Can I Roll a Thrift Savings Into a 529?

You cannot roll TSP assets directly into a Section 529 plan.

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The Thrift Savings Plan, the defined-contribution pension plan available to federal employees and the military, is a popular tax-deferred retirement savings vehicle. It is not designed to be a college savings vehicle, however, and is incompatible with the Section 529 college savings plan. You cannot execute a rollover from a traditional TSP account to a Section 529.

TSP Overview

The Thrift Savings Plan allows federal employees to make pre-tax contributions taken directly out of their paychecks to a retirement savings plan. The Thrift Savings Plan is normally tax-deferred, though the federal government rolled out a Roth option this year. When employees leave federal service, they can keep balances in the TSP, take an annuity, cash out, or roll the balances over into an IRA or eligible employer plan, such as a 401(k) plan.

Section 529 Overview

Section 529 plans allow taxpayers a tax-advantaged way to save for post-secondary education costs for themselves or a loved one. Contributions grow tax-deferred, and distributions are tax-free, provided they are used for a qualified higher education expense. Contributions, however, are made with after-tax dollars.

TSP Rollovers to Section 529 Plans Are Prohibited

Because traditional TSP contributions are made with pre-tax dollars and 529 contributions are after-tax, the two tax systems are not compatible with each other. You therefore cannot execute a rollover from a Thrift Savings Plan to a Section 529 plan. If you are eligible to roll over your TSP funds, however, you can roll it over to an IRA, and then make withdrawals from the IRA, penalty-free, to help defray college costs.


Remember that students can potentially qualify for scholarships, grants and loans to assist with college costs. You can't get a scholarship for retirement. Be careful about liquidating tax-advantaged long-term retirement assets to pay for college costs. You may wish to find another source of funds for college expenses.