Compare the effects of traditional and Roth contributions.
|The Treatment of…||Traditional TSP||Roth TSP|
|Your Paycheck||Taxes are deferred*, so less money is taken out of your paycheck.||Taxes are paid up front*, so more money comes out of your paycheck.|
|Transfers In||Transfers allowed from eligible employer plans and traditional IRAs||Transfers allowed from Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s|
|Transfers Out||Transfers allowed to eligible employer plans, traditional IRAs, and Roth IRAs2||Transfers allowed to Roth 401(k)s, Roth 403(b)s, Roth 457(b)s, and Roth IRAs3|
|Withdrawals||Taxable when withdrawn||Tax-free earnings if five years have passed since January 1 of the year you made your first Roth contribution, AND you are age 59½ or older, permanently disabled, or deceased|
The TSP will keep your traditional balance and your Roth balance in separate “buckets” in your TSP account for the purposes of tracking contributions and transfers into your account. However, you cannot just tap one or the other balance when you request transactions such as contribution allocation changes, interfund transfers, loans, and withdrawals. All transactions will include a proportional amount from each balance.