TSP vs IRA Calculator: How to Use It

What this calculator does

The TSP vs IRA Calculator models two savings paths for a federal employee side by side. On one side: contributions flow entirely or primarily into TSP, benefiting from G Fund access, the 0.06% expense ratio, and the separation-from-service early withdrawal rule. On the other: contributions split between TSP (enough to capture the agency match) and a Roth IRA, which provides investment flexibility and Roth-specific advantages like no lifetime RMDs.

The output shows projected balances at retirement under each scenario, estimated monthly income in retirement using the same withdrawal assumptions, and the after-tax advantage of the Roth split strategy in different tax bracket scenarios. It also shows the break-even point at which the IRA investment flexibility benefit overtakes the TSP G Fund stability advantage.

What each input means

Current TSP balance and annual contribution

Your current TSP balance across all contribution types (traditional, Roth, and the agency automatic and matching contributions). The annual contribution amount is what you personally contribute, before the agency adds its portion. FERS employees who contribute 5% get the full match: 1% automatic agency contribution plus 4% agency match, for a total of 10% of salary flowing into TSP from both sources combined.

Salary and agency match rate

Enter your current base salary. The calculator uses this to compute the dollar value of the agency match at the percentage you specify. Most FERS employees get a 4% match when they contribute 5%. If you contribute less than 5%, you leave free money on the table. This is the single most important input for the comparison because the match tilts the math decisively toward TSP before any other factors matter.

TSP allocation to G Fund

What percentage of your TSP balance sits in the G Fund vs. equity funds (C Fund, S Fund, I Fund) or lifecycle L Funds. The G Fund return is guaranteed and does not fluctuate. Equity funds grow faster over long periods but drop in bad years. The blended TSP return the calculator uses depends on this allocation. A 50/50 split between G Fund (currently around 4.5%) and the C Fund (historically around 10% long-term) produces a blended rate of roughly 7.25%, without any principal risk on the G Fund portion.

IRA type and investment return

Roth IRA or traditional IRA. The contribution limits are the same ($7,000 in 2026, $8,000 at 50+), but the tax treatment differs. Roth contributions are after-tax; withdrawals are tax-free. Traditional contributions may be deductible depending on your income and whether you have access to an employer plan (you do, since you have TSP). For most federal employees in the 22% or 24% bracket, the Roth IRA is the better IRA choice because it provides tax-free income that complements the taxable TSP withdrawals in retirement.

The G Fund: what it is and why it matters

The G Fund invests in special-issue U.S. Treasury securities that are not publicly traded. The rate it earns is set by statute: the weighted average yield of Treasury notes and bonds with 4 or more years remaining to maturity. The fund carries an explicit U.S. government guarantee against loss of principal.

In practical terms: you cannot lose money in the G Fund, and it earns a rate comparable to longer-term Treasury yields rather than the near-zero rate of money market funds. In 2023 and 2024, while money market funds paid 4 to 5%, the G Fund paid a similar rate with principal protection. No bank savings account, money market fund, or stable value fund in the IRA universe offers the same combination.

When financial advisors pitch rolling a TSP balance into an IRA after leaving federal service, they're pitching their fee. Giving up the G Fund for "more investment options" is a trade most federal retirees should not make without carefully modeling the numbers. The G Fund portion of a TSP provides a return profile that does not exist elsewhere in the retail investment world.

2026 contribution limits: TSP and IRA are independent

TSP elective deferral limit for 2026: $23,500 ($31,000 total for those 50 or older with the $7,500 catch-up). IRA contribution limit: $7,000 ($8,000 at 50+). These limits do not interact. Maxing TSP does not reduce what you can contribute to an IRA.

The Roth IRA direct contribution income limit phases out between $150,000 and $165,000 for single filers, and between $236,000 and $246,000 for married filing jointly in 2026. Federal employees above those thresholds who want Roth IRA access need to use the backdoor Roth method: contribute to a traditional IRA without a deduction, then convert it to Roth. The TSP now offers a Roth option that has no income limit, so high-earning federal employees can get Roth contributions through the Roth TSP regardless of income.

The separation-from-service rule: why it matters for planning

Federal employees who separate from service in or after the calendar year they turn 55 can take TSP distributions without the 10% early withdrawal penalty. This is the same rule that applies to 401(k) plans under IRC Section 72(t)(2)(A)(v).

A FERS employee who retires at their Minimum Retirement Age of 57 can access TSP immediately with no penalty. An IRA requires waiting until 59.5 in most cases. The practical implication: if you plan to retire between 55 and 59.5, keep enough in TSP to cover your income needs for that bridge period. Rolling the entire TSP balance to an IRA before 59.5 permanently forfeits this exception.

The one-time switch from a fixed SEPP method to the RMD method is an available adjustment if you need SEPP. But the TSP separation rule is simpler, more flexible, and avoids the SEPP commitment entirely. Plan accordingly.

Traditional TSP vs Roth IRA: the optimal split

Most federal employees in the 22% or 24% bracket benefit from traditional TSP (current deduction) plus Roth IRA (future tax-free income). The traditional TSP contribution reduces taxable income now, when rates are high. The Roth IRA builds a pool of tax-free money for retirement when you have more control over your bracket.

In retirement, drawing on traditional TSP fills lower brackets, and Roth IRA withdrawals handle spending above the bracket you want to stay in, without adding taxable income. This combination produces lower lifetime taxes than either all-traditional or all-Roth in most scenarios.

The Roth TSP is worth considering if you expect to be in a higher bracket in retirement than you are now, which is unusual but possible for high earners still accumulating pensions from multiple sources. The main downside of Roth TSP vs. Roth IRA: Roth TSP is currently subject to RMDs starting at 73. Roll Roth TSP to a Roth IRA at or after separation to eliminate that requirement.

Expense ratios: TSP vs IRA funds

TSP administrative expenses run approximately 0.06% per year across all funds. That covers the C Fund (tracks the S&P 500), S Fund (small/mid-cap), I Fund (international), F Fund (bonds), G Fund, and lifecycle L Funds. No additional fund-level expense ratios apply beyond the 0.06%.

A Vanguard or Fidelity IRA running index funds will run 0.03% to 0.15% in fund expenses. The gap is small in equity funds. Over 30 years on a $500,000 balance, the difference between 0.06% and 0.10% expense ratios is roughly $22,000. Real. But not the dominant factor in the comparison; the G Fund and the separation rule are stronger arguments than fee savings.