Ask The Experts: Money Matters

By Mike Miles

Military service and Roth TSP

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Q. I am 25 and now have the option to contribute to a Roth TSP. I have four years left on my military contract before I have the opportunity to get out. Seeing that my future with the military is somewhat questionable, would the Roth TSP still be a favorable option?

A. Except for tax-free pay earned in a combat zone, I don’t see any reason to expect that contributions to the Roth TSP are somehow better than contributions to the traditional TSP. In fact, I recommend that you favor the traditional TSP over the Roth TSP unless your circumstances make the Roth contribution more attractive.

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Comments

  1. Al R Says:
    November 28th, 2012 at 3:35 am

    Definately contribute all tax-free combat pay into your Roth TSP. Generally speaking if you’re in a lower tax bracket now than what you anticipate you be in when you retire, then use the Roth TSP now. If you have good prospects to have a higher paying job in civilian life then the Roth TSP is likely better. If you’re in a lower tax bracket which I guess you are, then go Roth TSP. If you need the tax break go with the traditional TSP. Which ever you choose, invest as much as you can.

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