James48843
Well-known member
Thrift Board says Roth TSP coming in 2012.
http://www.govexec.com/story_page.cfm?articleid=49344&oref=todaysnews
We'll see.
http://www.govexec.com/story_page.cfm?articleid=49344&oref=todaysnews
We'll see.
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Or you can now use TapaTalk again!Roth TSP update
- Thread starter James48843
- Start date
uscfanhawaii
Active member
Strange...with 2012 just a couple weeks away, I haven't heard anything more on the Roth TSP!! Anyone else heard about the implementation date?!? Or when they say 'in 2012', do they mean 12/21/12...along with the apocolypse?! :suspicious:
pokerstar629
Member
"The TSP expects to begin accepting contributions the second quarter of 2012."
https://www.tsp.gov/PDF/formspubs/oc06-5.pdftravelingman
New member
Nice..., thanks for the TSP Roth update... Its been a long time coming....
RealMoneyIssues
Well-known member
SilverSurfer posted an update link:
http://www.tsptalk.com/mb/showthread.php?10152-silversurferAccountTalk&p=345261#post345261May 7th is the day TSP will begin accepting Roth contributions.
I wonder what agencies will be set up to send money to TSP Roth.
"It said that not all agencies have completed the needed changes to their payroll systems to make Roth investing available as of May 7"
TSP sets launch of Roth-style investing - The Federal Eye - The Washington Post
jkenjohnson
Active member
I am very curious about something. Who plans on opening a Roth and what is your rationale for doing it? Please, the more feedback the better.I'll pay some into Roth because: a) My income is relatively low, and I have not yet maxed my position's maximum grade. I have a low federal income tax rate at the moment after the various deductions/credits I receive; b) Tax diversification for the future; c) I believe taxes will, in the long run, increase.
I'm in the 15% marginal tax rate bracket. I feel pretty confident that taxes will be higher in 30 years when I'm retired. I've already got money in TSP and pension that will be taxed. Roth TSP gives me the opportunity to put more than $5k a year in an account that I can withdraw from tax-free in the future. As stated above, this provides tax diversification.
SteelSaving
Member
I am opening a roth IRA right now but do not plan to contribute to the roth TSP.
I do not see my income level in retirement being higher then it is now.
So the plan is to take what I can from the TSP to keep me from paying taxes, then supplement the rest with the roth IRA.
Viva_La_Migra
Well-known member
I plan to. I like the idea of having a tax free income stream in retirement.
uscfanhawaii
Active member
As I said in my account talk......I just saw that the new Roth TSP is coming up May 7. Unfortunately it is only for active employees and military. AND....unfortunately the rules for it really suck. I was looking forward to it, and planning to use the Roth, but now I pretty much decided I will only continue with my outside Roth IRA. See the details here:
TSP Roth Option: Questions Answered
These rules do not allow very much 'tax diversification' since you MUST start removing at 70 1/2, unlike Roth IRA. AND, you MUST withdraw evenly by %, from BOTH traditional and roth TSP. AND, you MUST put both the roth and traditional portions into the same fund allocation.
So I will use an outside Roth IRA for my roth needs!!
jkenjohnson
Active member
As I said in my account talk......I just saw that the new Roth TSP is coming up May 7. Unfortunately it is only for active employees and military. AND....unfortunately the rules for it really suck. I was looking forward to it, and planning to use the Roth, but now I pretty much decided I will only continue with my outside Roth IRA. See the details here:
TSP Roth Option: Questions Answered
These rules do not allow very much 'tax diversification' since you MUST start removing at 70 1/2, unlike Roth IRA. AND, you MUST withdraw evenly by %, from BOTH traditional and roth TSP. AND, you MUST put both the roth and traditional portions into the same fund allocation.
So I will use an outside Roth IRA for my roth needs!!
I don't really see any advantage to a TSP Roth vs. a Scottrade (or whomever) Roth other than your money will be in one system?????? Does anybody else?
jkenjohnson
Active member
I'll take that as a "you don't think a TSP Roth is a good idea"?
uscfanhawaii
Active member
The only 'advantage' I see is that in TSP there are no income restrictions, and you can put in up to $22K. IRAs (either Roth or Traditional) as I understand it, are limited to $5K per year ($6K if over 50), and have income restrictions. But as I mentioned earlier, the rules really suck and an outside Roth IRA is MUCH MORE flexible for investing and then later on taking out or passing to heirs. I just transferred $25k from a Traditional IRA to a Roth IRA. Which is ANOTHER thing they do NOT allow in the TSP version.....you cannot move funds from your Traditional TSP to your Roth TSP!
I can only hope that the FRTIB (or whatever their initials are) will modify their Roth TSP rules sometime in the future. For now....count me out. It's a shame that they make the rules so unfriendly (yeah....like you said, BT!). :suspicious:
jkenjohnson
Active member
The only 'advantage' I see is that in TSP there are no income restrictions, and you can put in up to $22K. IRAs (either Roth or Traditional) as I understand it, are limited to $5K per year ($6K if over 50), and have income restrictions. But as I mentioned earlier, the rules really suck and an outside Roth IRA is MUCH MORE flexible for investing and then later on taking out or passing to heirs. I just transferred $25k from a Traditional IRA to a Roth IRA. Which is ANOTHER thing they do NOT allow in the TSP version.....you cannot move funds from your Traditional TSP to your Roth TSP!
I can only hope that the FRTIB (or whatever their initials are) will modify their Roth TSP rules sometime in the future. For now....count me out. It's a shame that they make the rules so unfriendly (yeah....like you said, BT!). :suspicious:
You're also limited to buying the G,F,C,S or I funds. That is another negative to me.
I would say that, in general, if the choice is between ROTH IRA and ROTH TSP, I would the IRA.
Potential advantages of Roth TSP:
1. If you get matching, you should put in enough to get your max match, and if the tax treatment is right for you, do the Roth option.
2. Very low expense ratios
3. Simplicity
Otherwise, there are quite a lot of restrictions for the Roth TSP vs other options.Similar threads
