The single most common question I get from federal employees under 50 is some version of: should I be doing Traditional or Roth? The pay stub gives them the option. It does not, in any useful way, explain the difference. The TSP website has a sentence or two. The agency briefing at new-hire orientation glosses over it.

So people guess. They pick whatever their onboarding form defaulted to, or whatever their coworker is doing, or whatever has the lower current impact on their take-home pay. Then they never look at it again. Twenty years later, they have a balance problem they could have prevented in their first year.

The mechanism, in one paragraph.

A Traditional TSP contribution goes in pre-tax. You do not pay federal income tax on the contribution in the year you make it. The money grows tax-deferred. When you withdraw it in retirement, the full withdrawal is taxed as ordinary income.

A RothTSP contribution goes in after you have already paid income tax on it. The money grows tax-free. Qualified withdrawals in retirement — generally those taken after age 59½ and after the account has been open for at least five tax years — come out entirely tax-free, including the earnings.

That is the entire difference. The tax break is just paid at different ends. The question, then, is which end it is cheaper for you to pay.

The arithmetic most people skip.

The naive way to think about it is: my tax rate is lower now than it will be in retirement, so I should do Roth. That is sometimes right. It is also sometimes very wrong. A few things complicate it.

First, your marginal tax bracket today is not the same as the effective rate you will pay on TSP withdrawals in retirement. Retirement income stacks differently — your FERS annuity, your Social Security (taxable up to 85%), your TSP withdrawals, any dividends or rental income. The marginal rate on the last dollar you pull from TSP is what matters, not your overall bracket.

Second, Roth contributions cost you more in current take-home pay. A 5% Roth contribution reduces your paycheck more than a 5% Traditional contribution, because the Roth dollar has already been taxed. If you are contributing the maximum (the 2026 elective deferral limit is $24,500), that difference is significant.

Third, and this is the part most people do not think about: Roth dollars are different dollars. They do not count toward your MAGI for Medicare IRMAA surcharges. They do not show up as provisional income for Social Security taxation. They do not factor into the RMD calculation on your Traditional TSP balance. In retirement, they give you tax flexibility you cannot get any other way.

When Traditional wins.

Traditional tends to make more sense when:

  • You are in a high federal bracket today (the 24% bracket or above) and expect to be in a meaningfully lower bracket in retirement.
  • You are aggressively catching up and every dollar of current take-home pay matters — Roth contributions reduce the paycheck more, dollar for dollar.
  • You expect a substantial portion of your retirement income to come from sources other than TSP (a strong FERS annuity, large taxable brokerage, etc.), so you want tax diversification through the Traditional side.

When Roth wins.

Roth tends to make more sense when:

  • You are early in your career and in a lower bracket now than you expect to be later.
  • You expect to be in a comparable or higher bracket in retirement (which is the case for most federal employees with a meaningful FERS supplement and Social Security stacking).
  • You are concerned about future tax-rate increases or about the future of the FERS/Social Security tax treatment of retirement income. Roth locks in today’s rates.
  • You want to manage IRMAA exposure in retirement, or you want tax-free legacy dollars for your heirs.

Why you do not have to choose one.

The most common error I see is treating this as a binary. The TSP lets you split your contributions between Traditional and Roth in any percentage combination, and you can change that allocation at any time. The best answer for many federal employees is a mix — especially as their income rises through their career.

A reasonable default for many career feds: start with enough Roth to build a tax-free bucket, then shift toward Traditional as your salary climbs into the higher brackets. Adjust as you approach retirement based on what the rest of your income picture looks like.