Q. I’m a 28-year-old FERS employee contributing 10 percent of my salary plus my agency’s 5 percent match to a traditional Thrift Savings Plan. I’m planning to increase my contribution by 1 percent each time I approach a step increase or other pay increase until I eventually max out my contributions. My decision now is to determine whether to put these additional contributions into a traditional or a Roth TSP. My understanding of the trade-off analysis is that it essentially comes down to an assessment of my current effective tax rate compared with what I project my effective tax rate will be in retirement. I realize that projection is not an easy thing, since there are numerous uncertain factors. However, is that the crux of the decision, or is there more to it (i.e., if I project my current effective tax rate to be higher than my effective tax rate in retirement, is there any other compelling reason to contribute to a Roth TSP instead of a traditional TSP)?
A. That’s the crux of the decision.