After the TSP, I invest my money in Betterment and Vanguard. I track all of my investments with Personal Capital. I also wrote a short, 2 hour book summarizing this site. You can buy it here.

A buddy of mine recently asked:

Can you double dip Roth TSP and Roth IRA? (Contribute the maximum to both plans in one year)

YES! Technically, I wouldn’t call it double dipping, because the IRS treats them completely differently. The Roth TSP is treated as an “employee retirement plan” while the Roth IRA is an “Individual Retirement Account.”

Your 2013 contribution limits are:

  • Roth TSP: $17,500
  • Roth IRA: $5,500

So if you were to deploy or go TDY to a combat zone at any point, during those months you were deployed you could put up to $23,000 of pay into your combo Roth TSP + Roth IRA.

That’s $23,000 that goes in tax free, grows tax free, and eventually pays out tax free. That’s like some 1%-er, Cayman island level tax planning right there.

2 Websites I Use to Achieve Financial Independence Faster

I have investment accounts all over the place. To keep track of all of them in one place I use Personal Capital. It combines all of my accounts, shows me where I may be overpaying in fees, and provides beautiful charts showing my overall asset allocation and performance.

I use Personal Capital to track my Roth and Traditional TSP, Vanguard IRAs, banking accounts, SDP, and my Betterment taxable account, all in one place. It's free, secure and presents me with a one-stop dashboard so I can see all my money on one site.

Read my full review of Personal Capital and see how easy it can be to manage your investments in one place. Trust me, once you try it, you'll love it.

P.S. - If you have over $100,000 of assets and a 401k, you really need to run the Personal Capital 401k Fee Analyzer.

The best way I know to achieve financial independence is to keep your investments simple, diversified, automatic, and low-cost. Costs eat into your returns like you wouldn't believe! A 1% difference in expense ratios can mean $100,000s lost to fees over a lifetime of investing.

Even if you're a DIY (do-it-yourself) investor like I am, you need to check out Betterment. You can read my full review here, but the bottom line is for only $250 per $100,000 invested (0.25% expense ratio) you get simple, diversified, and automated investing. In addition every account now gets free Tax Loss Harvesting+ features, which should increase returns for the average investor more than the minuscule management fee.

If you're not a DIY investor or are just getting started with investing, then you definitely need to check out Betterment. It's what I recommend to my family and friends who aren't strong investors or don't care to learn about asset allocations, diversification, or rebalancing.

Roth TSP vs. Roth IRA
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2 thoughts on “Roth TSP vs. Roth IRA

  • February 20, 2013 at 05:04
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    I keep TSP in the back of my mind, but I’m mostly worried about the “bridge” income between this career and actual retirement, so I’m privileging Lending Club, savings, and other short-term investments. Plus, watching my TSP grow at an anemic rank after getting tanked a few years back has deterred me as well.

    Reply
    • February 20, 2013 at 13:52
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      I like to call it the “gap” income/assets, to cover from early retirement (right now I’m aiming for 40) to when I can access my retirement specific accounts (TSP, IRA, etc). Same concept though. The more I learn about the Roth option TSP and how low the expense ratios are kept, the more attractive it is to me. However, if I was much later on in my career (like you), I would definitely be singing a different tune.

      Reply

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