Get 11-U-4. Implementation Of Roth Thrift Savings Plan Contributions - Tsp

options, but you can also − withdraw all of your traditional money, or − withdraw all of your Roth money . If you choose instead to withdraw money from both traditional and Roth, your withdrawal will be taken pro rata from both .

As with all financial tools, Roth TSPs have their share of drawbacks: You Can't Defer Income Taxes: Choosing a Roth TSP means paying taxes on all your income before depositing it into your account. ... Less Investment Flexibility: Your government agency hires a specific company to administer your TSP.

Roth contributions are made on an after-tax basis but are treated like tax-deferred contributions in almost every other way. For example, they are subject to the same distribution restrictions and contribution limits as tax-deferred contributions.

With Roth TSP, your contributions go into the TSP after tax withholding. That means you pay taxes on your contributions at your current income tax rate. The advantage of the Roth TSP is that you won't pay taxes later when you take out your contributions and any qualified earnings.

The Roth TSP has been offered only since 2012.

For high earners, a Roth TSP may be one of the best ways to save money after tax, as there is an earnings limit on contributing to a Roth IRA. A traditional TSP may be a better choice if you want to reduce your current taxable income and pay taxes on withdrawals during retirement.

As with all financial tools, Roth TSPs have their share of drawbacks: You Can't Defer Income Taxes: Choosing a Roth TSP means paying taxes on all your income before depositing it into your account. ... Less Investment Flexibility: Your government agency hires a specific company to administer your TSP.

The Internal Revenue Service has announced the Thrift Savings Plan (TSP) elective deferral limit for 2023 will increase to $22,500 per year. These limits apply to the combined total of tax-deferred traditional and Roth contributions.