued access to FEHB and a drop in taxable income—at least initially.

This creates a valuable planning window: the years immediately after retirement but before required minimum distributions begin. During that period, many retirees find themselves in lower tax brackets than they were in while working.

If that’s the case, converting large amounts of TSP money while still earning a full salary may mean voluntarily paying higher taxes today than you would need to pay later. A simple but powerful question to ask is: Will my tax rate be lower after I retire than it is now? If the answer is yes, waiting may be the smarter move.

The 2026 Roth catch-up rule already raises taxes for many employees

Starting January 1, 2026, many federal employees aged 50 and older will be required to make catch-up contributions as Roth contributions if their income exceeds the threshold. That change alone increases taxable income and reduces take-home pay.

For those affected, 2026 may already be a higher-tax year without doing anything extra. Adding voluntary Roth conversions on top of mandatory Roth catch-up contributions can compound the tax impact and leave very little room in your tax bracket to maneuver.

In other words, some federal employees may already be “doing Roth” in 2026 whether they planned to or not.

Roth conversions can trigger costs beyond the IRS

Income taxes are only part of the picture. Roth conversions can quietly trigger additional costs that many government employees don’t expect.

Higher income can lead to Medicare IRMAA surcharges, increasing Part B and Part D premiums two years later. It can also cause more of your Social Security benefits to become taxable. Depending on where you live, state income taxes may apply even if your retirement income is later exempt. In some cases, higher adjusted gross income can also phase out deductions or credits you were counting on.

These secondary effects can significantly reduce the real benefit of a conversion.

How you pay the tax matters just as much as the conversion

A Roth conversion only works well if the tax is paid smartly. TSP funds cannot be used to pay the taxes. If you tap into emergency savings, you may weaken your financial safety net. If you borrow, you introduce interest costs and risk.

For government employees approaching retirement, preserving liquidity can be just as important as tax efficiency. A conversion that looks good on paper can feel very different in real life if it drains cash reserves.

Federal pensions change the Roth math

A federal pension provides stability—but it also fills tax brackets automatically. That steady income reduces flexibility and can make large, early Roth conversions less efficient.

For many federal employees, smaller, partial conversions spread over multiple years are more effective than one large conversion. Converting too much too soon can waste lower tax brackets later and limit planning options when flexibility matters most.

RMD planning requires strategy, not fear

One reason Roth conversions get so much attention is fear of future required minimum distributions. RMDs can create tax challenges—but reacting to them too early can backfire.

Effective RMD planning is about timing. It often involves gradual conversions during lower-income years, coordinated with pension and Social Security decisions. Rushing into conversions without a multi-year plan can lead to inefficiencies that are difficult to unwind.

Roth conversions are optional—not mandatory

Perhaps the most important thing to remember is this: no federal employee is required to do a Roth conversion before 2026. Roth conversions remain available long-term, and for many government employees, the best conversion years haven’t even started yet.

The goal isn’t to convert more money. It’s to convert the right amount, at the right time, at the right tax rate.

The bottom line

Roth conversions can be powerful tools, but for government employees heading into 2026, they should be used with intention—not urgency. Hesitation doesn’t mean avoidance. It means planning.

Before converting, federal employees should think carefully about current versus future tax brackets, mandatory Roth catch-up contributions, pension and Social Security timing, Medicare impacts, cash flow needs, and long-term flexibility.

In many cases, the smartest strategy isn’t an immediate conversion—it’s a well-timed, multi-year Roth plan built around retirement income, not headlines.

This material is for informational and educational purposes only. It should not be interpreted as tax, investment, financial, or legal advice. Roth conversions involve complex considerations, and individual circumstances vary widely. Readers should consult a qualified tax professional, financial advisor, or other licensed expert before making any decisions related to Roth conversions or their broader financial strategy.

The post Why government employees should think carefully about Roth conversions going into 2026 first appeared on Federal News Network.