Shows & Panels
- The 2014 Big Picture on Cyber Security
- AFCEA Answers
- Ask the CIO
- Building the Hybrid Cloud
- Connected Government: How to Build and Procure Network Services for the Future
- Continuing Diagnostics and Mitigation: Discussion of Progress and Next Steps
- Federal Executive Forum
- Federal Tech Talk
- The Intersection: Where Technology Meets Transformation
- Maximizing ROI Through Data Center Consolidation
- Moving to the Cloud. What's the best approach for me
- Navigating Tough Choices in Government Cloud Computing
- The New Generation of Database
- Satellite Communications: Acquiring SATCOM in Tight Times
- Targeting Advanced Threats: Proven Methods from Detection through Remediation
- Transformative Technology: Desktop Virtualization in Government
- The Truth About IT Opex and Software Defined Networking
- Value of Health IT
Shows & Panels
The new Roth TSP: Who should choose it?
Monday - 3/5/2012, 8:31pm EST
They discuss the plan's benefits and advantages.
The Roth TSP differs from the traditional Thrift Savings Plan in that — while you cannot deduct the amount you put into it from your taxes — you will be allowed to withdraw it tax-free once you are retired and have reached the age of eligibility.
The traditional TSP works the oposite way: you are allowed to take a tax deduction now on your contributions to the plan, but you will be taxed on it once you withdraw it in retirement.
Sullender notes that many feds think that they should decide on whether or not to invest in the Roth TSP based on what they think their tax rate will be in retirement.
Conventional wisdom has it that, if you think you will be subject to a higher tax rate when you retire, you should take your tax hit now and invest in a Roth account.
But, for most people, it is difficult to predict what your tax rate will actually be when you retire.
Sullender says that the better way to make a decision on this is to consider it from the perspective of time: the longer you have until retirement, the more advantageous it probably is for you to invest your money and watch it grow in the Roth TSP.
"Every year that passes... more of that growth becomes tax-free on withdrawal," he says.
"The Roth TSP is something people should really consider," Sullender adds. "You might have more time than you think to let that money grow tax-free."
Federal workers will have the option of the Roth TSP beginning in April of this year. More information can be found at the Thrift Savings Plan website.