Q. My husband has been in the military for six years, and he plans on retiring at 20 years from the military. He will then work with the State or Defense Department and work for another 20 years before we retire. I am a DoD civilian employee. We would like to enroll him in the Thrift Savings Plan. But, we are not sure of which TSP plan (traditional or Roth) would benefit us the most. Any advice? A. It’s impossible to know now which will work out to be best for you. Without that knowledge, I prefer the tax break…
Browsing: Roth TSP
Q. There is around a $5,000 annual limit to a Roth IRA based on income and age. Does that limit apply to TSP? In other words, can I put all $17,500 plus the $5,500 catch-up contributions for those age 50 and older into the Roth TSP and pay taxes on it now, rather than later regardless of my income? I am a civilian over 50 years old in FERS. A. The Roth IRA limit does not apply to Roth TSP contributions.
Q. Can I roll over the funds in my traditional Thrift Savings Plan to the Roth TSP? I thought I had read that you couldn’t, but I see where you can roll over from a 401 plan, so it would make sense and just pay the taxes this year on the whole amount. A. You may not convert traditional TSP to Roth TSP money.
Q. I just started a Roth TSP and wondered if there was a five-year waiting period to start drawing it out? I am almost 61 years old. A. Yes, the five-year rule applies to Roth TSP withdrawals.
Q. Are there income limitations on a Roth TSP? For example, can a single person with an income greater than $127,000 contribute to a Roth TSP (in 2013)? A. The contributions are not affected by the size of your income.
Q. If I have both a traditional and a Roth TSP, can I elect to have all of my contributions (6 percent) go to the Roth account, and still receive the 5 percent matching contributions (FERS employee) that I have been receiving? Is there a required minimum of my contributions that must go to the traditional account? A. The matching formula applies to all of your deferral contributions, Roth or traditional.
Q. I am 25 and now have the option to contribute to a Roth TSP. I have four years left on my military contract before I have the opportunity to get out. Seeing that my future with the military is somewhat questionable, would the Roth TSP still be a favorable option? A. Except for tax-free pay earned in a combat zone, I don’t see any reason to expect that contributions to the Roth TSP are somehow better than contributions to the traditional TSP. In fact, I recommend that you favor the traditional TSP over the Roth TSP unless your circumstances…
Q. I am CSRS and eligible to retire now with 30 years at age 56. My salary excludes my wife and I from funding a Roth with more than $6,000 each year (except $22,500 allowable into new Roth TSP). Let’s say I put $25,000 into the Voluntary Contributions Program with the intention of making a one-time, lump-sum withdrawal as soon as possible and roll the original $25,000 into a private Roth IRA. I am told that doing so is a way to immediately fund a Roth that is not limited to my current $6,000 amount mentioned above. Do I understand this correctly,…
Q. Does a Vanguard Roth decrease the elective amount that I can place in the Thrift Savings Plan? This year, I have already maxed my Vanguard Roth to $5,000. Can I only place $12,000 into TSP, or can I still contribute the total $17,000 to TSP? I understand that if I contribute $5,000 to the Roth TSP, I can only place $12000 into the regular TSP. Does the Roth TSP preclude from using the Vanguard Roth? A. The amount you contribute to a Roth IRA does not affect the amount you may contribute to the TSP, but your income might…
Q. I’m a 45-year-old reservist who has been recalled to active duty. I’m also an E-6 with more than 18 years of service. I can afford to invest my entire pay, including incentive pays, and wondered if it would be better to pay off an existing mortgage, approximately $60,000, just refinanced last month at 3.5 percent and a 15-year term? Or would it be better to max out the Roth TSP and set up another deferred account or IRA of some sort? My wife makes about $55,000 per year. A. It’s impossible to say what’s best for you without the…