Q: I plan to retire March 1. I am thinking about maximizing my TSP and TSP catch-up contributions for the first two months of 2012. That would be a total contribution of $16,500 and $5,500 respectively. I know this would have huge tax advantages for 2012 and increase my retirement investments, so is this a good plan? Upon retirement, I will have 720+ hours of annual leave and do not want to have a huge salary increase for the tax year, and this is one way to accomplish this. Am I overlooking something?
A: “Is this a good plan?” is too broad a question to be answered here. I suggest you start by running pro-forma tax calculations to see what the effect on your tax return will be. It’s safe to assume that it would be in your best interests to at least maximize any employer matching contributions. Beyond that, it’s impossible to say here what is the best strategy for you.
