Electric Boat & Navy Families: The TSP Just Got More Powerful (2026 Roth Conversion Update)
- Marc Lowe
- May 4
- 4 min read
If you work at General Dynamics Electric Boat or serve in the United States Navy or United States Coast Guard here in New London, there’s a major retirement planning update you may have heard of...
As of January 2026, the Thrift Savings Plan (TSP) now allows in-plan Roth conversions.
This is one of the biggest upgrades to the TSP in years—and for many families in our area, it creates a real opportunity to reduce lifetime taxes and gain more control over retirement income.
Why This Matters in New London
In this part of Connecticut, I regularly work with:
Electric Boat engineers and managers with strong incomes and growing TSPs
Navy and Coast Guard families building wealth through the TSP
Dual-income households combining civilian and military benefits
On paper, everything looks solid:
Steady income
Consistent retirement contributions
Pension or future benefits
But under the surface, there’s a common issue:
👉 Most of your retirement savings are pre-tax.
That means in retirement, a large portion of your income will be taxable:
Pension income
TSP withdrawals
A portion of Social Security
And that can create a higher tax burden than expected.
What the New TSP Roth Conversion Rule Allows
For the first time, you can now move money from your Traditional TSP to your Roth TSP—inside the plan.
No rolling funds out of the plan necessary. No IRA required.
Here’s how it works:
You convert pre-tax dollars → pay taxes today (keep in mind, you cannot withhold taxes from the conversion. The taxes must be paid from your outside checking accounts)
The money moves into Roth side of your TSP where you can also make Roth Contributions
Future growth and withdrawals can be tax-free
This gives you something you didn’t have before:
👉 Control over when you pay taxes
A Real-World Scenario (Common Around Here)
Let’s say you’re:
55 years old
Working at Electric Boat or nearing retirement from the military
Planning to retire in the next 5–10 years
Your income today is relatively high—but once you retire:
Your income may temporarily drop
You haven’t started Social Security yet
Required Minimum Distributions (RMDs) haven’t kicked in
That window?
👉 It may be the best time in your life to do Roth conversions at lower tax rates.
Now, instead of rolling your TSP out to an IRA to do this—you can do it directly inside the TSP.
Where People in This Area Tend to Miss Opportunities
Working with families around Groton and New London, I see a few consistent patterns:
1. “Set It and Forget It” TSP Strategy
New Federal employees are automatically enrolled in the TSP (through FERS), and 5% of their base pay is automatically deferred into a target-date ‘Lifecycle Fund’ which is selected based on their age. The problem is that these funds get more conservative as they approach the "Target Date". By the time they reach retirement they often are in a very conservative portfolio where those returns may not be enough to keep up with inflation and their withdrawals throughout the rest of their lives, which is often 30+ years.
2. No Tax Diversification
Everything sits in pre-tax accounts, creating a future tax bottleneck. What happens if tax rates go up int he future and the only income source is pre-tax money that is going to be taxed at ordinary income tax rates at the time?
3. No Withdrawal Plan
There’s no coordination between:
TSP
Pension income
Social Security timing
That’s where unnecessary taxes can start to show up. Not planning for a lifetime of taxes and having a flexible strategy with buckets of different types of retirement sources to pull from can hurt a plan.
Why This Update Is a Big Deal for Military Families
If you’ve served in the Navy or Coast Guard, your TSP is likely one of your largest assets.
This new rule gives you the ability to:
Reduce future RMDs
Create tax-free income streams
Smooth out your tax brackets over time
Build flexibility into retirement
And flexibility is everything—especially if:
You plan to stay in Connecticut (very high state tax rates)
Or you’re deciding whether to relocate in retirement ( may make sense not pay taxes now if moving to a lower tax state in retirement)
A Simple Framework to Use This Strategically
If you’re in the New London area and this applies to you, here’s where to focus:
Max your match (if still working)
Evaluate your current tax bracket
Identify low-income years for conversions
Avoid converting too much in one year
Coordinate with your full financial picture
This isn’t about doing one big move—it’s about making small, intentional decisions over time.
Final Thought
Around here, I see a lot of disciplined savers.
People who did the right things:
Served
Worked hard
Consistently contributed
But the next phase—turning savings into tax-efficient income—is where the real planning begins.
The new TSP Roth conversion feature gives you a powerful tool to do that.
The difference now comes down to whether you use it intentionally.
If you’re an Electric Boat employee or part of a Navy or Coast Guard family in the New London area and want help thinking through this, that’s exactly the type of planning I specialize in.
About the Author
Marc Lowe, CFP® is a fee-only fiduciary advisor based in Waterford, CT, helping families & small business owners make smarter financial decisions.
The information presented in this article is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through In The Money Retirement, an investment adviser registered with the state of Connecticut. The information linked to on third-party sites is being provided strictly as a courtesy and convenience. We make no representation as to the completeness or accuracy of information provided at these websites. When you access these websites, you are leaving our website and assume any and all responsibility and risk for use of the web sites you are visiting.The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Comments