Learn why the Roth TSP can be a great choice for younger feds.
When to Contribute to the Traditional TSP?
Learn more at our next No-Cost webinar on the TSP!
When to Contribute to the Roth TSP?
When to Contribute to Both the Traditional TSP and the Roth TSP?
Financial professionals say that putting a portion of TSP contributions into the Roth TSP can help federal employees hedge their bets if they are not sure what their future combined federal and state tax rates will be. Congress will soon require those federal employees aged 50 and older, and whose Social Security wages exceed $145,000, to contribute only to the Roth TSP. The regular contributions can go to either the traditional TSP or to the Roth TSP. This law takes effect on January 1, 2026.
*Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.