See which TSP option leaves you more spendable money in retirement, based on your tax rate now and the rate you expect later.
A traditional contribution lowers your taxes today, so it costs less out of each paycheck. This view compares a traditional contribution with a smaller Roth contribution that has the same effect on your take-home pay.
If you contribute the same dollars either way, Roth costs more today but shelters more money. This matters most if you contribute the IRS maximum.
Traditional: contributions go in before tax and grow tax-deferred. Withdrawals are taxed as ordinary income, so the after-tax value is the ending balance times (1 minus your retirement tax rate).
Roth: contributions go in after tax. Qualified withdrawals (generally age 59½ and at least 5 years after your first Roth contribution) are tax-free.
Same take-home pay: a traditional contribution of C reduces take-home pay by C × (1 minus your current tax rate), so the matching Roth contribution is that smaller amount. With identical returns, Roth comes out ahead exactly when your retirement tax rate is higher than your current rate, and the two tie when the rates are equal.
Limits: the 2026 elective deferral limit ($24,500, plus catch-up of $8,000 at ages 50+ or $11,250 at ages 60 to 63; source: tsp.gov Bulletin 25-3) applies to your traditional and Roth contributions combined. Contributions are capped at that limit, held at 2026 levels in later years.
Agency contributions: your agency's automatic 1% and matching contributions go to your traditional balance whichever option you pick, so they're left out of this comparison. Check current rules at tsp.gov.
Assumptions: contributions are made evenly through the year and earn about half a year of return in their first year. Returns compound yearly. Amounts are nominal. Tax rates are flat estimates; real taxes depend on brackets, Social Security taxation, required minimum distributions, and state rules. The Roth catch-up requirement for higher earners is ignored.