Deployment advice??

[kendrickg]

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Hi all,

I'm getting ready to deploy in October. Any advice as to what I should do with my TSP allocations? I'm currently putting in 8%. Should I just leave this alone or should I stop it and put all in my Roth IRA? Any suggestions or comments?

Thanks

Gary

 

[Show-me]

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Get the matching fund what ever you do. I have been kicking around the idea of cutting back my contributions to 5% from 15%and fully funding my ROTH. The most important thing is to contribute the 5% and get the matching fund. It's money in the bank.

Good luck on the deployment and thank you.:^

 

[mlk_man]

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Put it in your Roth and invest in an Energy fund or ETF(XLE) and concrete companies(FRK). This particular company hasn't really had a down yoy in over 10 years.

JMHO

M_M

 

[mlk_man]

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Oh, I agree with show-me also, put the 5% in your TSP.

 

[Show-me]

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mlk_man wrote:

Put it in your Roth and invest in an Energy fund or ETF(XLE) and concrete companies(FRK). This particular company hasn't really had a down yoy in over 10 years.

JMHO

M_M

Ha! My co-workers and I were just talking about Mexican concrete companies. Luv the energy and railroads. ACI, BTU, BNI, UNP, and NSC. Milk two more I have been watching are PANL and OLED. Not energy related but cutting edge stuff. Cooooool!

 

[kendrickg]

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I'm active duty. What matching funds are we talking ab out?

 

[Show-me]

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Let me do some searching.

 

[Show-me]

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http://www.tsp.gov/uniserv/features/index.html

This is a link to the Uniformed Services page at tsp.gov. Unfortunately it looks like the government employees that deserve it the most are not eligible for matching funds. Sorry, that really sucks.

Service contributions:

The law that extended the TSP to the uniformed services allows the secretary responsible for that service to designate critical specialties for matching contributions. Members serving in these specialties who agree to serve on active duty for 6 years may be eligible for matching contributions. The matching contributions are made during the 6-year active duty obligation. If you are eligible to receive matching contributions, your service will match your basic pay contributions dollar-for-dollar on the first 3 percent of basic pay you contribute and 50 cents per dollar on the next 2 percent of pay per pay period. (As of the date of this publication, matching contributions had not been authorized by any of the uniformed services.)

 

[Show-me]

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Being that you do not get any “matching funds” I personally would use any tax exempt monies to fund my Roth IRA first.

 

[Birchtree]

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Kendrickg,

Don't worry about the Roth until you return - you can fill that sack at any time, you are limited to $4000.

Remember starting in 2006 there are no more % caps - you can put in $15,000.

Adjust your TSP account to an auto-pilot mode - and concentrate on your job and keeping your head down. Go with the best America has to offer from a value stand point - 100% C fund and adjust your allocation to reflect same. If we continue to trend sideways or go into a prolonged correction you make out like a bandit buying lower priced shares every two weeks - simple as simple can be - and very cost effective. If you notice your balance is decreasing don't worry - just keep the TSP on auto-pilot. If you are not way ahead by the time you return - come squeeze the fool that gave you these suggestions. You will be surprised how many shares you can accumulate when prices are cheap - but here is the catch. You more than likely will be making the majority of you purchases on the up side because the C fund is destined to out perform for the next couple of years - and you still end up doing fine. The goal is to accumulate shares on a consistant basis in all types of markets.

 

[Guest]

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Are how many share you can accumulate by going to G and let it fall and cram your money back in.

Just like this:

C fund better hold 1220. :shock::shock:

 

[TSP@ti2de]

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Here's what I learned so far, after being 'in country' for just over a month:

Unless you have serious debt that you can't pay off by the time you leave the mobe station that would negate or offset any TSP earnings, pay that off, then do this:

• Save up $10K for the Soldier Savings Plan at the mobe station so that you can 'max' the program right when you get here. Borrow the money if you have to. It is a RISK-FREE investment backed by the government that pays 10%/year, you have 90 days to withdraw after you get home, so you net about $1300.
• MAX TSP at 10%; Special Pay / Bonuses / Incentive Pay at 100%.
• If you are enlisted and want to re-enlist, do it incountry so the entire bonus is tax-free. Do the right thing with that money and put it towards your future.
• When October rolls around, MAX everything so you can kick the full $15K
• MAXyour Roth
• Two words: FREE COLLEGE
• Hang out with the TSP Talk folks and learn what to do with all that money!

I know right now it sounds impossible, but you can do it. It just takes discipline. I see lots of Joes here spend money onmeals/pop at the PX when it is FREE at the DFAC, and live from paycheck to paycheck whenthere is really not much to buy here. At the end of the tour, you will be proud of yourself for doing these things. Rock on!

 

[Birchtree]

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My thinking is that in 2006 you may be able to do even more than the $15K, which is based on taxable income. Since you will be deployed there is no taxable base - you might be able to put the majority of your money to work in the TSP without hindrance. Select yourself an auto-pilot program and let dollar cost averaging be your investment guide. That way you participate in both up and down swings - some days you'll be lucky - some days you may have to pay higher prices. But the bottom line is you will be much further ahead when you return.

Dennis

 

[kendrickg]

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Thanks for all the advice guys. I appreciate it. I'm going to try to max everything out and take advantage of it while I'm over there. Hopefully this will be my last trip.

Gary

 

[James]

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Kendrickg,
I suggest following the advice given byTSP@ti2de that is exactly what I have been doing while deployed.

Birchtree,
Military service members only make contributions to the TSP once a month.

I have written my congress members about the lack of matching funds and they just pointed the finger elsewhere. I have posted information about that in this forum.

Birchtree,
Do you know where I can look or who I can contact to verify that deployed members in tax exempt zones will be able to contribute more than $15K to their TSP?

-James

 

[TSP@ti2de]

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I went to my S1 and J1 personnel shops and repeated this conversation...

*crickets chirp, tumbleweed blows by*

I'm going to contact the TSP site and see what they say about the tax-free max.

 

[James]

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I know what you mean. I have been asked by multiple leaders to give classes on the SDP and TSP. The admin sections only know how to get you signed up, but couldn't tell you the details of the programs.

 

[pyriel]

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sheasljj wrote:

Birchtree,
Do you know where I can look or who I can contact to verify that deployed members in tax exempt zones will be able to contribute more than $15K to their TSP?

-James

I need toget a life...

This is what you are looking for. Let me break it down for you...

Next year, TSP limit is lifted. However, IRS (party pooper) capped it at 15k.

[align=center]Contribution Limits[/align]
In addition to the percentage contribution limits below, the maximum amount of your own pay that you can contribute to the TSP is also limited by the IRS. TSP employee contribution limits and IRS limits will increase each year, as follows:



[align=center]




[align=center]Year[size=][/size][/align]

[align=center]TSP Limits[size=][/size][/align]

[align=center]IRS Limits[size=][/size][/align]


[align=center]FERS [size=][/size][/align]

[align=center]CSRS[size=][/size][/align]

[align=center]Uniformed Services[size=][/size][/align]

[align=center]Regular Contributions*[size=][/size][/align]

[align=center]Catch-Up Contributions[size=][/size][/align]

[align=center]Total Contributions[size=][/size][/align]


[align=center]2003[size=][/size][/align]

[align=center]13%[size=][/size][/align]

[align=center]8%[size=][/size][/align]

[align=center]8%[size=][/size][/align]

[align=center]$12,000[size=][/size][/align]

[align=center]$2,000[size=][/size][/align]

[align=center]$14,000[/align]


[align=center]2004[size=][/size][/align]

[align=center]14%[size=][/size][/align]

[align=center]9%[size=][/size][/align]

[align=center]9%[size=][/size][/align]

[align=center]$13,000[size=][/size][/align]

[align=center]$3,000[size=][/size][/align]

[align=center]$16,000[/align]


[align=center]2005[size=][/size][/align]

[align=center]15%[size=][/size][/align]

[align=center]10%[size=][/size][/align]

[align=center]10%[size=][/size][/align]

[align=center]$14,000[size=][/size][/align]

[align=center]$4,000[size=][/size][/align]

[align=center]$18,000[/align]


[align=center]2006 and thereafter[size=][/size][/align]

[align=center]Limits eliminated[size=][/size][/align]

[align=center]$15,000[size=][/size][/align]

[align=center]$5,000**[size=][/size][/align]

[align=center]$20,000 [size=][/size][/align]


[suP]*[/suP][suP] For uniformed services participants, this includes incentive pay and special pay, including bonus pay.
[/suP][suP]**[/suP][suP] After 2006, this amount will be subject to increases to reflect inflation.[/suP]
[/align]
All of an enlisted member's and warrant officer's compensation is eligible for the combat zone tax exclusion. Officers, however, may exclude no more than the highest rate of basic pay paid to each service's senior enlisted member (and any hostile fire/imminent danger pay received by the officer).

Since your basic pay and special pay is tax exempt, you can actually put all of them in TSP. Why? Because they are not subject to the cap made by the IRS. Why? Because the cap only matters to the basic pay that is not tax exempt. Since your salary in the combat zone is tax exempt, they don't fall under the cap. Officers do have a cap as stated below.

Tax-Exempt Contributions

When you serve in a combat zone or qualified hazardous duty area, most compensation you receive for active service is excluded from your gross income on your IRS Form W-2, regardless of whether you contribute any of it to the TSP. All of an enlisted member's and warrant officer's compensation is eligible for the combat zone tax exclusion. Officers, however, may exclude no more than the highest rate of basic pay paid to each service's senior enlisted member (and any hostile fire/imminent danger pay received by the officer).

In some cases, members who are serving outside a combat zone or qualified hazardous duty area but are directly supporting operations in such a zone or area can also qualify for the combat zone tax exclusion.

You receive no direct tax benefit from contributing pay to the TSP which has been excluded from gross income; however, the earnings on those contributions are tax-deferred.

When you make a withdrawal, money is taken from your total account balance proportionally from your taxable funds and your tax-exempt funds. The amount attributable to tax-exempt contributions will not be taxable.

Your service will notify the TSP whenever your contributions are from tax-exempt money. The TSP will then account for your tax-exempt contributions and, as indicated above, will ensure that these amounts are not reported to the IRS as taxable income. Consequently, those contributions will not be subject to taxation when you withdraw them. Your quarterly participant statement will show your tax-exempt balance separately.

Your service can tell you more about combat zone/qualified hazardous duty area service and whether you qualify for the tax exclusion. (See also IRS Publication 3, Armed Forces' Tax Guide.)

 

[TSP@ti2de]

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Argh, you beat me to it! Here's the link for all that:

http://www.tsp.gov/uniserv/features/chapter16.html

 

[Neophyte]

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....but there is an 'overall' limit on both tax-exempt and tax-deferred contributions as defined by I.R.C code section 415. For fiscal year 2006, the 'overall' limit is $44000.

(I'll only be tax free for 2-4 months of 2006, so there's no physical way for me to reach that limit this year, but if you can, more power to you!)