TSP/ROTH Master Plan???

[FSNCO]

Hello everyone, just thought I would check in and see how the board was doing, and of course run my latest "financial master plan" by all you here to see what the collective has to say. As in my last thread I am planning on bashing a chunk of my CSRB into TSP and a ROTH. The time has come and I will be making the plunge next month. Here is where I am at now...
6 years to retirement from AD, contributions in TSP L2040 for the last 2 years.
Planning on direct deposit a chunk from CSRB right into TSP for 07. Planning on starting and maxing both a ROTH, and a Spouse ROTH for 07. I plan on maxing both ROTH's in 08 before I start contributions to TSP because of the tax exempt. I will have a long deployment in 08 for contributions.

How does this sound and does anyone have any info on Spouse ROTH's? Thanks.

 

[tspforretirement]

Hello everyone, just thought I would check in and see how the board was doing, and of course run my latest "financial master plan" by all you here to see what the collective has to say. As in my last thread I am planning on bashing a chunk of my CSRB into TSP and a ROTH. The time has come and I will be making the plunge next month. Here is where I am at now...
6 years to retirement from AD, contributions in TSP L2040 for the last 2 years.
Planning on direct deposit a chunk from CSRB right into TSP for 07. Planning on starting and maxing both a ROTH, and a Spouse ROTH for 07. I plan on maxing both ROTH's in 08 before I start contributions to TSP because of the tax exempt. I will have a long deployment in 08 for contributions.

How does this sound and does anyone have any info on Spouse ROTH's? Thanks.

Hello FSNCO,

It looks like you have a great plan on your IRA contributions, and my comments below is based upon deployments into a zone that is receiving the "Combat Zone Exclusion".

As you probably have already researched the income you put into a Roth is taxed before it goes in, so that, when you take a qualified distribution it is tax free. BUT! If you are in zone that has the tax exclusion, then the income you put into the Roth IRA is not taxed. Therefore, you get no taxes on either end.

Your next question is about IRAs for spouses.

I highly recommend that you check for and read the latest publications from the IRS. Publication 590 covers IRAs. You can find this and all other IRA publications online at http://www.irs.gov



Realize that laws can/do change…



Hooah!

 

[ChemEng]

I agree with tspforretirement.

Given your situation:
1. Maximize your Roth. Right now this is only $4k a year, but will increase yearly. This money is supposed to have already been taxed when the contribution is made with the plan to not tax it when its withdrawn. By making this contribution tax-free, you are giving yourself ~30% return right off the bat. Add on compounded growth to that and its pretty easy to see why thats a good starting point. (FYI There are quite a few target retirement date mutual funds to look into if you are looking for something similar to the L2040.)
2. Put whatever you have left afterwards into TSP contributions.

Spouse Roths work like any other Roths. Just be aware that there has to be earned income to qualify for Roth contributions. If you wife isnt claiming any income on her taxes, then she wont be able to make any contributions.

Good luck!

 

[Boxkicker]

Those CSRB's are taxed pretty heavily if you are not in a combat zone... but whatever you put into the TSP is not taxed at all, no matter where you are. If you are planning to put it into a Roth, I think you have to suffer the taxes on whatever it disbursed to you... I'm not exactly sure, but I think the best way to get the most for your CSRB is to put it 100% into the TSP and then loan yourself the Roth max amount.