San Antonio is home to one of the largest military communities in the country. Joint Base San Antonio — encompassing Fort Sam Houston, Lackland AFB, and Randolph AFB — supports hundreds of thousands of active-duty service members, veterans, retirees, and their families. For many of them, the Thrift Savings Plan is the single largest retirement asset they've built during their years of service, and arguably one of the best retirement savings vehicles available to anyone in the United States.
When you separate from the military or transition into a civilian career, one of the first financial decisions you'll face is what to do with your TSP. Roll it over to an IRA? Leave it where it is? Do a partial rollover? The answer isn't the same for everyone, and under the 2026 rules — with contribution limits, tax brackets, and estate planning thresholds all shifting — the stakes are higher than most people realize.
Here's a framework for thinking through it clearly.
The 2026 Contribution Landscape
Before we talk about rollovers, it helps to understand how much you can put into the TSP while you're still contributing. For 2026, the elective deferral limit is $24,500. That's the maximum you can contribute from your own pay through traditional or Roth TSP contributions.
If you're age 50 or older, you can make an additional catch-up contribution of $8,000, bringing your total employee deferral to $32,500. And thanks to a newer provision, if you're between the ages of 60 and 63, you qualify for an enhanced catch-up of $11,250instead of the standard $8,000 — pushing your total deferral limit to $35,750 during those peak years.
These limits matter because they determine how quickly you can build your TSP balance before separation — and the larger the balance, the more important it is to get the rollover decision right.
When Staying in the TSP Makes Sense
The TSP has genuine advantages that are worth understanding before you move anything. First, the fees are remarkably low. The TSP's expense ratios are among the lowest of any retirement plan in existence — fractions of a basis point in many cases. You would be hard-pressed to replicate that cost structure in even the most efficiently constructed IRA.
Second, if you separate from service during or after the calendar year in which you turn 55, the TSP allows penalty-free withdrawals. This is known as the “age 55 separation rule,” and it's a significant benefit that you lose once you roll funds into an IRA, where the early withdrawal penalty generally applies until age 59½.
For families who may need access to retirement funds during a career transition — and many military families in San Antonio are navigating exactly that — this rule alone can be a compelling reason to keep at least some money in the TSP.
When Rolling to an IRA Makes Sense
On the other side, an IRA offers something the TSP does not: flexibility. The TSP limits you to a handful of broad index funds and lifecycle funds. An IRA opens up the full universe of investments — individual stocks, sector-specific ETFs, bonds, real estate investment trusts, and more. For families who want a more tailored investment strategy, one that accounts for their full financial picture, an IRA provides the tools to build that.
Consolidation is another practical benefit. If you have retirement accounts scattered across multiple employers and institutions, rolling your TSP into an IRA can simplify your financial life and make it easier to manage your overall asset allocation and withdrawal strategy in retirement.
And then there are Roth conversions. If you're in a lower tax bracket during your transition — perhaps between military separation and starting a civilian role — rolling traditional TSP funds into a traditional IRA and then converting to a Roth IRA can be a powerful long-term tax strategy. You pay taxes now at a lower rate and let the money grow tax-free for the rest of your life. For 2026, the Roth IRA income phaseout begins at $153,000 for single filers and $242,000 for married filing jointly, which means many dual-income military families will need to use the backdoor Roth strategy or focus on Roth conversions rather than direct contributions.
The conversion window during a career transition can be especially valuable. Your income may drop temporarily, creating room to convert at the 12% or 22% bracket rather than the 24% or 32% bracket you'll occupy once civilian employment is fully established.
The Partial Rollover Strategy
One option that often gets overlooked is the partial rollover. You don't have to make an all-or-nothing decision. You can leave a portion of your money in the TSP — preserving the low fees and the age 55 rule — while rolling the rest into an IRA for greater flexibility and Roth conversion opportunities.
This approach gives you the best of both worlds. It's particularly useful for military families who are navigating a transition and want to maintain access to funds while also building a more comprehensive investment strategy.
The key is being intentional about how much stays and how much moves. That calculation should be driven by your specific goals, your tax situation, and your timeline for needing access to the money — not by a generic rule of thumb or a sales pitch from someone who earns a commission on the rollover.
What San Antonio Military Families Should Consider
The military-to-civilian transition is one of the biggest financial inflection points a family can experience. Your income may change significantly, your benefits structure shifts, and your tax situation looks different almost overnight.
Consider a military physician at JBSA earning $400,000 or more in combined salary, special pay, and bonuses. Under the 2026 federal tax brackets — permanently extended by the One Big Beautiful Bill Act (OBBBA) — the 24% bracket applies up to $403,550 for married filing jointly, and the top 37% rate kicks in above $768,700. That physician's TSP rollover decision looks very different depending on whether they're staying in the military, transitioning to civilian medicine in San Antonio, or retiring altogether.
The OBBBA also expanded the state and local tax (SALT) deduction. For 2026, the SALT cap rises to $40,400, with a phasedown that begins above $505,000 in modified AGI. Texas has no state income tax, which means military families here already have an advantage — but the higher SALT cap can still matter if you own property or pay significant local taxes in other states where you maintain ties.
A TSP rollover decision shouldn't be made in isolation. It needs to be coordinated with your full financial picture: your pension (if you have one), your spouse's retirement accounts, your tax projections for the next several years, your insurance needs, and your long-term goals as a family. Too often, service members roll over their entire TSP because a financial salesperson told them to — without ever examining whether it was actually in their best interest.
The Estate Planning Connection
Your TSP rollover decision doesn't exist in a vacuum — it connects directly to your estate plan. Under the OBBBA, the federal estate and gift tax exemption has been set at $15 million per person (indexed for inflation). For most military families, this means the federal estate tax won't be a direct concern, but the planning around it still matters.
Beneficiary designations on your TSP and IRA accounts override your will. If you roll your TSP to an IRA but forget to update the beneficiary designation on the new account, your assets may not go where you intend. This is especially critical for blended families, which are common in the military community.
The Survivor Benefit Plan (SBP) also interacts with your retirement accounts in ways that matter. If your spouse is receiving SBP annuity payments, those count as taxable income and affect how much room you have for Roth conversions and which bracket those conversions fall into. Coordinating the SBP with your TSP rollover strategy and your broader retirement income plan is essential for minimizing your family's lifetime tax burden.
The bottom line on estate planning: every time you move money between accounts, review your beneficiary designations, your trust documents (if you have them), and your overall estate plan to make sure everything still aligns.
The Bottom Line
There is no universal right answer when it comes to your TSP. The best strategy depends on your age, your tax bracket, your access needs, your investment preferences, and — most importantly — what you're building toward as a family.
The 2026 rules have created new opportunities and new complexities. Contribution limits are higher, the OBBBA has permanently extended the TCJA tax brackets, and the estate planning landscape has shifted. All of these factors should inform your rollover decision.
If you're a military family in San Antonio facing this decision, take the time to think it through carefully. Talk to someone who isn't trying to sell you a product. Get a clear picture of your full financial situation. And make the choice that aligns with your values and your vision for the next chapter — not the one that benefits someone else's bottom line.