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Ask Dave

Government Saving Plan Or Roth IRA?

Lee asks if one retirement plan, which is tax-free, is better than another that is tax-deferred.

QUESTION: Lee asks if a Roth IRA is better than the government employee’s thrift savings plan.

ANSWER: The military does not match in the TSP and you are better off to grow your money tax-free than tax-deferred.  So, you should fund a Roth IRA first.  After you fully fund the Roth IRA, you should fund the TSP because it is a good retirement savings tool. 

Remember: you should only save for retirement after you have paid all your debt except the house and saved 3-6 month’s of expenses.