Q. I am a federal employee, almost 30 years old and contribute to my Thrift Savings Plan, as well as a Roth IRA toward retirement. I contribute the maximum to my Roth IRA at $5,500 a year and contribute 15 percent of my $82,500 salary (approximately $12,500 a year). I have a comfortable emergency account, life insurance, $500 per month to a 529 plan for my 1-year-old, on top of the basic necessities.
How much should I be contributing if I can’t max both my TSP and Roth IRA? Should I continue with this allocation, or should I be maxing my TSP at $17,500, only putting $500 into my Roth IRA. After reviewing some items, I do not know the pros and cons to each as far as this allocation of funds.
A. I suggest that you maximize your TSP contributions before contributing to any other retirement account. The TSP is the best retirement savings and investment vehicle you’ll find. Its low cost and access to the G Fund make it so. What makes you think that your Roth IRA is a better choice?