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How to plan for the Roth TSP option
Friday - 2/10/2012, 11:32am EST
The Federal Retirement Thrift Investment Board plans to make it happen sometime in the next few months.
Ed Zurndorfer, registered employee benefit consultant, told The Federal Drive with Tom Temin the Roth TSP is different from a Roth IRA. The Roth IRA has income limits. In 2011, you would not quality if you are single making more than $107,000 or jointly filing with a spouse and making more than $179,000.
The Roth TSP has no income limitations, however.
The Roth option is "going to help younger employees who right now are probably in a lower tax bracket and eventually will be in a higher tax bracket, especially down the line ... when they're retiring and they're going to be really happy come that time that they're not having to pay tax on withdrawals from their Roth TSP account," Zurndorfer said.
The traditional TSP will still be appealing for people who want their tax break immediately.
"Employees are going to have to sit down and evaluate, Where am I better off? Getting my tax break now or in the future?" he said.