Q. I am considering a Thrift Savings Plan loan of $40,000 to fully fund a Roth TSP for the next few years. I am in the Air Force and plan on staying in the service for at least six more years until retirement. I’m just not sure that the benefits of a fully funded Roth TSP will outweigh the tax I will pay on the loan payments, not to mention the tax I will pay on the interest from the $40,000 as it sits in the bank waiting to be deposited into my Roth TSP, and the gains that $40,000 would have made if it stayed in my traditional TSP?
A. You’ve identified the costs, which you will incur. I don’t see any mention of the benefit that would motivate you to do this. Without a benefit that is likely to outweigh the cost, you shouldn’t do it.