Preparing for the rest of my life

[radionightster]

Hi all,

I am very new to investing. Some background: I'm 29. I have an "emergency" fund that will keep my family afloat for 6 months. I have recently joined the military and want to take part in the TSP. I know to maximize my contributions to a Roth IRA first, and then invest in the TSP.

Question: From my short pre-military job, at a university, I have a (I think …) 401(a) that has a few thousand dollars in it. Is it possible to roll this into a Roth IRA? If you "roll" something into a IRA, does that count toward your contributions?

Question: I have $20,000 extra that I don't know what to do with. I'd like it to "work for me", but also keep it reasonably safe. I have learned about CD ladders, maturing every 6 or 12 months. Would this be a good use of the 20,000? Or would it be wiser to invest in a few mutual funds?

Please advise.

Thank you,
RN

 

[alevin]

Good morning, radio. Good job with the emergency fund for your family. I'm not sure I understand what you are thinking, concerning the Roth. Not ready to answer the other questions yet...

Are you considering rolling the 401K over into the new Roth TSP option, or converting it into a Roth account outside of TSP?

 

[radionightster]

Good morning, radio. Good job with the emergency fund for your family. I'm not sure I understand what you are thinking, concerning the Roth. Not ready to answer the other questions yet...

Are you considering rolling the 401K over into the new Roth TSP option, or converting it into a Roth account outside of TSP?

I am very new to this so my terminology may be completely wrong.

I have a Roth IRA with my bank (USAA), and the TSP is completely separate via the military. I have not yet set up the TSP, as I don't go on active duty until January.

I'd like to roll my 401a money directly into my existing Roth IRA account at my bank. Is that possible?

Thank you kindly,
RN

 

[KevinD]

I could be wrong so seek professional advice.

I think that in order to roll the 401a into a Roth you would have to pay taxes on the money. However you can roll that money into the TSP without any problem. And I don't think that money will count toward your contributions. YMMV.

Welcome to TSPTalk and the TSP!

Merry Christmas, Happy and Prosperous New Year and THANK YOU for your service!

 

[alevin]

well, I have converted a regular IRA mutual fund account into a Roth conversion account myself in the past, but it got established as a separate account from an original Roth account.

An original Roth account is limited to annual contribution limits, 401K rollover amounts are not limited. that means you can contribute to your established Roth account this year-if you choose, and you can also rollover your 401K into a Roth conversion account. But you will have to pay taxes on the conversion amounts. And income limits still apply. If there are stocks in the 401K, there are some other rules that apply. You still can't have income over the income cap. You can spread the the taxes over a couple years-2011 and 2012 if you need to.

I did a Google search using phrase "Roth rollover limits" to refresh my memory on conversion topic. don't just look at one site that comes up, read several, they all add refinements to the subject, there are plenty of nuances. If you don't have the time for that kind of research, you may want to consult a financial advisor fairly quickly to help you figure everything out faster.

And here's a link to some of the more straightforward information.

http://www.ehow.com/facts_6726987_401_k_-roth-ira-contribution-limits.html

 

[tsptalk]

Question: From my short pre-military job, at a university, I have a (I think …) 401(a) that has a few thousand dollars in it. Is it possible to roll this into a Roth IRA? If you "roll" something into a IRA, does that count toward your contributions?

Welcome RN! Go to www.tsp.gov and type in "401 rollover" in the search box, and it will take you to a link to the form you need.

 

[Nate]

Welcome to the active duty club! -And to the TSPtalk site. Ive been active duty for a hot minute, and while I'll let the more experienced members here give you advice regarding your investment specifics, I can give you some info on the military, finances/TSP, basic, deployments, etc.
Are you married? What MOS are you going into? Any sign-on bonus included with it? Do you have any college?

 

[SkyPilot]

No real advice, as you have already taken an important step by participating in this community. That said, let me thank you for volunteering for service. I am proud of all of you who have served, and continue to make that sacrifice.

Thanks, and a Happy and Prosperous New Year!

 

[alevin]

Hey all, one of the quietest guys on the board just announced his retirement this week-not here, on his blog. Congratulations, Ocean-best wishes for a fullfilling retirement! thanks for all you do and have done around here on tsptalk. http://oceanportfolio.blogspot.com/

 

[tsptalk]

Thanks alevin. I will wish him well over there.

As some of you may know, ocean was the one who wrote the original code for our AutoTracker. That was an amazingly generous gesture that he did for free for us. I think he worked on it for a year or more.