SEP IRA

Question: What is the difference between a TSP and a SIMPLE IRA? They have different Contribution limits?

I am talking about the Thrift Savings plan that federal employees have access to. Does anyone have a good comparison?
I have a good understanding of SIMPLE and ROTH IRAs, so if you could relate to that, I would be grateful.

Answer: I’m not a financial advisor but I’ll give this my best shot.

My understanding of the Thrift Savings Plan (TSP) is that it is an employers sponsored plan similar to a 401K in the private sector. So one of the main differences is that an Independent Retirement Account (IRA) is, as the name implies, independent, ie. not sponsored by an employer and therefore is set up by the individual employee. I believe the Federal Government may offer some type of “matching” funds, ie. if the employee puts money into the TSP the government will match it up to a certain level. If this is the case it is WAY better to invest in that than in an IRA for which you would receive no matching money from the government. I do not know if the TSP puts in before or after tax dollars. If you work for the Federal Government you can ask your personnel office for help. If you search for it online you should probably find many details.

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