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, low fund fees, and the separation-from-service early withdrawal rule. On the other: an IRA, which provides investment flexibility and, for a Roth IRA, no lifetime RMDs.

The output shows projected balances at retirement for each account, estimated monthly income at a 4% draw, a table of when each account can be tapped without the 10% penalty given your separation age, and a 2026 tax-bracket comparison of traditional TSP against a Roth IRA. It also puts a dollar figure on your G Fund allocation: how much projected balance you give up versus holding equities, in exchange for no principal risk.

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). Enter the total going into TSP each year, your contributions plus agency money. 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.

Separation age and age 50+

The separation age sets the projection length and drives the early-access table: separate during or after the year you turn 55 and TSP withdrawals skip the 10% penalty from then on. The age 50+ box raises the IRA limit to $8,600. Before any of this, contribute at least 5% to TSP if you're FERS; below that you leave agency match on the table.

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 can't lose principal; its interest rate resets monthly. 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 a G Fund rate of 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 contribution and investment return

Roth IRA or traditional IRA. The contribution limits are the same ($7,500 in 2026, $8,600 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: $24,500 ($32,500 total for those 50 or older with the $8,000 catch-up). Under SECURE 2.0, participants aged 60-63 can contribute an $11,250 super catch-up instead of $8,000, bringing the TSP maximum to $35,750. If your 2025 wages were over $150,000, 2026 catch-ups must be Roth. IRA contribution limit: $7,500 ($8,600 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 $153,000 and $168,000 for single filers, and between $242,000 and $252,000 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 (56 for 1953-1964 births, 57 for 1970 and later) 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. SECURE 2.0 eliminated Roth TSP RMDs starting in 2024, so both Roth TSP and Roth IRA are now RMD-free during the owner's lifetime. The remaining Roth IRA advantage is contribution withdrawal flexibility: Roth IRA contributions (not earnings) can come out tax-free and penalty-free at any time.

Expense ratios: TSP vs IRA funds

TSP fund expenses are among the lowest anywhere. The C Fund's total expense ratio was 0.048% in 2023, according to the TSP's summary booklet; tsp.gov lists the current figure for every fund, including the G, F, S, I and L Funds.

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. The gap is real, but it's not the dominant factor in the comparison; the G Fund and the separation rule are stronger arguments than fee savings.