TSP Roth vs other Roth IRA, starting a new account

[breathemusic]

Hi all,

I'm brand new here and have been browsing the forums but was hoping for a bit of advice. I'd like to start a Roth IRA, and was considering the possibility of opening one before April 15th so that I could max out a contribution for 2011 as well. But in late April or May my TSP will also be launching a Roth option. My understanding, which may be wrong, of the way it works is that you can only have 1 Roth IRA. You may have several accounts in it, etc. But you just have 1 Roth IRA that can be maxed out. I guess I'm wondering how that will come into play if I have open a Roth IRA with, say, Vanguard, but then want to utilize the TSP Roth option. Would I have to close the vanguard Roth and somehow transfer it to the TSP? Would I let the Vanguard one just ride out the measley $5k that I will have put in it and use the TSP Roth for everything in 2012 and beyond?

As of right now, I only have my TSP (I'm 26) and my ING savings account (emergency fund/future house downpayment fund) but I want to start contributing more toward retirement.

[kork13]

Nope!

You are mostly correct with the Roth IRA... You can only contribute $5k/yr to Roth IRAs. Technically, you can own multiple Roth IRA accounts, but even if you have 10 Roth IRA accounts, you can still only add a sum total of $5k between them all. But that doesn't make much sense, so in general, most people only have the one.

The good news, though, is that the Roth TSP is not an IRA, it's a 401k (for all intents and purposes). So if you'd like and can afford it, you can save up to $5k in your Roth IRA plus up to another $17k in your Roth TSP. Great deal, isn't it??

I'd definitely recommend that you open up a Roth IRA and max it out before the cutoff next month. You can never make up missed opportunities to save in an IRA.

[breathemusic]

Ah! I didn't realize it wasn't being used as an IRA. Makes sense now. I'll definitely go ahead and make that contribution toward 2011 then! Thanks!