Military Retirement Planning Strategies: Should I Choose a Roth IRA or Roth TSP?
As a military member serving your country, you have most likely set up life insurance, but have you thought about your retirement options when you complete your time in the military? There are a number of unique saving options for military families when it comes to retirement planning strategies.
We are appreciative the sacrifice and courage that our military members provide to all of us; Sage Investment Advisers, LLC located in Poughkeepsie, NY focuses on creating retirement planning strategies that fit the unique retirement needs and desires for military personnel and their families.
The two most popular options that military members usually choose for the retirement panning options are the Thrift Savings Plans (TSPs) or one of the Individual Retirement Account options (Simple, Roth, etc.).
Roth IRA Overview
Since the Roth IRA was introduced in 1998, its popularity has soared. It has become a fixture in many retirement planning strategies because it offers savers several potential advantages.
The key argument for going Roth can be summed up in a sentence: Paying taxes on your retirement contributions today may be better than paying taxes on your retirement savings tomorrow.
Roth IRA contributions are made with after-tax dollars, and any potential earnings on investments within a Roth IRA are not subject to income tax or included in the account owner's income. Instead, they accumulate on a tax-deferred basis and are tax-free when withdrawn from the account if the distribution is qualified.1
You can arrange tax-free retirement income. Roth IRA earnings can be withdrawn tax-free as long as you are 59½ or older and have owned the account for at least five years. The IRS calls such tax-free withdrawals qualified distributions.1
Withdrawals don’t affect the taxation of Social Security benefits. If your provisional income is between $25,000 and $34,000 - or $32,000 and $44,000 for joint filers - then your Social Security benefits may be taxed if you take withdrawals before your full retirement age. Luckily, a qualified distribution from a Roth IRA doesn’t count as taxable income, which may be a means of avoiding taxation on your Social Security benefit.1,2
Roth IRA Considerations
Who can open a Roth IRA? Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2021, eligibility to contribute to a Roth IRA is phased out between $198,000 and $208,000 for married couples filing jointly and between $125,000 and $140,000 for single filers.1
When considering a Roth IRA, you’ll want to keep the contribution limits in mind. The combined annual contribution limit to all of your traditional and Roth IRAs is $6,000 for 2021 ($7,000 if you're age 50 or older), but income limits may reduce your ability to contribute. It’s important to note that you can continue contributing to your Roth IRA throughout retirement, and there is no required minimum distribution.1
Roth TSP Overview
A thrift savings plan is a supplemental retirement savings plan meant to complement pension plans for federal workers and military personnel.
A traditional TSP is funded akin to a traditional 401(k) or 403(b). Pre-tax dollars are directed from your paycheck to fund the account, thereby reducing your taxable income. Put another way, you don’t pay tax on traditional TSP contributions or earnings until they are withdrawn.3
TSP Considerations
The handful of funds offered by the TSP pale in comparison to the variety of investments you can hold in an IRA. You can utilize a Roth TSP, however, just as you can with an IRA.
Unlike a Roth IRA, there are no income limits for contributing to a Roth TSP. You may contribute after-tax dollars in exchange for potential tax-free withdrawals during retirement. In fact, you can make both Roth and traditional contributions to a TSP per your contribution election. You can’t convert a traditional TSP balance to a Roth TSP balance, however.4
Similar to a 401(k), you may be permitted to take a loan from your TSP. As long as you work for the federal government or are in the uniformed services, you can take a loan and pay it back with interest (Note: you must be in pay status). General purpose loans have repayment terms of one to five years, residential loans (for home buying or home construction) repayment terms of one to fifteen years.5
While IRAs and TSPs have many functional differences, they have many similarities. Speak to your trusted financial professional about how a Roth IRA or Roth TSP might be of service to your retirement strategy.
Many military members do not begin their retirement planning strategies until they are ready to leave the military rather than as soon as they enter into their branch of service. Speaking to a financial advisor who can further discuss the difference between a Roth IRA and a Roth TSP can help you make the best decision for your retirement planning needs.
Published by Sage Investment Advisers, LLC in Poughkeepsie, NY
We give a financial tip each week on our social media pages! Follow us on Facebook and LinkedIn to keep up to date on our latest financial tips of the week. Click the link below to view the latest weekly financial tip of the week.
View the monthly investment letters we send out to our clients to keep them up to date on everything going on in the stock market and economy. Click below to view the latest monthly Sage Investment Advisers, LLC letter.
June 23, 2025 Sage Investment Advisers, LLC Named 2025 Best Financial Planner in the Hudson Valley WAPPINGERS FALLS, NY — Sage Investment Advisers, LLC, a trusted and local fiduciary firm based in Wappingers Falls, is thrilled to announce they have been chosen as Best Financial Planner in the Hudson Valley for 2025 , by Hudson Valley Magazine. Sage Investment Advisers beat out many other local financial planners and advisory firms to win the title of Best Financial Planner in the Hudson Valley. The Best of the Hudson Valley is an annual competition from Hudson Valley Magazine, where locals vote for their most beloved local businesses in each category. “We are honored to be named Best Financial Planner in the Hudson Valley,” said Jerry Schuder, President of Sage Investment Advisers. “This recognition validates the daily efforts of our team, working tirelessly to guide clients in retirement planning, investment management, and wealth preservation with integrity and care.” Sage Investment Advisers serves clients throughout the Hudson Valley region, including Wappingers Falls, Poughkeepsie, and beyond, offering tailored financial strategies, retirement planning, Social Security optimization, and real estate advisory services. Sage is dedicated to providing their clients with custom financial and retirement strategies to help them plan their retirement and legacy. This latest achievement adds to their list of other prestigious awards which include: 2024 Readers’ Choice: Best Financial Advisor – Hudson Valley , awarded by Daily Voice facebook.com+15dailyvoice.com+15sageinvestmentadvisersllc.com+15 Multiple Five‑Star Wealth Manager Awards (2012–2016, 2022–2025), presented by Five Star Professional fivestarprofessional.com+2fivestarprofessional.com+2fivestarprofessional.com+2 Recognized growth as the Hudson Valley’s #1 fastest-growing wealth management firm in prior industry rankings m.facebook.com+10sageinvestmentadvisersllc.com+10fivestarprofessional.com+10 Best Financial Advisor Firm (2024-2025)-Hudson Valley, awarded by USA Today “Being part of this Hudson Valley community means everything to us,” added Vice President, Joe Guarneri. “This award reflects our clients’ confidence and the strength of our fiduciary-driven practice.” ---------------------------------------------------------------------------------------------------------------------------------------------------------- About Sage Investment Advisers, LLC Located at 1829 South Road, Wappingers Falls, NY , Sage Investment Advisers is a local fiduciary wealth management and financial planning firm. The team combines financial and investment knowledge with decades of experience to offer custom investment strategies, retirement roadmaps, Social Security optimization, college planning, and real estate advisory services—all designed to empower clients to pursue financial peace and legacy building. Contact Jerry Schuder President, Sage Investment Advisers, LLC (845) 240‑1551 info@sageinvestmentadvisersllc.com Website: sageinvestmentadvisersllc.com Sage Investment Advisers, LLC , serving as Hudson Valley’s premier fiduciary firm, is honored to be named Best Financial Planner for 2025 , and remains dedicated to helping clients build their wealth, retirements, and legacies.