Q. My daughter is 20 and just entered the military, hopefully to make a career of it. She is contributing 10 percent to her traditional TSP and $25 per month to her Roth TSP. Her traditional TSP is fully invested in the G Fund (this was automatic and she didn’t know enough to change anything). Wouldn’t it be better for her to put the maximum amount she can afford into the Roth TSP before putting anything into the traditional? She will probably be making quite a bit more money when she retires than what she makes now. If not, what is your suggestion? If she keeps the traditional contribution, should she redistribute her fund percentages or just switch to one of the L funds that are managed for her?
A. It’s not possible to know now whether the Traditional or Roth TSP will work better for her in the end. It’s less important where the money gets saved than how much she saves. Your argument in favor of contributing to the Roth TSP first is reasonable, but whatever motivates her to save the most is best. She will probably be better off directing all of her TSP money into the L 2050 fund until the L 2060 fund is rolled out in 2020.
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