TSP allocation


Q. I am separating from the military in January 2014. From there, I will be pursuing my education. I will be 60 in 2042. My Thrift Savings Plan is 100 percent G Fund. I stopped my TSP contribution and started the Roth TSP because I like the idea of not paying tax when retirement comes. I am aware that the account needs to be in place for five years and can only be withdrawn at age 59½, and that the money is deducted from taxed income. Is this a wise decision?

Since my traditional TSP can’t be transferred to TSP Roth, I decided to just leave it there. Would it be better to leave it entirely to G fund or allocate certain percentages to other funds? And which would be a good one to put them into?

A. It is not generally better to contribute to the TSP or the Roth TSP. Which is better entirely depends upon your tax circumstances now, and what happens in the future. Knowing what we know today, it is likely to be far more important that you save the money than it is where you save the money.

If you have no idea what to do, I suggest that you put your TSP holding into the L Fund that most closely corresponds to your life expectancy and cross your fingers.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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