Q. Quite a few of us here in Afghanistan believe the new Roth IRA is an excellent investment. We are contributing tax-free money to receive tax-free contributions and earnings after we retire and meet withdrawal criteria. We leave Afghanistan in late February. Since we have been in a combat zone for two months, we plan to max out the Roth as much as possible. If we are able to max the Roth at $17,000, how much may we contribute to the traditional TSP/Roth TSP for the rest of the year?
A. The TSP contribution limit applies to all of your TSP contributions — traditional and Roth — combined for the year.
2 Comments
Very smart of you to invest as much of your tax exempt income as possible. If you are able to contribute $17k in the Roth TSP and still have money left to invest, suggest you invest $5,000 in a Roth IRA.
Are you using the taking advantage of the Saving Deposit Program?
Thank you for your military service.
First of all, the 2013 contribution limit is $17.5k, not $17k. Second of all, you can contribute much more than $17.5k while deployed.
“…the Internal Revenue Code (IRC) 415(c) annual addition limit applies to uniformed services members who make tax-exempt contributions to the TSP while deployed in a designated combat zone. The annual addition limit will increase from $50,000 in 2012 to $51,000 in 2013”
Source: https://www.tsp.gov/PDF/bulletins/12-u-19.pdf
Also, the 2013 Roth IRA limit is $5.5K, not $5k.
Source: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits