Ellen retired from a federal agency at 63 with a healthy traditional TSP balance. In 2025 she rolled a chunk into a new Roth IRA, converted some more, and felt good about the tax diversification. Then her roof failed. She pulled $30,000 from the Roth IRA, assuming it was all tax-free because she was past 59½.

Most of it was. Not all of it. Her earnings were another matter, and the reason was a calendar quirk most people never hear about until it costs them: the five-year rules.

There are actually several of them. They overlap, they get confused with each other, and they apply differently to the TSP than to an IRA. Let's sort them out.

The rule that matters most: qualified distributions

For a withdrawal of Roth earnings to be completely tax-free, it generally has to be "qualified." That takes two things at once:

  1. The Roth account has met its five-year holding period.
  2. You are 59½ or older, or disabled, or the money goes to a beneficiary after your death. (A first-time home purchase also works for Roth IRAs, up to a $10,000 lifetime limit.)

Miss either piece and the earnings portion of your withdrawal can be taxable, and possibly hit with a 10% penalty if you are under 59½.

Note what this rule does not touch. Your own direct contributions to a Roth IRA come out tax-free and penalty-free at any time, because you already paid tax on them. The five-year rule is about the growth.

How the clock actually starts

This is the part that surprises people. The five years do not start on the day you contribute. They start on January 1 of the tax year for which you made your first Roth IRA contribution or conversion.

So if you open a Roth IRA with a $500 contribution in November 2025, designated as a 2025 contribution, your clock started January 1, 2025. Your five-year period is satisfied on January 1, 2030. Contribute in April 2026 but designate it for 2025 (allowed until the tax filing deadline), and you can still claim 2025 as your start.

Two more points that help:

  • One clock covers all your Roth IRAs. It starts with your first Roth IRA and applies to every Roth IRA you own, now or later. Opening a second one does not restart anything.
  • The clock is per person, not per dollar, for the qualified-distribution test. Once it's satisfied, it's satisfied.

That second-to-last bullet leads to a practical habit. If you think you might ever use a Roth IRA, open one early and put in a small amount. A few hundred dollars today can start a clock that saves you a headache a decade from now.

The separate clock for conversions

Here is where Ellen got tripped up. Each Roth conversion carries its own five-year clock, also starting January 1 of the year of the conversion. This clock has a narrower job: it determines whether the 10% early withdrawal penalty applies to the converted amount if you are under 59½.

If you are already 59½ or older, this second clock mostly stops mattering. You owe no penalty on the converted dollars regardless.

Ordering rules decide what comes out first in a Roth IRA withdrawal:

  1. Regular contributions
  2. Conversions, oldest first
  3. Earnings

Ellen's $30,000 withdrawal drew first on her contributions and conversions, which were safe. If she had pulled more than her total basis, the excess would be earnings, and because her Roth IRA clock had started only in 2025, those earnings would be taxable income until 2030. That's the trap. Not the principal, but the growth on it.

The Roth TSP has its own clock

If you contribute to the Roth TSP, you have a separate five-year test inside the plan. According to TSP rules, a Roth TSP withdrawal is qualified when five years have passed since January 1 of the calendar year of your first Roth TSP contribution, and you are 59½, disabled, or deceased.

A quick example. A FERS employee begins Roth TSP contributions in October 2023. The clock started January 1, 2023, so the five-year test is met on January 1, 2028. If that employee is 56 at that point, the test is met but the age test is not. Both must be true.

A few TSP-specific wrinkles:

  • The TSP clock is independent of any Roth IRA clock. Having an old Roth IRA does not satisfy the Roth TSP test, and vice versa, while the money stays in the plan.
  • TSP Roth withdrawals are pro rata. Unlike a Roth IRA, there is no "contributions first" ordering. Each withdrawal is split proportionally between your contributions and earnings. Before the five-year and age tests are met, part of every withdrawal is taxable.
  • In-plan Roth conversions exist now, and how they interact with the clocks has specifics worth checking on tsp.gov before you act, not after.

Rolling a Roth TSP into a Roth IRA

Many retirees move their TSP to an IRA. When a Roth TSP balance rolls into a Roth IRA, the holding period generally counts from the earlier of the two start dates: your Roth TSP clock or your existing Roth IRA clock, if you have one.

That makes a real case for the habit I mentioned above. Someone who has had Roth IRA money since 2015 and then rolls over a Roth TSP balance started in 2024 is generally in better shape than someone opening their first Roth IRA at the moment of rollover, though in that second case the Roth TSP's history can carry over too. The details depend on how the rollover is done, so confirm with your IRA custodian and a tax professional before you move money.

Inherited Roth accounts

Beneficiaries do not start fresh. In general, an inherited Roth IRA uses the original owner's five-year clock. If your mother opened her Roth IRA in 2012, a beneficiary inheriting in 2026 is already past the line. If the owner had been in year two, the beneficiary would need to wait out the rest. Earnings that come out before the clock is satisfied can be taxable, though the 10% penalty doesn't apply to death distributions.

Practical moves

  • Start your Roth IRA clock early, even with a token contribution, if there is any chance you will use Roth money later.
  • Keep a simple record of the year of your first Roth IRA contribution, each conversion, and your first Roth TSP contribution. Your custodian's 1099-R and Form 8606 history will help, but they aren't always complete.
  • **Before a convers