100% base pay?

[NWC07]

I see that this is an option for electing 100% base pay for my TSP. Would this cause any red flags if I were to choose this option? I prefer to invest the full $16500 in the first few months of the year to maximize gains....

 

[Callme_CO]

I'm curious are you in the Armed Forces or working on the Civilian side.

Armed forces would benefit more from this than the Civilian side but then what are you going to living on? Also if the market dips around the time your tsp contribution would have gone in for the time your pay would have gone in your losing shares that way.

If you work for an agency you would be passing up the 5% match. That's doubling your money.


It seems smarter to me to just balance it out through out the year but others on here are far smarter than I.

 

[NWC07]

I'm curious are you in the Armed Forces or working on the Civilian side.

Armed forces would benefit more from this than the Civilian side but then what are you going to living on? Also if the market dips around the time your tsp contribution would have gone in for the time your pay would have gone in your losing shares that way.

If you work for an agency you would be passing up the 5% match. That's doubling your money.


It seems smarter to me to just balance it out through out the year but others on here are far smarter than I.

Military, so no matching contributions unfortunately.

All contributions go directly to the G fund. I buy on the dips.

The 100% base pay does not include housing, flight pay or BAS and we have additional funds to live on.

TSP will max out fairly quickly so this is a temporary move.

 

[NWC07]

Here is an explanation as to why front-loading your TSP should not be done if you get the 5% match.

Employees participating in FERS and receiving matching contributions should not
“front-load” their TSP contributions. Once contributions stop, as a result of reaching the IRS
elective deferral limit of $16,500, the matching contributions also stop. Employees should
equally divide their election amount (whether fixed dollar or percentage) over 26 pay periods in
order to maximum matching contributions for the entire year. The TSP provides a tool to helpyou calculate the exact amount you should contribute each pay period on their web site​

 

[OMA]

I see that this is an option for electing 100% base pay for my TSP. Would this cause any red flags if I were to choose this option? I prefer to invest the full $16500 in the first few months of the year to maximize gains....

I did that for a few years -

Just be careful not to forget to change the contribution option before you get to the max.

 

[Frixxxx]

Military, so no matching contributions unfortunately.

All contributions go directly to the G fund. I buy on the dips.

The 100% base pay does not include housing, flight pay or BAS and we have additional funds to live on.

TSP will max out fairly quickly so this is a temporary move.

If you retire military after 20 years, the government purchases a $1,000,000 annuity to pay your retirement. Until they stop paying retirement to military, you will never see matching contributions. Active Duty is soo different than a Civil servant, these can't even be compared. Most people have to work 30+ years to get a retirement close to the military and then they get a smaller annuity payment (on average).

If your budget allows you to not see a paycheck while paying into your TSP account, then by all means front load it. But my question is, could you balance it out over a year and invest in other avenues? Also, you could add add a Roth IRA an take advantage of all that free money on the backside as well.

Good Luck!

 

[James48843]

Front loading works, UNLESS the market tanks later in the year. I have seen many years where front loading would have worked well, but...in those years where October tanked, you could have purchased shares cheaper then.

Your choice, of course. Just remember things don't always go up, (unless you're in "G"), you could run that risk of missing a better opportunity later should the markets pull back.

 

[Frixxxx]

Front loading works, UNLESS the market tanks later in the year. I have seen many years where front loading would have worked well, but...in those years where October tanked, you could have purchased shares cheaper then.

Your choice, of course. Just remember things don't always go up, (unless you're in "G"), you could run that risk of missing a better opportunity later should the markets pull back.

Good Call, James, That's another area I never even thought of.

I have to re-evaluate alot when you post!

 

[anthony]

Loading all your contributions at one time of the year (including front, back, middle) makes sense for military when they are deployed getting CZTE pay. This sets it where all your contributions go in during tax free time, up to the higher $45,500 limit if you can make it that high. (not sure that's the current high max)

If you are convinced that market timing works and also that you have the skill (and time) to make it work then front loading might give you bit more money to play with, but that's marginal. I'd just spread load it if you're not deployed and do the same in a Roth simultaneously. I max Roths either at the same time or prior to maxing TSP. If I can't max both, the TSP is the short one.

Totally separate issue, but does TSP automatically adjust your 'final' contribution of the year to hit $16500? With it being based on a whole percent of base pay it is impossible to actually hit $16500 on the head -- you're always either over or under. I haven't been able to figure it because I've had deployed time every year since 2005 so I've always had the higher max limit.

 

[OMA]

I've been a few hundred dollars short of the $16,500. Never hit it on the head. Too worried about going over.

 

[Frixxxx]

I've been a few hundred dollars short of the $16,500. Never hit it on the head. Too worried about going over.

Going over is not a crime.....It is just not tax deferred. If you recieve matching, then it stops.....That is the crime! Just give me the 5% match and call it even.

 

[Callme_CO]

I'd still max out a seperate roth ira while deployed. Just to stupid to pass up.

 

[OMA]

I see that this is an option for electing 100% base pay for my TSP. Would this cause any red flags if I were to choose this option? I prefer to invest the full $16500 in the first few months of the year to maximize gains....

No problems. I did it - just make sure you stop the TSP election before you go over the $16.5k.

 

[domingo3]

Actually, you don't have to stop the election. It automatically stops contributions once you hit the limit, and then starts back up in January. I was able to hit the limit for a couple of years (2003&2004). They didn't have catch up contributions back then, though. The military knows how old you are but I'm not sure if that info is fed into the pay system. Test it out again and see if it works. There's so few people in the military eligible for catch up, I doubt they modified the system for it.

 

[OBGibby]

I've been a few hundred dollars short of the $16,500. Never hit it on the head. Too worried about going over.

You won't go over. It gets caught automatically on that last pay period and adjusts downward your contribution to keep you within the $16,500. At least that's been my experience.