TSP or IRA

[Ralphie]

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I'm new to this great site and have a question may be someone can help.

I retired about 3 years ago and have not touched my TSP. Don't REALLY need to take monthly draws on it yet.

Should I just hold on to the TPS or roll it over in to an IRA ??

Any help would be great but please keep it simple.

THANKS........retired and loving it !!!

 

[Guest]

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You may want to play theconversion game and roll some of your TSP to a ROTH. Just enough not to put you into the next tax bracket.

That as simple as I can get and probably the best thing for you to do longer term.

IMHO.

 

[Ralphie]

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May seem like a stupid question but what would be my ADVANTAGE to doing that. I'm not very knowlegable about these things.

 

[Guest]

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When you take the money out of your ROTHs, years and years, from now hopefully.

You will have to pay no tax.

If you have a little buffer to the next bracket that may be the wise thing to do.

I believe tax rates in the future will be higher then they are now.

Good luck.

 

[Ralphie]

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THANKS for the info that makes it a little clearer to me.

Ralph

 

[Guest]

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Let me know if you need more guidance or help.

Once again this is just my advice. You may want to read about ROTHs and think about where you think tax rates will be in the future. I am just telling you what I "think" would be best. I could be wrong.

Good luck.

Welcome to the board.

 

[Birchtree]

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Ralphie,

I'll make an attempt to start this conversation - but first you should know to whom the information comes from. I am a renegade type contrarian Bull who happens to be a republican capitalist. You just have to take this advise with 2 grains of salt.

My first question is: what has the TSP money been doing the last 3 years? If it has been sitting in the G fund we will have start further down the hill in preparation.

Do you want to leave any funds to heirs - presently you may be restricted in your choices.

You will eventually be required at 70.5 to give up a required minimum distribution that will probably be based on your age. An IRA will give you greater flexibility in that circumstance - however a Roth IRA has no such requirements on the initial owner- it will change when it passes to an heir.

You need to do some planning - if you have a good cash position and are of the mind and spirit to exercise some risk to increase your balance, now is an excellent time and opportunity to get started. I would recommend slowly building a Roth IRA over time in sections to reduce taxes. If you have good control of your income you may have the capability of adjusting your tax bracket. Many things to look at - I realize I'm leaving you dangling with just thoughts - but this is a complicated topic with many traps set up by my dear friends at the IRS to take money from you. Caution is the word when these types of changes. Please provide some more information and it will help others learn from how you handle your situation. Take care,

Dennis

 

[Birchtree]

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Ralphie,

Hey, don't let DMA's avatar fool you - he is actually mocking my hero. But DMA will give you some favorable advise. We have fun in this manner.

 

[Guest]

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Dennis

The guy is retired. Let him stay that way.

 

[Birchtree]

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Ralphie,

Just because you are retired doesn't mean you aren't full of vitality and wanting to do something with your TSP funds - now is the perfect time - especially when you have some free time. That is an assumption on my part - for all I know you could be busier now than when actively working. We're all different with our own perspective on how the world works. DMA thinks you should sit and take absolutely no risks to perhaps improve your financial situation - or heck maybe you want to chase a little excitment trading or investing. It's your money and you posed the question.

Dennis

 

[Ralphie]

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Hi Birchtree (Dennis)

Were only about 60 miles away from each other ......small world.

My TSP has been 50% G and 50% F seems to be doing ok.

My heirs won't need my TPS money.I want to have some fun with it too after working all thoses years ! But I'm only 59 now but you don't know what tomorrow brings !

My wife is not into risk so I am conservitive, and happy.

Don't want to worry about ups & downs of the market just something safe.

Ralph

 

[Guest]

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You have to look at the risk/reward.

Is it worth the risk right now to go long?

Seven years now in these index funds you have only lost to inflation.

Good luck Ralphie. And congrats on being retired. :^

 

[Birchtree]

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Ralphie,

You mentioned you want to have some fun with your TSP money, do you want to spend it or invest it. Even if you leave the G fund, you can still seek relative safety by going into the C fund at a rate of 50%. There is not that much volatility with that fund if you buy and hold for a set period of time. You would still outperform the G fund with minimal increase in risk.

 

[Guest]

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Fun he means live life not watch his account go down.

 

[Ralphie]

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Hi Dennis

That may be a good idea. I can keep it simple and keep an eye on it . Yes I want to have fun spending it but just not sure when to start.

Will have to think about it.

 

[Ralphie]

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You got it DMA................that's the plan.

This is not going to make me a rich man. Just some thing to suppliment my pension.



Ralph

 

[Guest]

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Take care Ralphie.

I wish you the best.

I would recommend a nice Short Term Investment Grade Fund for your ROTH. Just wait for this to pass. Fed rate hikes do not help stock prices. I have asked about 100 times on here tell me one fed rate hike cycle where stocks have ended higher and I hear nota. :shock:

Now is not the time to be a hero. Capital preservation is the key. More ammo to fire pick off some opportunities later.

Me - I am watching the yield curve. 100% of the time inverted yield curve 100% we have had a recession - I will not fight those odds and I am watching it like a hawk.

 

[Mike]

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Roll as much of it to a Roth each year as you can without bumping yourself into the next tax bracket. Aside from that, where specifically you should invest it depends on how much of it you will need and when. If you don't need it for ten years (or more), you can be a bit more aggressive and put something into equities (perhaps 1/3 of overall holdings). If you need the money in five years or less, then you should definitely be in full preservation mode and keep it in securities / bonds.

 

[mlk_man]

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Hiya Ralphie,

If you wanna have a little fun, transfer some of your TSP monies into a Roth or Traditional IRA. They have a lot more investment options than our TSP. You can even do some research on a few small developmental companies and throw a few bucks into a couple you like. WHo knows, they might hit the big time and then you can give me the money!

Good luck,

M_M