TSP Roth vs traditional usually tilts toward Roth for members who will stack a pension on a civilian salary, and Edgepoint Wealth Management sends pay earned in a combat zone to Roth first. Roth TSP money from tax-exempt combat pay is never taxed again once the distribution is qualified (5 years and age 59½), while traditional money from that same pay is tax-free only on the contributions, not on the earnings. Members ask it this way: 'I barely pay tax on my LES, so why give up a deduction?' Reviews of active-duty accounts at Edgepoint Wealth Management usually turn up a split chosen years ago and never looked at again. Below, one hypothetical Air Force household walks through the choice, and each rule is explained at the moment they run into it.
By Sarah Chen, CFP — Senior Financial Planner | Reviewed by Marcus Thompson, CFASarah has guided families through retirement transitions for over fifteen years, specializing in tax-efficient withdrawal strategies.
If the combat-zone months are coming, set the Roth election first. A $12,000 deferral can grow for decades and never be taxed, and you can't get that from traditional money.
Marcus Hale, CFP® and Lead Advisor at Edgepoint Wealth Management
Traditional money feels like savings, but at a 24 percent later rate a $20,000 deferral taken at 22 percent owes $4,800 against $4,400 saved. Run the later tax line before you pick.
Daniel Reyes, CPA and Tax Director at Edgepoint Wealth Management
Age 44, 22 years in: where Curtis and Joanne start
Hypothetical Curtis is an Air Force E-8 who retires at age 44 after 22 years under High-3. His wife Joanne, age 42, is a nurse earning $80,000. Curtis's LES shows taxable base pay of about $66,000. BAH and BAS are tax-free, so they never show up in taxable income.
Their starting tax line is short. $66,000 plus $80,000 is $146,000, and the $32,200 standard deduction for 2026 leaves $113,800 taxable. For illustration, assume a 22 percent marginal rate, meaning 22 cents of tax on the next dollar they earn.
Compare two rates. When the rate you pay today is no higher than the one you expect after a pension and a civilian salary stack, Roth usually comes out ahead. When today's rate is clearly higher than the later one, traditional usually does.
Curtis's pension will be $3,300 a month, and a contractor job is waiting. Before Edgepoint Wealth Management suggests any Roth split, it projects the pension, the contractor salary and Joanne's pay as one future tax line. Fund choices come second.
How much of Curtis's pay is taxable at all?
Only about $66,000 of Curtis's pay is taxable, because BAH and BAS never count and the IRS excludes pay earned in a combat zone from federal income tax. Roth TSP from that pay costs nothing now, and qualified distributions later are tax-free, earnings included. The 2026 employee deferral cap is $24,500. Roth from exempt pay counts toward it; traditional from exempt pay counts only toward the $72,000 total limit.
TSP Roth vs traditional vs a split, on 4 criteria
Curtis has three options, and they differ on four things: tax now, tax at income draws, required minimum distributions (RMDs) and flexibility. All-traditional lowers tax now but leaves the full balance exposed to RMDs at age 73 (age 75 for people born in 1960 or later). All-Roth costs tax now, has no lifetime RMD in the TSP, and qualified distributions don't add to taxable income in the pension years.
A split hedges against tax law changing. Curtis's version puts combat pay in Roth, sends base pay to traditional in years taxed at 22 percent, and switches to Roth in the final year. One catch on the traditional side: money from exempt pay comes out with the contributions tax-free and the earnings taxable.
A civilian accountant once told Curtis that Roth 'can't take tax-free pay.' Had he believed it, $12,000 of combat pay would have gone to traditional. At an assumed 5 percent a year, that money reaches about $47,000 over 28 years. The roughly $35,000 of earnings, taxed at an assumed 22 percent, comes to about $7,700 that Roth would have avoided.
Curtis catches it by checking the Roth percentage for exempt pay in myPay and the tax-exempt balance line on the TSP statement. Nothing here is guaranteed. A TSP balance can drop and take years to recover. The Roth tilt rests on a guess about future tax rates and law, and none of it covers state income tax.
A brother's advice that would have cost $7,700
| Criterion | All traditional | All Roth | Split |
|---|---|---|---|
| Tax now | Lowest | Highest | In between |
| Tax at income draws | Taxed as income | None if qualified | Traditional part only |
| RMD at age 75 | Full balance | None in TSP | Traditional part only |
| Flexibility later | Low once pension stacks | High | Highest |
| Combat-pay earnings | Taxed on exit | Never taxed | Never taxed (Roth) |
4 years of deferrals, traced year by year
At age 41, Curtis spends 6 months in a combat zone. He sends $12,000 of that tax-exempt pay to Roth TSP. It costs $0 in tax now and $0 when the distribution is qualified.
At ages 42 and 43, he defers $10,000 a year to traditional. At an assumed 22 percent, each year saves $2,200, so $4,400 in all. At age 44, he defers $10,000 to Roth, which costs $2,200 in tax now. Only the combat-zone Roth removes tax for good. The traditional years shift it.
Here is the shift in dollars. After he retires, the $39,600 pension, a $110,000 contractor salary and Joanne's $80,000 stack to $229,600, at an assumed 24 percent. If drawn in those years, the $20,000 deferred at 22 percent saved $4,400 but would owe $4,800, before growth. So they plan to leave that traditional money untouched until his contractor salary ends. Our calculator runs this kind of comparison with your own numbers.
The pension is why the answer changes. Curtis's $39,600 a year fills the low brackets for life, so every later traditional dollar lands on top of it.
A second hypothetical household should choose differently. A married O-3 at an assumed 24 percent separates after 8 years with no pension and expects 2 years of graduate school with little income. Traditional fits that member better, because the money can come out or be converted later at a lower rate. Converting to Roth in low-income years is its own topic, covered in our tax planning for veterans work.
Years 41 to 44, one at a time
The household that should pick traditional
What age switches each rule on?
For Curtis, born after 1960, five ages matter: 44, when deferrals end with his last paycheck, then 50, 59½, ages 60 to 63, and 75. The one that separates the two TSP balances is age 75, when RMDs hit traditional money and Roth TSP faces none in his lifetime. Age 59½ only helps Roth if the 5-year clock has run.
| Age | Rule that switches on | What it means for Curtis |
|---|---|---|
| Age 44 | TSP deferrals end with last paycheck | Final split set in myPay |
| Age 50 | $8,000 catch-up in employer plan | Traditional allowed at $110,000 FICA wages |
| Age 59½ | Qualified Roth distributions if 5-year met | Combat-pay Roth fully tax-free |
| Ages 60-63 | $11,250 catch-up replaces $8,000 | Larger Roth or traditional slot |
| Age 75 | RMDs on traditional balances | Roth TSP has no lifetime RMD |
How long before your last LES should the split change?
Change the split before the combat-zone months begin, because each paycheck follows whatever election is on file at that moment. A change made after the final military paycheck does nothing at all, so Curtis sets his final split while paychecks are still coming.
Acting too early costs money too. Locking in all-Roth in year 4 of service, before you know whether a pension will come, hurts a member who later separates and spends a few low-income years. And setting any split before someone estimates the pension and the second-career income is simply the wrong order.
Put one question to the finance office or the myPay help desk: 'Is my exempt pay going Roth or traditional?' If they say 'same as base pay' without opening the election screen, that is a red flag. Ask the TSP for your tax-exempt balance. Ask the new employer's HR whether the 401(k) offers Roth. If it doesn't, a worker whose prior-year FICA wages topped $150,000 cannot make catch-up contributions at all, under the IRS rule for 2026.
Run this checklist against your own accounts:
Timing errors and what they cost
Questions that expose a wrong election
Send every dollar of combat-zone pay you defer to Roth TSP first, and make sure that election is on file before the combat-zone months begin. For base pay, pick Roth when today's marginal rate is at or below your expected later rate.
- The Roth percentage on the myPay TSP election for base pay
- The Roth percentage for special, incentive and bonus pay
- The tax-exempt balance line on the TSP statement
- Your projected pension in dollars a month
- Your expected civilian salary and your spouse's pay
- Your birth year, which sets RMDs at age 73 or age 75
Curtis can set the split alone; Edgepoint Wealth Management runs the stacking math
Curtis can run the checklist and change his myPay election himself in a few minutes. Projecting the pension, the contractor salary, Joanne's income and the later income draws into one tax line is the part worth a first conversation with Edgepoint Wealth Management.
Only the combat-zone Roth removes tax for good; the traditional years just move it.
Common questions on TSP Roth vs traditional
If my husband dies before age 59½, can I take his Roth TSP money out tax-free?
Distributions to a beneficiary after the participant's death are generally treated as qualified once the 5-year period has been met, so the age 59½ test usually doesn't apply to you. If the 5 years haven't passed, the earnings part may be taxable. Check your exact dates with the TSP before taking money.
What happens if my TSP and my new 401(k) deferrals add up to more than $24,500 in the same year?
The IRS limit of $24,500 for 2026 applies to your deferrals across all plans combined. Roth contributions from exempt pay count toward it. If you go over, ask a plan to return the excess before the spring deadline, or the extra can be taxed twice.
My TSP statement shows a tax-exempt balance; how will that money be taxed later?
The tax-exempt balance tracks contributions made from pay the IRS excluded. If it sits in traditional TSP, those contributions come out tax-free and the earnings are taxable. If it sits in Roth TSP, the whole amount, earnings included, is tax-free once the distribution is qualified.
Do Roth TSP contributions reduce what I can put into a Roth IRA?
No. The IRS sets the Roth IRA limit separately from the TSP deferral limit. For 2026 the IRA limit is $7,500, or $8,600 with the age 50 catch-up, shared between traditional and Roth IRAs. Your TSP Roth contributions don't use any of it. Income limits can still apply.
Can we still contribute to a Roth IRA if our joint income is above $242,000?
For 2026 the IRS phase-out for married couples filing jointly runs from $242,000 to $252,000. Inside that range your direct contribution shrinks, and above $252,000 it isn't allowed. Roth TSP has no income limit, which is why Edgepoint Wealth Management often looks at it first.
How much smaller does each paycheck get if I move $10,000 a year from traditional to Roth?
Moving $10,000 a year is about $833 a month. At an assumed 22 percent tax rate, traditional deferrals cut your take-home by about $650 and Roth by the full $833, so your paycheck shrinks by about $183 more each month, or $2,200 a year. Your own rate sets the real number.
Primary sources
This material is general information only and does not constitute individual investment, tax, or legal advice. Investing involves risk, including the possible loss of principal. Before making any decision, talk to a financial professional, tax advisor, or attorney about your specific situation.