The Roth IRA for service members

The TSP is the first retirement account every service member should fund, but it isn't the only one. A Roth IRA - opened at any brokerage, entirely separate from your military accounts - gives you a second stream of tax-free retirement money, more investment choices than the TSP's short menu, and flexibility the TSP lacks. For a population that's often young, in low tax brackets, and periodically drawing tax-free combat pay, it's close to a perfect fit.

Roth IRA basics

A Roth IRA is funded with after-tax dollars: you get no deduction now, but the money grows tax-free and comes out tax-free in retirement. There's an annual contribution limit (check the current IRS figure) and an income limit above which contributions phase out - though most service members are well under it. You can invest in nearly anything: low-cost index funds, target-date funds, individual stocks. And crucially, you can always withdraw your own contributions (not the earnings) tax- and penalty-free, which makes it a flexible backstop as well as a retirement account.

Where it fits in the order of operations

1. Emergency fund first - a $1,000-$2,000 starter so a surprise doesn't derail everything.
2. TSP to 5% - capture the full BRS match, a guaranteed 100% return you never skip.
3. Roth IRA up to the annual limit - tax-free growth with more flexibility and investment choice than the TSP.
4. Back to the TSP - increase contributions above 5% toward the elective deferral limit.
5. Taxable brokerage - once the tax-advantaged accounts are maxed.

Roth IRA vs. Roth TSP - you can use both

They're complementary, not competing. The Roth TSP has rock-bottom fees, gets the match (into the traditional side), and has a high contribution limit. The Roth IRA has a lower limit but a vastly bigger investment menu and easier access to your contributions. A common setup: fund the TSP to the match, then the Roth IRA to its limit for the flexibility and choice, then return to the TSP. Together they build two separate pools of tax-free retirement money.

The bottom line

A Roth IRA is the natural second retirement account for a service member: fund the TSP to the 5% match first, then max the Roth IRA for its tax-free growth, flexibility, and wide investment menu, then push more into the TSP. Lean Roth while your bracket is low, and pour tax-free combat pay into it during deployments for money that's never taxed at any point. Two tax-free buckets beat one - and starting young means decades of untaxed compounding you'll be very glad to have.