The Roth TSP

Recently, the Thrift Savings Plan began offering the opportunity for federal employees to contribute to a Roth component of their retirement savings. The Roth TSP will allow individuals to contribute after-tax money into their TSP savings accounts. Money in the Roth will grow tax-free until withdrawal. Some of the key differences between the Roth and traditional contributions are:

Traditional contributions	Roth contributions
Contributions are on a pre-tax basis that lowers current taxable income	Contributions are on a post-tax basis that does not lower current taxable income
Withdrawals after age 59 ½ are taxable	Withdrawals after age 59 ½ are not taxable

The choice of whether or not to contribute to the Roth TSP is up to the individual investor. Individuals can place all or a part of their retirement contributions into the Roth or remain entirely in the traditional component. Both choices are designed to complement each other and provide more post-retirement tax planning options. Be sure to consult your tax advisor for specific advice.

For additional information on either Roth or traditional contributions, log on to the TSP website at: www.tsp.gov.

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