I just got here, but in case anyone's still interested in the answer to your question, you can transfer TSP money to a traditional IRA, but only after you've separated from the military.
Under certain circumstances, it can be a great thing to do. I dumped a bunch of money into my TSP before I separated. Once I did, I transferred the funds into a traditional IRA. I then immediately converted the traditional IRA to a Roth IRA. Doing this, I was able to put about 30K in my Roth, which would have taken years to accumulate otherwise.
It's kind of a neat way to get around the Roth IRA contribution limits, and perfectly legal. If your situation allows for it, I highly recommend it. It works especially well if you contributed to TSP while deployed, since you don't have to pay income tax on those funds when you convert to Roth.
Unfortunately, I don't know of any way to do it while you're still in service. I took full advantage of a few weeks break in service that I had in order to pull off the above.
d3
