Browsing: Roth TSP

Q. I am really confused over the Roth IRA and Roth TSP. I have an individual Roth IRA through Vanguard. I have a Thrift Savings Plan account that I max every year, and because I’m over 50, I also max my TSP catch-up contribution. I’m thinking of changing the catch-up contribution from the regular TSP to the Roth TSP. If I contribute the max to a Roth TSP, can I still contribute the max to my Vanguard Roth IRA ($6,500 to Vanguard and $6,500 to Roth TSP for a total of $13,000). Or do I need to choose just one…

Q. I understand that a federal civilian employee under FERS can make $52,000 a year to the Thrift Savings Plan. I know that the $17,500 regular contribution and the $5,500 catch-up contribution totaling $23,000 can be put into the Roth TSP. How much of the overall $52,000 limit can be put into the Roth TSP, and how would one contribute to the Roth TSP above the $17,500 and $5,500 limits? A. You misunderstand the limits. The $17,500 and $5,500 limits are the total deferral limits to either the regular or Roth TSP.

Here are the five basic Thrift Savings Plan funds in order from the highest to the lowest rate of return for the month of October: C Fund (4.60%), I Fund (3.38%), S Fund (2.94%), F Fund (0.89%), G Fund (0.19%). And here are the year-to-date results: S Fund (31.13%), C Fund (25.34%), I Fund (19.43%), G Fund (1.52%), F Fund (-0.78%). Interesting? Maybe to some. Useful? I don’t know how. As an investment manager — or TSP participant, as you are more commonly known — you are responsible for making, or delegating the making of, a massive series of decisions.…

Q. I am a federal law enforcement officer. I recently read an article that discussed the downside of the Roth TSP for federal law enforcement officers and firefighters. Is this true? ************* Many of you are probably unaware of the serious pitfalls you will encounter if you opt to contribute to the Roth TSP.  For a federal law enforcement officer or firefighter, the Roth TSP is a poor choice. It wasn’t until this week that a reader posed a question to me that caused me to realize what a bad idea the Roth TSP is for many of us. The idea behind…

Q. I’ve been making substantial contributions in the Roth TSP and plan to do so until I retire. I have a large sum in my non-Roth TSP account. I’ve read that when I begin to take TSP withdrawals in retirement, I cannot specify whether they come from the Roth or non-Roth TSP. I read that the withdrawals will be taken pro-rata from both forms of the TSP. Is that correct? If I want my Roth TSP to grow for as long as possible, is there anything I can do to preserve it other than keep delaying all TSP withdrawals until age…

Q. I realize that the withdrawal of Roth earnings have different implications. But if I understand this correctly, the withdrawal of Roth IRA contributions can be done at any time without triggering a taxable event or penalty. Is the same true for the withdrawal of contributions from the Roth TSP? A. You may withdraw Roth funds without tax or penalty if you’ve had a Roth IRA for at least five years (starting from Jan. 1 of the year you first contributed to a Roth IRA) and you are at least age 59½. The same rule applies to your Roth TSP…

Q. I am 26 years old and I contribute 15 percent into my Thrift Savings Plan account. I have been reading suggestions on personal finance websites that I should consider placing a portion of my contribution into the Roth TSP to anticipate the possibility that I will be in a higher tax bracket around retirement. I was wondering what your opinion on this issue is and if it would be a good idea to place a portion of my TSP contributions in the Roth TSP. A. I’m indifferent without any evidence that it will further your interests. It’s impossible to…

Q. I’m a 28-year-old FERS employee contributing 10 percent of my salary plus my agency’s 5 percent match to a traditional Thrift Savings Plan. I’m planning to increase my contribution by 1 percent each time I approach a step increase or other pay increase until I eventually max out my contributions. My decision now is to determine whether to put these additional contributions into a traditional or a Roth TSP. My understanding of the trade-off analysis is that it essentially comes down to an assessment of my current effective tax rate compared with what I project my effective tax rate will…

Q. As a retiree, can I convert my Thrift Savings Plan account to a Roth TSP, or is this only available to active employees? A. You may not convert traditional TSP balance to the Roth TSP, regardless of your employment status.

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