In this episode, Dan and Ed break down the differences between Roth TSP and Roth IRA accounts for federal employees. They explain the advantages and limitations of each option, strategies for maximizing contributions, and important considerations for withdrawals, tax treatment, and retirement planning. The discussion also covers recent changes under SECURE Act 2.0 affecting Roth TSP conversions.
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FedLife Podcast (Ep.156): Roth TSP vs Roth IRA – Which Should Federal Employees Maximize?
Join us as Dan and Ed break down Roth TSP and Roth IRA differences, contribution limits, investment options, withdrawal rules, and what federal employees need to know to make informed retirement planning decisions.
In this episode, you’ll discover:
Key differences between Roth TSP and Roth IRA accounts
• Contribution limits for federal employees and how age affects them
• Investment options available in Roth IRA vs Roth TSP
• Withdrawal rules and tax advantages for each account
• Creditor protection, fees, and loan options for Roth TSP participants
• Income limits and eligibility considerations for Roth IRA contributions
• How the SECURE Act 2.0 changes Roth TSP conversion rules
• Factors to consider when deciding which Roth account to prioritize
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you're eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP. Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.
Source Article:
https://stwserve.com/roth-tsp-versus-roth-ira-which-is-more-advantageous/
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