401K vs. Roth IRA

[Dan R]

I just completed my first three months working for the Federal Government which has the TSP plan (www.tsp.gov) for its 401k. Right now I am contributing 15% of my salary to the TSP in the L2040 plan, and I am 22 years old. In December I will be matched at 5% of my salary if I contribute a minimum of 6% of my salary.

The TSP is a tax deferred 401k, meaning I am not taxed now (on the amount I am contributing), but when I reach retirement age I will pay taxes on what I have earned once I withdraw it. With the Roth IRA I am taxed now, but anything I earn would be tax free. I am planning on opening a Roth IRA in the near future either way, but I would have difficulties fully funding the Roth, and keeping my TSP contribution at 15% of my salary. Would I be better suited to lower my contributions to the TSP to a level that ensures I am able to fully fund my Roth IRA (still making sure I get the 5% once elgible)?

[wmspringer]

Obviously you want to contribute enough to get the full match, otherwise you're throwing money away. I prefer the Roth IRA, under the assumption that I'll be in a higher tax bracket when I retire than I am now. I actually talk about this on my website for the forum project