Washington Weighs Roth Option for TSP
Washington state is debating new pension policies for firefighters and law enforcement. A recent proposal would allow Roth in-plan conversions for participants in the Thrift Savings Plan (TSP). This change would give public servants greater flexibility in managing their long-term retirement savings and tax strategies.
- The in-plan conversion option stems from the federal SECURE 2.0 Act of 2022, with the Federal Retirement Thrift Investment Board setting January 28, 2026, as the effective date for the program to begin. - This type of conversion moves money from a traditional, pre-tax account balance to a Roth, post-tax balance; the amount moved is treated as ordinary income and taxed in the year of the conversion. - For firefighters early in their careers and in a lower tax bracket, paying taxes on retirement funds now can be advantageous compared to paying taxes on withdrawals in retirement when their income and tax rate are potentially higher. - Seattle firefighters are enrolled in the Law Enforcement Officers' and Firefighters' (LEOFF) Plan 2, which is a defined-benefit pension system. [15,
