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What’s the difference between traditional and Roth investing?
Apr 06, 2014
Traditional investments are made with pre-tax money that is taxable on withdrawal, as are its associated earnings.

Roth investments are made with after-tax money that is tax-free on withdrawal; whether its associated earnings also are tax-free depends on whether they are deemed to be “qualified.” The requirements are that five years have passed since January 1 of the year in which you made the first Roth TSP investment; and you have reached age 59 1/2, died, or have become permanently disabled under a standard set by the IRS.

You can invest in one type of balance or both, up to the annual limits. However, automatic and matching contributions for employees under the Federal Employees Retirement System always are made into a traditional balance and are subject to the tax policies applying to that type of balance.

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