Increase federal tax withholding or TSP contribution?


Q. Which would be more advantageous to reduce my annual federal tax bill: contribute more into TSP or withhold more and have more from my salary go toward federal taxes? Am I correct that contributing more into TSP would go toward retirement savings, reduce my taxable income and lower my federal tax bill?

A. It’s impossible to say which will be “best.” One is prepaying your federal taxes, and the other is deferring income tax from the current year into a future year. If you can do both, do both. If you can only do one or other, then pay your taxes.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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