Roth TSP Option

[Tomodachi]

Anyone going to invest in the upcoming Roth TSP option? I'm going 20% into L2050 right now. Considering going into this option as soon as it rolls out...

 

[pourts]

Why would you give up the flexibility, ease of use, and customer service of a fidelity/vanguard/ etc Roth IRA in order to do it through the gubment's TSP? Vanguard is also very inexpensive.

 

[bert]

You can contribute to both an IRA and TSP.

 

[mmx1]

Max normal contribution is 5,000.
Max TSP contribution on top is 17,000 this year.

Quite a deal if you have the cash to do it.

 

[Brett327]

Why would you give up the flexibility, ease of use, and customer service of a fidelity/vanguard/ etc Roth IRA in order to do it through the gubment's TSP? Vanguard is also very inexpensive.

Concur. My various Vanguard funds have consistently outperformed (sometimes significantly) their corresponding TSP funds.

Brett

 

[bert]

Low fees plus the tax advantage make TSP well worth it. You can roll it over to a better fund family when you get out (and you can even convert it to a Roth if you have the cash/deire).

 

[MasterBates]

How hard is it to get them to move it to say USAA?

Because just changing my mailing address with TSP has been an exercise in headbanging.

Not this kind:

This kind:

 

[phrogpilot73]

Here's something to keep in mind:

• Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $173,000. You cannot make a Roth IRA contribution if your modified AGI is $183,000 or more.
• Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2012 and your modified AGI is at least $110,000. You cannot make a Roth IRA contribution if your modified AGI is $125,000 or more.

Source

 

[MasterBates]

So basically, I'm screwed, because between reserves, separation pay, and my day job, I'm going to exceed the married threshold, and I'm single.

Fuck tax laws.

 

[Tomodachi]

Why would you give up the flexibility, ease of use, and customer service of a fidelity/vanguard/ etc Roth IRA in order to do it through the gubment's TSP? Vanguard is also very inexpensive.

I kept reading that TSP is the cheapest as far as fees etc... and performance is in line with those companies as well. I'm an E-5 and can easily max out the $5,000 a year limit for Roth so like mmx1 said the $17,000 Roth TSP limit would be very nice option. I can imagine after 20+ years of service and starting a new career my tax bracket will be higher, so the tax savings would be better going Roth now.

 

[bert]

Just to make sure you understand the tax difference: a Roth defers your tax advantage until you withdraw the money post 59.5 years old. The standard IRA or TSP gives you tax savings now (reduces this tax year's AGI).

I just worked my last day in the Navy, and at some point will start a thread talking about the things I did to prepare for retirement, but will post this for now. We converted our regular IRAs to Roths when the law changed (letting us spread the tax charge over 4 years) and I've maxed out TSP since it was introduced. We can pay the cost to roll my TSP into a Roth account, but I haven't decided if it is worth it or not yet (leaning towards not). My advice to any JO would be to max out a Roth IRA first, then contribute as much as you can to a regular TSP.

 

[Brett327]

Just to make sure you understand the tax difference: a Roth defers your tax advantage until you withdraw the money post 59.5 years old. The standard IRA or TSP gives you tax savings now (reduces this tax year's AGI).

I just worked my last day in the Navy, and at some point will start a thread talking about the things I did to prepare for retirement, but will post this for now. We converted our regular IRAs to Roths when the law changed (letting us spread the tax charge over 4 years) and I've maxed out TSP since it was introduced. We can pay the cost to roll my TSP into a Roth account, but I haven't decided if it is worth it or not yet (leaning towards not). My advice to any JO would be to max out a Roth IRA first, then contribute as much as you can to a regular TSP.

I'd love to hear about your retirement planning/issues, etc. Some food for my thoughts.

Brett

 

[Gatordev]

My advice to any JO would be to max out a Roth IRA first, then contribute as much as you can to a regular TSP.

This is is the tack I'm on, but I welcome a new thread, as well.

 

[mmx1]

As a JO, your taxable income is already quite low, especially if you're pulling tax-free deployment pay. You want to pay taxes now while you're still "poor" on paper, vice later, so the Roth is more applicable.

Also, consider that earnings in a Roth non-taxable, so the relatively little amount of tax you pay up front shields all of your compounded earnings from taxes down the road (assuming political and fiscal upheaval don't make the federal government retroactively change its retirement tax benefits). You will end up paying taxes down the road on your traditional TSP/tax-deferred, so the more it grows, the more tax you will pay on it.

I don't think a traditional IRA makes much sense for the JO unless you think you've maxed out your earning potential at that pay grade.

 

[pourts]

Max normal contribution is 5,000.
Max TSP contribution on top is 17,000 this year.

Quite a deal if you have the cash to do it.

Can we gat a legit link to a doc that says you can give 5k to roth IRA **plus** whatever to tsp? If so, that's awesome. If annual limit is still 5k, then give it to vanguard/fidelity not tsp.