You’ve got some thinking to do about your investments. The people who manage your Thrift Savings Plan have published draft rules for a Roth option that would let you put in after-tax money.
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.
Tom Temin is the host of The Federal Drive, which airs from 6-10 a.m. on 1500 AM in the Washington, D.C. region and online everywhere. Tom has 30 years experience in journalism, mostly in technology markets. Before coming to Federal News Radio, he was a long-serving editor-in-chief of Government Computer News and Washington Technology magazines.