Congress has proposed a Roth TSP option, which many consider to be a “game-changer” for military families. Right now a married couple where one spouse is serving can save $16,500 (more if deployed to a combat zone in a pre-taxed account, plus an additional $10,000 in a post-tax Roth IRA. Under the new proposal, couples could save the same $16,500, but pay the tax now, and let the investments grow tax free now, and come out tax free later.
Conventional wisdom has said that military members should fully fund the Roth IRA before saving money in the TSP. Now with the Roth TSP we can do both.
One additional word. You might want to stick with the strategy of fully funding your Roth IRA first before contributing to the Roth TSP. The reason is investment choices. The TSP options, which might be expanding, currently limit your to a small basket of index-linked funds. If you go with a discount brokerage, like USAA, Schwab, or TD Ameritrade, your options are almost limitless. That makes a difference if you want to add exchange traded funds, commodities, and real estate investment trusts to your mix.