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I am looking for some Foolish advice. I am 29 years old and I recently started a new job working for the federal government. Until the middle of January, I am eligible to enroll in a tax deferred savings plan (TSP) in which I am allowed to contribute up to 7% of my pre-tax income.
There are no matching contributions by the employer. Both my wife and I also have Roth IRA's. Here is my question: Since my wife and I are eligible to contribute the maximum amount to our IRA's right now, am I better off enrolling in the TSP or should I pass on the TSP and max out my Roth IRA instead?

Ogrecat wrote:
I think that is 12% not 7%.

Nope. 7% for military the first year, increasing by 1% per year until 2006 when the only limit is the annual 401(k) limit (should be $15,000 by then I think, maybe that's 2008).

And there aren't any matching funds. Personally I hope there never are, because that will signal the death knell for the most generous retirement package out there (meaning Congress will use matching funds as a reason to lower pension/increase retirement age.)

And for what it's worth, I vote for Roth all the way. Otherwise you are really guessing at what tax rates will be like in 25-30+ years. And if I had to guess on that, I'd say they'll be higher than the gradually decreasing rates over the next 9 years. Better to NEVER have to pay taxes than worry about what the rate will be then vs. now.

- Tom

Oh, Jeo--just out of curiosity, what do you do? You are obviously military (I'm an acquisition officer in the Air Force). Have you checked out the Military Fools board?
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