Q. I am 24 years old and I have been contributing 15 to 20 percent of my pay to a traditional TSP for 3 years now. When I started my TSP, the option to invest in a Roth TSP was not available. I have a decent amount of money in my traditional TSP right now. I’m curious if it would be better to stop contributing to my traditional and let it grow and start contributing to a Roth TSP or continue to invest in my current plan and maintain my current compounding interest? I’m nervous that if I change my contributions I will lose out on a significant amount of money that I could have gained by maintaining my contributions in my already established traditional TSP.
A. It will only matter if the effective tax rate on your contributions is different from the rate on withdrawals, and that’s something you can’t know this far ahead of time. There’s no way to know if contributing to one or the other, or both, will work out best for you, so do it the way you like. In the end, it won’t matter nearly as much where you saved the money as it will matter that you saved it.