ROTH TSP or ROTH IRA?

[Diesel]

They allowed us to start our ROTH TSP this month. Which leads me to a question. I have 15,000 to invest every year. I currently put 10,000 into TSP and 5,000 into a ROTH IRA. What would people suggest? My current AA is 50% C 25% S 25% I.

1. Put the entire amount into ROTH TSP.
2. Put 10,000 into ROTH TSP and 5,000 in ROTH IRA
3. Put 5,000 into the regular TSP and $5,000 into ROTH TSP and 5,000 into Roth IRA.

Thanks

 

[ronocnikral]

Ummm...insufficient information. Goals? Tax bracket? Tax bracket in retirement? Etc etc. this is not a cut and dry subject. And you'll more then likely get responses on both sides of the fence.

 

[Animorph]

If you are above the 15% marginal tax rate I would put it all in the regular TSP, if that's an option. Take it out in retirement inside the 15% tax bracket after you retire, either as a Roth conversion or as income. It can still end up in the Roth, but will be taxed at a lower average rate hopefully. Though that depends on other retirement income letting you do that, and future tax rates. You just need to minimize the tax rate paid.

If you are currently within the 15% tax rate I would put it all in Roth accounts. They let you save more after-tax value than regular TSP since you contribute the same amount but no taxes are taken out of withdrawals.

Or if it all seems like a wash, go ahead and even up the amounts in your traditional and Roth accounts as a diversification measure.

 

[Diesel]

Thanks for ideas to think about. To answer the tax question, we are currently in the 25% tax bracket. When we retire we will be in the 15% bracket.