Q. On March 11, you wrote a response to a gentleman who was retiring from the Postal Service and had a question about moving his Thrift Savings Program to a civilian account. In your response you wrote, “You are not required to roll over your TSP account and may continue it for life. You should do everything you can to keep your money in the TSP for as long as possible, since it is superior to any other investment account you will find. Your TSP should be the last account you tap for retirement income.” That response raised a few…
Browsing: Roth TSP
Q. I am over 50, my wife (unemployed) is under 49. In 2013, if I contribute the maximum amount (including catch-up) of $23,000 to my Roth TSP and traditional Thrift Savings Plan, can I also contribute the maximum of $6,000 to a Roth IRA or traditional IRA for a total contribution of $29,000? Can I also contribute the maximum of $5,000 for my wife into a Roth IRA or traditional IRA for a total contribution of $34,000, assuming that I fall within the adjusted gross income limits as addressed by the Internal Revenue Service? If there are limitations on contributing to a…
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 I am aware that the account needs to be in place for five years and can only be withdrawn at age 59½, and that the money is deducted from taxed income.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…
Q. I am covered under CSRS. Can I still open an external Roth account and contribute the $6,000 maximum (plus catch-up)? If so, how would contributing to the Roth TSP interact with contributing to the external Roth? A. The limits for the two are separate, but your eligibility to contribute to a Roth IRA depends upon your tax return for the year. If your income is too high, your Roth IRA contribution eligibility will be phased out. There’s a worksheet in IRS Publication 590 that will help you determine your eligibility.
Q. Can you make a rollover from a private post-tax 401(k) into the Roth TSP account? A. If it’s Roth 401(k) money, yes.
Q. I contribute to the Thrift Savings Plan where you don’t invest the money. What is the difference between the Roth IRA and TSP? Would you recommend that I look into the Roth IRA? A. The TSP is funded with pretax money, but when withdrawn, the money is taxed as ordinary income. The Roth TSP is funded with after-tax money, but the money is exempt from income when it is withdrawn. Everyone who is eligible to participate should consider the costs and benefits of both options, although it can be difficult or impossible to know in advance that one or…
Q. Federal employees now have the option of investing a portion of their Thrift Savings Plan contributions into the Roth option. As many of us know, contributions to the Roth TSP are from after-tax income. The benefit comes from tax-free earnings. The way I understand the rules, we must contribute to Roth for five years and not make any withdrawals until we are age 59½. The traditional TSP also uses the 59½ rule, unless we retire at age 55 or later. When we make withdrawals from our TSP account, the money is divided proportionately from both the traditional and Roth funds. For example:…
Q. Should I put some or all my TSP money into a Roth TSP? I’m almost 30, make around $59,000 a year and want to make aggressive choices so my money can grow. What should I do? A. The answer depends entirely upon your predictions about your future income tax rates.
Q. I am a GS-14 criminal investigator with 16 years covered service, and I am expecting to contribute to the Thrift Savings Plan for another 10 years or so before retiring. I have been contributing the TSP maximum for the past 10 years. What is your guidance with the Roth option? Should I scale back my TSP contribution to the 6 percent minimum to capture the matching contributions and invest the rest with the Roth option? A. Without a good reason to do otherwise, I prefer the tax-deferred contributions.
Q. I am a single FERS employee. In 2012 and prior years, I have been able to contribute the maximum amount to my Thrift Savings Plan account to bring my adjustable gross income below the income phase-out limit to be able to contribute the maximum to a Roth IRA. However, in 2013, I believe my AGI will exceed the limit and I would like to take advantage of the Roth TSP option. If I contribute the maximum $17,500 to the Roth TSP, can I still invest in a traditional IRA? If so, can I take the IRA deduction even though I make…