For TSP Roth contributions, does the government’s match also go into your Roth TSP account?


I am trying to decide if I should put a portion of my TSP contribution into the Roth TSP. What should I be aware of in making this decision?

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Posted by (Questions: 1, Answers: 0)
Asked on December 1, 2017 12:27 am
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There are many things to be aware of when considering participating in the Roth TSP. Perhaps first is the fact that the Roth TSP is not a separate account; rather it is a separate balance within your one TSP account. This fact means that all actions you take in the TSP will be applied proportionately to your traditional and Roth balances. This isn’t just a TSP rule; it’s in the tax code.
If you plan on separating prior to the age of 59 1/2 and withdrawing money from the TSP, the Roth portion of your withdrawal will not be tax free because your withdrawals will not be “qualified”. If you won’t be withdrawing until 59 1/2 or later, this point is moot.
Another item is that the advantage of a Roth depends, to a large part, on how your post retirement tax rate compares with the rate you are paying on your Roth contributions when you are making them. Of course, we don’t know what future tax rates will be.
If you decide to contribute to the Roth, any government matching contributions must go into the traditional TSP.
My opinion (and that’s all it is – opinion) is that if I wanted to contribute to a Roth, I would do it in an outside Roth IRA – at least until the proportionality requirement is done away with.

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Posted by (Questions: 0, Answers: 61)
Answered on December 9, 2017 10:36 pm

I’ve been contributing my portion of my TSP contribution to Roth since it was available. I also fund a Roth IRA outside of my TSP. My question to you is if I were to separate from the government prior to retirement, would I be able to roll over the Roth portion to my Roth IRA and the Traditional to a Traditional IRA? I’m surprised this is just an accounting function to separate the two balances.

( at December 15, 2017 7:53 pm)