The Roth Thrift Savings Plan Has Arrived

If you are currently participating in the Thrift Savings Plan, then you have probably heard that a good thing just got better. The long anticipated Roth option for the Thrift Savings Plan was launched this week after several years of changes and delays. Unfortunately, not all branches will receive access to the Roth TSP on the same date, so this article wil cover a quick overview of how the Roth Thrift Savings Plan works, why it’s a great deal, and an update for the launch dates for DoD civilians and each branch of the military.

Roth TSP – Best of Both Worlds

Roth Thrift Savings PlanI’ve gone on record several times as saying the Thrift Savings Plan is awesome for investors. There are a few downsides, but it’s almost all good for the average investor. The average investor won’t be able to find such a simple and easy to use investment plan, or one that offers lower management fees.

I’ve also mentioned that I love the Roth IRA and that everyone needs one. The primary reasons Roth IRAs are so valuable for investors is due to their long term tax benefits. You are able to contribute funds which have already been taxed at your current income level, then invest those funds and allow them to grow until you reach retirement age – then you can withdraw them tax free. Since most military members are in a relatively low tax rate, this is an incredible opportunity to pay a relatively low amount of taxes on your income, let compound for decades, and never pay taxes on it again.

The Roth TSP account offers the best of both worlds as it combines the benefits of a Roth IRA with the Thrift Savings Plan. You can contribute to any of the Thrift Savings Plan funds (which are best in class in terms of management fees), and enjoy the long term tax benefits of the Roth classification.

Roth or Traditional TSP?

There are pros and cons to each plan, depending on your tax bracket, long term investment plans, and other issues. A good place to start is with this primer which compares the traditional and Roth 401k, because the 401k plan and TSP have very similar rules. You can contribute to both the traditional and Roth TSP in the same year, as long as your combined contributions don’t exceed the TSP contribution limits.

Roth TSP Start Dates

The Roth TSP officially launched on May 7, 2012, but the first batch of participants won’t be able to contribute funds until June, while the remaining participants will not be able to contribute until October. DFAS officials decided upon doing a phased rollout for the Roth Thrift Savings Plan due to the complexity of the various civilian, active duty, and reserve pay systems, and to ensure they correctly classify each type of pay, including things such as incentive pay, bonus pay, special duty pay, etc.

According to DFAS officials, the Marine Corps will be the first group of servicemembers to receive access to the Roth TSP, starting in June. All DoD civilians are next in line, when they get access in July, 2012, and the Air Force, Army, and Navy service members will be able to contribute beginning in October 2012.

Other TSP Changes

Due to the addition of the Roth TSP option, the TSP officials created new forms for in-service and post-separation withdrawals. The new forms will be able to accomodate both the traditional and Roth TSP. TSP officials also consolidated the forms for use by both civilian and uniformed personnel (previously there were forms for each TSP plan). The old forms will not be accepted after June 1, 2012, so be sure to get a copy of the new form if you are planning on making any withdrawals in the near future.

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Date published: May 14, 2012.

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Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is currently serving in the IL Air National Guard. He also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google.


  1. says

    Wow, finally! I think they had just introduced the TSP when I was getting out. Now a Roth TSP? Awesome. This is going to be great for lower level enlisted members of the military and all those on deployment in tax-free zones.

  2. Joe says

    Am I allowed to contribute to a Roth IRA and the Roth TSP in the same year? If so do you know what the limits are? I am currently in a combat zone and would like to know so that I can make adjustments to my contributions. Thanks Joe

    • says

      Joe, yes, you are allowed to contribute to both in the same year. The limit for TSP contributions is $17,000 for members under age 50, $22,500 for members over age 50 ($5,500 catch-up contributions, and a total contribution limit of $50,000 for all members for all sources of contributions, including things such as special bonus pay, reenlistment bonuses, hazard duty pay, or any other contributions you make to your TSP account. (You can read more here).

      IRA contributions are completely separate and follow Roth IRA contribution rules.

  3. doris weerkes says

    would it be wise for me to switch half of my tsp comtributions to a roth tsp account . I AM TRETIRING IN 3 YRS AND AM 63 IN NOV.

    • says

      Doris, The fact that you are retiring in 3 years is a great time to speak with a financial planner and have him or her help you go over your entire financial plan to help you decide the best route to take. There are many factors at play, including how much you already have saved, whether or not you will have a pension, when you will need the money, how much you expect to receive from Social Security benefits (and when you plan on taking Social Security), and many other factors. You may find it better to put all of your TSP contributions into the Roth TSP if you don’t need your funds right away, or you may find it better to continue using the Traditional TSP to get the tax break now, and have your TSP withdrawals taxed when you make them in retirement. In short, there is no one-size-fits-all solution and you will do best to have a personal recommendation. It is always a good idea to do so before entering retirement, so this is a wonderful time to begin getting your finances aligned for the next major event in your life.

      Best of luck!

  4. Diana says


    I am retiring in 2017. I have been contributing to TSP with a mix of funds. At this point I couldn’t tell you what funds I am invested in. What is the best way to begin reorganzing my TSP portoflio to pick the right mix of funds with the right percentage allocation for each fund? I have never really found an article that helps you do these two things. Can you give me some advice?

    Thank you,


  5. USPS Letter Carrier says

    Diana, the L2020 is a good default choice with an asset allocation for anyone retiring the same time as you.

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