Traditional and Roth TSP contributions do not get reported separately on your tax return because your agency already handles them through your Form W-2. Distributions are different: the Thrift Savings Plan sends you and the IRS a Form 1099-R for every withdrawal, and you report the taxable portion on your Form 1040. So the short answer to whether you report TSP on taxes is: contributions no, distributions yes.
The rest comes down to which boxes on which form, and a handful of rules that decide whether a distribution is fully taxable, partly taxable, or tax-free.
Why Contributions Don’t Go on Your Return
Your contributions are already baked into the W-2 your agency issues. There is nothing to add to your 1040 for them, but it is worth understanding what the W-2 is showing so you can check it against your pay records.
Traditional TSP contributions come out of your paycheck before federal income tax is calculated. Box 1 of your W-2, your total taxable wages, has already been reduced by what you contributed. Box 12 itemizes the contribution separately under Code D, which identifies elective deferrals to a 401(k)-type plan.1GSA. Explanation of 2025 IRS Form W-2, Wage and Tax Statement Your AGI on the 1040 is lower because those dollars never appeared in Box 1 in the first place.
Roth TSP contributions are taxed upfront, so Box 1 includes them. They still get itemized in Box 12, but under Code AA rather than Code D.1GSA. Explanation of 2025 IRS Form W-2, Wage and Tax Statement If you split contributions between the two, you’ll see both codes.
Agency matching contributions always go to your Traditional balance, regardless of how you designated your own money.2The Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions The match doesn’t appear on your W-2 and isn’t taxed until you take a distribution.
How to Report a TSP Distribution
Any time you take money out, the TSP files a Form 1099-R and sends you a copy by January 31 of the following year.3Internal Revenue Service. General Instructions for Certain Information Returns (2025) Four boxes drive everything you need:
- Box 1 shows the gross amount withdrawn.
- Box 2a shows the taxable portion. This is the number that flows to your return.
- Box 4 shows federal tax already withheld. It counts as a tax payment when you file.
- Box 7 shows a distribution code that tells the IRS what kind of payment this was.
You report the Box 2a amount on the pensions and annuities line of Form 1040. For a plain Traditional TSP withdrawal, Box 1 and Box 2a will usually match because the whole thing is taxable as ordinary income under the general rules for employer plan distributions.4Office of the Law Revision Counsel. 26 USC 402 – Taxability of Beneficiary of Employees Trust
If the TSP paid you directly instead of rolling the money elsewhere, it withheld 20% of the taxable amount for federal tax.5Office of the Law Revision Counsel. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income You can request more than 20% when you submit the withdrawal, but not less on an eligible rollover distribution paid to you.6Thrift Savings Plan. Changes to Tax Rules About TSP Payments
Roth Distributions and the Five-Year Rule
A Roth TSP withdrawal is entirely tax-free if it qualifies as a qualified distribution. Two conditions have to be true at the same time: five years must have passed since January 1 of the year you made your first Roth TSP contribution, and you must be at least 59½, permanently disabled, or deceased.6Thrift Savings Plan. Changes to Tax Rules About TSP Payments When both are met, Box 2a shows zero.
The five-year clock is easy to misread. It starts on January 1 of the calendar year of your first Roth TSP contribution, not the date you contributed. A first Roth contribution in October 2022 means the clock started January 1, 2022, and your earnings become eligible for qualified treatment on January 1, 2027.7The Thrift Savings Plan (TSP). Roth In-Plan Conversions If your first Roth balance came from a Roth in-plan conversion, that conversion date starts the clock.
If the distribution isn’t qualified, only the earnings portion is taxable. Your Roth contributions come back tax-free because you already paid tax on that money. The TSP does the math and puts only the taxable earnings in Box 2a. Box 7 will show Code B for a designated Roth account distribution.8Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
The 10% Early Withdrawal Penalty
Take money out before age 59½ and you generally owe an additional 10% tax on the taxable amount, on top of regular income tax.9Thrift Savings Plan. Withdrawals In-Service Box 7 tells you whether it applies. Code 1 means early distribution with no known exception. Code 2 means the TSP already recognized an exception; you don’t owe the penalty.
If Code 1 appears and every dollar in Box 2a is subject to the penalty, you can report it directly on Schedule 2 of Form 1040. If an exception applies that the TSP didn’t code, file Form 5329 to claim it.10Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
The exceptions most relevant to federal employees and service members:
- Separation from federal service during or after the year you turn 55. For qualified public safety employees, including federal law enforcement officers, corrections officers, customs and border protection officers, federal firefighters, and air traffic controllers, the age is 50.10Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
- Total and permanent disability. Box 7 should show Code 3.
- Substantially equal periodic payments calculated on your life expectancy. Changing the schedule too early can trigger retroactive penalties.11The Thrift Savings Plan (TSP). Withdrawals in Retirement
- Unreimbursed medical expenses above 7.5% of your AGI.
- Payments to a former spouse under a qualified domestic relations order.
- Up to $5,000 per child for qualified birth or adoption expenses.
Rollovers: Usually Reported, Rarely Taxed
Moving TSP money to another retirement account is generally not taxable, but the TSP still issues a 1099-R and the receiving institution files Form 5498 to confirm the funds arrived.12Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
In a direct rollover, the TSP sends the money straight to the new plan or IRA custodian. Box 7 shows Code G for Traditional funds, Code H for Roth funds moving to a Roth IRA.8Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) Box 1 shows the full amount; Box 2a shows zero. On the 1040 you enter the total on the pensions line and write “Rollover” next to the taxable amount of zero. Roth TSP funds can only roll to a Roth IRA or another plan’s designated Roth account; sending them to a traditional IRA destroys the tax-free status.
An indirect rollover is where people get hurt. The TSP pays you, withholds 20% of the taxable amount for federal tax, and gives you 60 days to redeposit the money into another qualified account.5Office of the Law Revision Counsel. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income To keep the whole distribution tax-free, you have to deposit the gross amount, including the 20% that was withheld. If the TSP withheld $8,000 out of a $40,000 distribution, you need to come up with $8,000 from another source and deposit the full $40,000. You recover the withheld $8,000 as a tax credit when you file. Deposit only the $32,000 you received and the missing $8,000 becomes a taxable distribution, possibly with the 10% penalty attached.
Report the rollover the same way as a direct one: total on the pensions line, “Rollover” next to the taxable amount. Keep the Form 5498 from the receiving institution as proof of timely deposit.
TSP Loans
A loan isn’t a distribution. No 1099-R, nothing on your return, as long as you keep up with payments. General-purpose loans run 12 to 60 months; primary residence loans run 61 to 180 months.13The Thrift Savings Plan (TSP). TSP Loans
Two situations turn a loan into taxable income. If you stop making payments and don’t cure the delinquency in time, the outstanding balance plus accrued interest becomes a deemed distribution.14Thrift Savings Plan. TSP Booklet – Loans The TSP issues a 1099-R with Code L in Box 7 and the unpaid balance in Box 2a.8Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) Under 59½, the 10% penalty applies too.
Leaving federal service with a loan balance creates a plan loan offset, reported with Code M when it qualifies as a qualified plan loan offset amount. For an offset triggered by separation from service, you have until your tax filing deadline (including extensions) to roll the offset amount into another eligible retirement plan and avoid tax on it.15Internal Revenue Service. Plan Loan Offsets That’s a much longer window than the 60-day rollover deadline.
Required Minimum Distributions
At age 73, RMDs from your Traditional balance begin.16The Thrift Savings Plan (TSP). SECURE 2.0 and the TSP The age moves to 75 starting in 2033. Roth TSP balances are no longer subject to RMDs under SECURE 2.0.
The TSP calculates the amount each year from your age and prior-year-end Traditional balance using the IRS Uniform Lifetime Table. If your own withdrawals fall short, the TSP automatically sends the difference: by the following April 1 for your first RMD year, by December 31 in every year after that. It shows up on a 1099-R and lands on the pensions line of your 1040 like any other Traditional distribution. Default withholding on RMDs is 10%, adjustable from 0% to 100%.6Thrift Savings Plan. Changes to Tax Rules About TSP Payments
Missing an RMD carries a 25% excise tax on the shortfall, dropping to 10% if corrected within the timeframe under IRC Section 4974(e).6Thrift Savings Plan. Changes to Tax Rules About TSP Payments Report the penalty on Form 5329.
Inherited TSP Accounts
A surviving spouse can have the TSP open a beneficiary participant account, which defers tax until distributions are actually taken, or roll the funds into their own IRA or existing TSP account.17Thrift Savings Plan. Information for Participants and Beneficiaries Rolling Traditional TSP funds into a Roth IRA is taxable in the year of the rollover.
Non-spouse beneficiaries have 90 days to request a payment from the temporary account the TSP sets up; if they don’t act, the TSP distributes the funds on day 90.18The Thrift Savings Plan (TSP). Beneficiary Distributions A non-spouse can move the funds to an inherited IRA but cannot roll them into their own retirement account. The taxable portion goes into the beneficiary’s income for the year received.
State Tax Is a Separate Question
Federal treatment of the TSP is uniform across the country, but state income tax isn’t. Some states have no income tax. Among those that do, many exempt part or all of retirement income, and some treat federal government retirement income differently from private plans. Rules often depend on age or total retirement income. Check your state’s department of revenue before assuming your after-tax number.