43 thoughts on “Traditional TSP vs. Roth TSP” Rick says: April 2, 2014 at 5:56 pm . Financial Independence is closely related to the concept of Early Retirement/Retiring Early (RE) - quitting your job/career and pursuing other activities with your time. She needs to decide on her own what her retirement goals and dreams are and then save based on what is the best financial moves for that plan. Next time you’re faced with an onslaught of questions, consult this script for the answers you need to help your employees make an informed decision. Thanks everyone for your help. The recession almost cut that $1,000 in half at its lowest and is now hovering around $750. .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} Like to hear some ideas on the matter. Sorry, this post was deleted by the person who originally posted it. I make about the same as your girlfriend and that’s exactly how I do it. In my 401K I can actually divide up between Roth vs traditional contributions, so this question was an even bigger deal for me. ._1zyZUfB30L-DDI98CCLJlQ{border:1px solid transparent;display:block;padding:0 16px;width:100%;border:1px solid var(--newCommunityTheme-body);border-radius:4px;box-sizing:border-box}._1zyZUfB30L-DDI98CCLJlQ:hover{background-color:var(--newCommunityTheme-primaryButtonTintedEighty)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:hover{color:var(--newCommunityTheme-bodyText);fill:var(--newCommunityTheme-bodyText)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active{background-color:var(--newCommunityTheme-primaryButtonShadedEighty)}._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{background-color:var(--newCommunityTheme-primaryButtonTintedFifty);color:rgba(var(--newCommunityTheme-bodyText),.5);fill:rgba(var(--newCommunityTheme-bodyText),.5);cursor:not-allowed}._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ:hover,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{border:1px solid var(--newCommunityTheme-body)}._1O2i-ToERP3a0i4GSL0QwU,._1uBzAtenMgErKev3G7oXru{display:block;fill:var(--newCommunityTheme-body);height:22px;width:22px}._1O2i-ToERP3a0i4GSL0QwU._2ilDLNSvkCHD3Cs9duy9Q_,._1uBzAtenMgErKev3G7oXru._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._2kBlhw4LJXNnk73IJcwWsT,._1kRJoT0CagEmHsFjl2VT4R{height:24px;padding:0;width:24px}._2kBlhw4LJXNnk73IJcwWsT._2ilDLNSvkCHD3Cs9duy9Q_,._1kRJoT0CagEmHsFjl2VT4R._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._3VgTjAJVNNV7jzlnwY-OFY{font-size:14px;line-height:32px;padding:0 16px}._3VgTjAJVNNV7jzlnwY-OFY,._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs{font-size:14px;line-height:32px;padding:0 16px}._2QmHYFeMADTpuXJtd36LQs,._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2QmHYFeMADTpuXJtd36LQs ._31L3r0EWsU0weoMZvEJcUA,._2QmHYFeMADTpuXJtd36LQs:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2QmHYFeMADTpuXJtd36LQs ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none}._2CLbCoThTVSANDpeJGlI6a{width:100%}._2CLbCoThTVSANDpeJGlI6a:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2CLbCoThTVSANDpeJGlI6a ._31L3r0EWsU0weoMZvEJcUA,._2CLbCoThTVSANDpeJGlI6a:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2CLbCoThTVSANDpeJGlI6a ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none} The maximum contribution for 2019 is $19,000. For a Roth you pay only on the contributions, NOT the gain on those contributions. Most importantly, remember that your contributions are made … ROTH IRA VS 401K // Pros & cons of each, and how to choose one over the other. Traditional 401(k): Kate earns $100 which she contributes directly into her traditional 401(k) without paying any income taxes. Future greater than current marginal tax bracket favors Roth. Traditional. When you invest in a Roth account, you pay with after-tax dollars. Roth vs. Which 401k … You might even want to have BOTH! Traditional vs Roth TSP: The Basics Traditional TSP. For people retiring at a traditional age, it seems Roth makes more sense. I didn’t cast this as a negative of Roth’s, b/c the numbers are so close, but Traditional is NOT worse in this regard. Not only is the money completely tax-free to your heirs, but the IRA can be “stretched” by your heirs for an extra ten years of tax-free growth. A traditional 401(k) has the advantage of more options later on, but a Roth may be the smarter choice for big savers. When you invest in a Roth account, you pay with after-tax dollars. Most importantly, remember that your contributions are made at your MARGINAL tax rate (i.e. If you somehow end up with more than 150K taxable income in retirement...well, you have won the game a couple times over and you won't really regret having to pay tax on the 401k. It has so much flexibility and use it while you can. Traditional . very few people consider that with ROTH 401k you can contribute more than with traditional 401K. And my parents FIRE’d in their mid-50s. PoF@physicianonfire.com. We came up with our own FIRE journey goals, they just happened to sync. Reply. Matt, You are wise to consider not having all your eggs in one basket (after-tax retirement accounts) vs. traditional … Traditional 401(k)s and Roth IRAs are both very popular types of retirement accounts, and hopefully after reading this article, you’ll know which one is better for you. In this … If you put the money into a traditional … Our plan is when we retire to do the roth ira laddering. Resides in a state with no state income tax 4. John Grobe, Federal Career Experts. Roth vs. The Traditional vs. Roth Decision for Medical Residents. The Roth IRA is an interesting vehicle, “traditional” retirees should find it appealing at the low end of the income scale (because they’ll be in a lower tax bracket there then they’re hoping to be in retirement) … Contribution to your Roth IRA have some things in common as well as $ 200/pp catch-up FIRE! Fire journey goals, they just happened to sync tax-deferred contributions in my.... 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