In Roth TSP, when are investments taxed?

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Multiple Choice

In Roth TSP, when are investments taxed?

Explanation:
In a Roth TSP, taxes are paid before the money goes into the account. Contributions are made with after-tax dollars, so that money has already been taxed. The benefit is that the account grows tax-free, and qualified withdrawals in retirement are tax-free as well. So the defining timing is upfront taxation on your contributions. Why the other options don’t fit: paying taxes upon withdrawal would apply to traditional pre-tax accounts, not Roth; not taxed would ignore the upfront tax you already paid on the contribution; taxed yearly isn’t how Roth gains are taxed—there isn’t yearly taxation on the earnings as long as withdrawals are qualified.

In a Roth TSP, taxes are paid before the money goes into the account. Contributions are made with after-tax dollars, so that money has already been taxed. The benefit is that the account grows tax-free, and qualified withdrawals in retirement are tax-free as well. So the defining timing is upfront taxation on your contributions.

Why the other options don’t fit: paying taxes upon withdrawal would apply to traditional pre-tax accounts, not Roth; not taxed would ignore the upfront tax you already paid on the contribution; taxed yearly isn’t how Roth gains are taxed—there isn’t yearly taxation on the earnings as long as withdrawals are qualified.

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