Roth TSP vs traditional TSP: which one fits your last years in uniform?

When did the Roth TSP rules change?

Roth balances in employer plans, including the TSP, no longer have lifetime required minimum distributions. Traditional balances still do, starting at 73, or at 75 if you were born in 1960 or later. Three beliefs about this still circulate, and each one gets a rule below.

Belief: Roth TSP forces RMDs, so you must roll it to a Roth IRA before 73. Not anymore. Older plans that scheduled a rollover only for that reason can drop it.

Belief: a high civilian salary shuts you out of Roth. It doesn't. Roth TSP has no income limit. The Roth IRA does: for 2026 it phases out at $153,000-$168,000 single and $242,000-$252,000 married filing jointly, per the IRS.

Belief: the type of catch-up is your choice. For 2026, if prior-year FICA wages from your employer topped $150,000, the $8,000 catch-up (and the $11,250 catch-up at 60-63) must be Roth. Retired pay and VA compensation aren't FICA wages, so only salary counts toward that test.

Step 1: Read your LES, not your total pay

Belief: your bracket follows your total compensation. It doesn't. BAH, BAS and combat zone pay don't appear in W-2 Box 1 taxable wages, so an E-8 or O-5 can sit in a lower bracket than total pay suggests. Gather your last LES and your last W-2, and compare the two.

Combat zone pay has its own rule. Traditional contributions from tax-exempt pay come out tax-free later, but their earnings are taxed. Qualified Roth withdrawals are tax-free on both. Tax-exempt traditional contributions count toward the $72,000 total limit, not the $24,500 deferral limit, while Roth contributions still count toward the $24,500.

The timing slip here: switching to traditional in the last 2 years in uniform "to cut taxes before retirement." It puts the cheap tax years in the wrong order. At an assumed 12%, $49,000 of deferrals saves $5,880. Withdrawn later at an assumed 24%, the same money has a tax cost of $11,760, a $5,880 loss before growth.

• Last LES
• Last W-2, Box 1
• Combat zone months, if any

Step 2: Stack the first civilian year

Belief: retired pay and a new salary are separate worlds. They land on one return. Add the expected salary to taxable retired pay, and leave out VA disability compensation because it isn't taxable. Retired pay sits on top of salary, so $165,000 of salary plus a pension can land in a higher bracket than any year in uniform. Write down the marginal rate on the last dollar, because that is the rate a traditional deferral saves. The slip: using your average rate.

Step 3: Split this year's Roth TSP vs traditional TSP

Maureen, a hypothetical person, is 52, single, a retired Air Force lieutenant colonel working as a civilian program manager at $165,000, with a 60% VA rating. She has $610,000 in traditional TSP and wants to know how much to convert each year while her salary already sits in a high bracket. Today's question is smaller: how to split this year's deferrals.

She defers the full $24,500 plus the $8,000 catch-up. Her prior-year FICA wages of $165,000 top $150,000, so the $8,000 must go Roth. The open choice is the $24,500. At an assumed 32% rate now, traditional saves $24,500 × 0.32 = $7,840.

If she later spends it herself at an assumed 22%, the tax cost is $24,500 × 0.22 = $5,390, so traditional comes out $2,450 ahead. If her niece inherits it and empties it within 10 years at an assumed 35%, the tax cost is $24,500 × 0.35 = $8,575, so Roth comes out $735 ahead. Before growth, the rate gap decides, because the same growth multiplies both sides. Once the $24,500 limit is maxed, though, Roth shelters more after-tax money, which tilts close calls toward Roth.

The trade-off is plain. Traditional gives you cash now ($7,840 for Maureen) and the option to convert later. Roth gives you tax-free qualified withdrawals, no lifetime RMDs and a tax-free inheritance for heirs who empty the account within 10 years. A high bracket now with the money spent by you points to traditional. A low bracket now, or heirs in high brackets, points to Roth.

The slip at this step is an outdated beneficiary designation. The heir math only works if Form TSP-3 names the person you mean. Nobody knows future tax rates. If you can't guess who will spend the money, or your take-home pay can't absorb Roth's higher tax cost ($7,840 more this year for Maureen), a 50/50 split is a reasonable hedge. All investing carries risk, and you can lose money, including what you put in.

• Traditional: cash now, taxed later
• Roth: tax now, qualified withdrawals tax-free

What happens if you change the split later?

You can change your election in any pay period, but it applies only to future pay. Roth TSP dollars can never be recharacterized as traditional, so the tax cost already paid on them is the one irreversible part. Traditional balances can be converted to Roth later, which has its own page under Roth conversion planning; this article doesn't cover converting existing balances.

Payroll applies the Roth catch-up rule, while you alone keep Form TSP-3 current. The table shows that most tasks sit with you, and only two belong to someone else.

The first numbers Savant Wealth Management pulls

Savant Wealth Management compares W-2 Box 1 wages with total pay from your last LES, then estimates the marginal rate for your first full civilian year. It also checks who is named on Form TSP-3, because the heir's tax rate can flip the answer. Nothing about future tax rates is guaranteed. Related topics, such as TSP withdrawal planning and Survivor Benefit Plan elections, come later in the order of decisions.