Roth TSP Option

[CommodoreMid]

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.

Yeah I'd be interested in knowing that too. Right now I max out my Roth through USAA and I stick basically just my flight pay (since I wasn't missing it when I didn't have it) into my TSP. I would up my contributions to that if I could get the same benefits as the Roth.

 

[bert]

http://www.irs.gov/pub/irs-pdf/p590.pdf#page1

Too lazy to find the 2012, but I'm sure it is out there. The above is the IRA contribution rules.

https://www.tsp.gov/PDF/formspubs/oc91-16.pdf

This addresses the question at hand.

http://www.irs.gov/retirement/participant/article/0,,id=151786,00.html

This is the IRS elective deferral limit you see referenced by the second link (it isn't relevant, but that could be confusing).

 

[pourts]

http://www.irs.gov/pub/irs-pdf/p590.pdf#page1

Too lazy to find the 2012, but I'm sure it is out there. The above is the IRA contribution rules.

https://www.tsp.gov/PDF/formspubs/oc91-16.pdf

This addresses the question at hand.

http://www.irs.gov/retirement/participant/article/0,,id=151786,00.html

This is the IRS elective deferral limit you see referenced by the second link (it isn't relevant, but that could be confusing).

That link of FAQs doesn't address the roth issue.

Until I see it in writing, im inclined to think its still a 5k max for all roth contributions (tsp or private).

 

[boobcheese]

The limits on Roth contributions are the same as the IRS elective deferral limits. If you contribute to both the TSP Roth 401(k) and traditional tax-deferred contributions options, your combined contributions must not exceed the IRS elective deferral limit.

https://www.tsp.gov/PDF/formspubs/oc06-5.pdf

 

[bert]

That link of FAQs doesn't address the roth issue.

Until I see it in writing, im inclined to think its still a 5k max for all roth contributions (tsp or private).

The third link addresses the limit. You can't hit it with just a Roth IRA and TSP.

 

[Brett327]

Cool, that's good stuff.

 

[illinijoe05]

I know that in a Roth you can withdraw your contributions (but not gains) at any time with out penalty, is this going to be true for the TSP Roth?

 

[bert]

https://www.tsp.gov/PDF/bulletins/11-u-4.pdf

This is the bulletin on implementation - I haven't waded through it but it might have your answer.

 

[pourts]

https://www.tsp.gov/PDF/bulletins/11-u-4.pdf

This is the bulletin on implementation - I haven't waded through it but it might have your answer.

OK, that document has some good info. It took them 3 years to implement the changes, as the law was signed in 2009. Why am I not suprised? Still no matching, but this looks like a decent program.

Wonder why this hasn't been advertised more? I see 6 different insulting "don't be that guy" drinking posters through the course of my work day, but no advertising about this. Thanks for the post mighty mouse.

It looks like untaxed combat pay can be contributed to Roth TSP the same as normal after tax contributions. You would be crazy not to max out when you deploy. Its basically a government sanctioned tax shelter in that case (up to 16.5k).

 

[MemphisGold]

Now that the new tsp has been rolled out last month, does anyone know how to start actually contributing to the Roth portion of it?

 

[mmx1]

The MARDMIN came out on Friday, but you have to submit a paper form as mypay doesn't yet support it (shocking).

MYPAY CAPABILITIES TO START, STOP OR CHANGE ROTH ELECTIONS WILL NOT BE AVAILABLE UNTIL JULY OR AUGUST 2012. IN THE MEANTIME, MARINES CAN START, STOP OR CHANGE ROTH ELECTIONS BY SUBMITTING A TSP ELECTION FORM (TSP-U-1) TO THEIR SERVICING ADMINISTRATION CENTER. TSP-U-1 IS AVAILABLE AT WWW.TSP.GOV, THROUGH THE FORMS LINK. MARINES WILL BE NOTIFIED WHEN MYPAY IS READY TO SUPPORT ROTH ELECTIONS.

http://www.marines.mil/news/messages/Pages/MARADMIN295-12.aspx/

but the rest of you will have to wait until later this year. I guess park the money in a savings account until then.

he Roth TSP, which uses after-tax dollars, will begin phased implementation this month for the Marine Corps, and in July for DOD civilians, said Barbara Thompson, the director of the Defense Department’s Office of Family Policy/Children and Youth.
The Roth TSP plan will be available for Navy, Air Force and Army members in October of this year, Thompson said.

http://www.defense.gov/news/newsarticle.aspx?id=116573

 

[pourts]

Print the TSP-U-1 form out (and maybe a couple copies) and bring it to your IPAC. They will probably have no idea what you are talking about, and tell you that you need to go on the website to do that. Politely explain to them that, this is ROTH tsp, is a new program, and works different. Print out all the supporting documents you can so you can show them in writing. If your IPAC is anything like mine you will be basically teaching them how to do it and will be the guinea pig.

 

[DanMa1156]

Thread bump here - and I did read that IRS link about the $17k contribution limit on 401Ks (http://www.irs.gov/Retirement-Plans...rticipants---Limitation-on-Elective-Deferrals) - but I'm still a bit confused. I see that MyPay says I can contribute up to 17k in a Roth TSP - but am still unsure what the validity on that is past the first 5000. Now, since I max out my Roth that I have with Vanguard, can I contribute another 17,000 with TSP Roth or only 12,000 or none at all since I'm already maxed out. Just confused and am certainly no stud when it comes to tax law.

 

[BoomGoDynamite]

The Roth 401k and Roth IRA are treated as two separate entities. So you can max Roth IRA @ $5,500 (2013) and Roth 401k @ $17,500 (2013) for a total $23,000 of sweeet tax advantaged savings. However, the Roth 401k and "traditional" TSP are linked, so combined they can be no more than $17,500 (2013).

I remember reading all this somewhere on the TSP site, but cant' find it, so here's this = http://helpdesk.blogs.money.cnn.com/2012/08/30/coordinate-roth-ira-roth-401k/

 

[Tycho_Brohe]

Thread bump here - and I did read that IRS link about the $17k contribution limit on 401Ks (http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/401(k)-Resource-Guide---Plan-Participants---Limitation-on-Elective-Deferrals) - but I'm still a bit confused. I see that MyPay says I can contribute up to 17k in a Roth TSP - but am still unsure what the validity on that is past the first 5000. Now, since I max out my Roth that I have with Vanguard, can I contribute another 17,000 with TSP Roth or only 12,000 or none at all since I'm already maxed out. Just confused and am certainly no stud when it comes to tax law.

As BGD said, you can contribute $5,000 to the Roth IRA and contribute $17,000 to the Roth TSP.

Just to clarify a little, there are generally four tax-advantaged retirement investment vehicles:
1) a traditional 401K,
2) a Roth 401K,
3) a traditional IRA, and
4) a Roth IRA.
(for servicemembers, the TSP is the 401k, and the Roth TSP is the Roth 401k)

Next year, you can contribute up to a total of $17,500 to any 401k AND up to a total of $5,500 to any IRA. Meaning if you have both a 401k and an IRA and max them both out, you can deduct up to $24,000 worth of contributions. However, if you contribute to both a traditional IRA and a Roth IRA, you can only deduct up to $5,000 of contributions to both accounts.

A good point that was made earlier in the thread I thought needed restating: the Roth options are good for those who are starting their career, while their salaries (and therefore their current tax brackets) are relatively low. It's especially attractive for those who deploy to designated combat zones, since most of your pay during that time is tax-free, and if you put it in a Roth IRA/401k instead of a traditional IRA/401k, it'll grow tax-free and you'll withdraw it tax-free when you retire, which makes a big difference in the long run.