ROTH TSP

[Birchtree]

RothTsp,

Roth IRA = $4000 plus $1000 for catch-up = $5000 if over 50

TSP = $20,000 plus match per year - and tax free if you are deployed -no limit cap.

A Roth IRA is better for a stock account where you can reinvest dividends 4 times per year - IMHO. You can borrow with no paper work and trade until you're satiated again with no paperwork - the IRS doesn't care to keep track of your assets. It just takes forever to accumulate a balance - but if you got time on your side it's a sweet deal.

Dennis-permabull #2

[ROTH_TSP]

hi dave, is anyone talking about a ROTH type option for TSP?
Congress passed legislation for ROTH 401(k)s that went into effect 1 Jan. 2006. this would be like a ROTH IRA were you pay tax now on your contribution and all the money in the account plus all the compounding would be tax-free at retirement. please help get the word out
THANKS Chris

[FundSurfer]

get more people talking about us having a ROTH type option for our TSP

You can start a Roth right now on your own and can even set up payroll deduction if you are so inclined, why do you want it tied to TSP? That would limit your options. Many people on this board advocate starting a Roth, primarily for flexibility/tax reasons when you retire.

[ROTH_TSP]

We need more ROTH TSP talk !
Congress passed legislation for any company to start ROTH 401(k)s as of 1 Jan. 2006. We need this option for TSP it would be better than a ROTH IRA because we would be able to contribute up to $15,000 into any combination to a regular and ROTH type account. Who can we talk to to get pressure to get this started ASAP? everyone i talk to like the tax-free withdrawls at retirement. Thanks Chris

[robo]

Looked over some articles about this and seen some figures to support the information below.

Always get into your 401K first to get any matching from your employer.

Second choice, Max the Roth before maxing out 401K

Next Max out your 401K plus catch-up if over 50
( Currently 20K per person as Birchtree pointed out)

My wife and I are eligible for both so we are currently saving around 50k a year. Pay yourself first as much as you can. My only hope is to someday have as much money as Birchtree does!!!! Go Go Birchtree!!!

In my opinion this is the way to go!!!!

[ROTH_TSP]

If TSP wanted they could offer us a ROTH type option- help spread the word.
Congress passed legislation that went into effect 1 January 2006, allowing any company to start ROTH type options to there 401(k) accounts. This would be great for our TSP ( taxes are at the lowest point in history-now)theres already talk of raising taxes, i would rather pay now on my contributions and hve all the compounding Tax-Free at retirement. just like a Roth IRA.

[Dave M]

The TSP is what it is. If they had a ROTH option it would be nice, but we do still have that option 'outside.' $15000 tax-paid into a ROTH is not that attractive to me. I need the tax-savings so I would reverse the priorities and max out the TSP before maxing out the ROTH, but that is my preference, merely. Having both is the main thing, which we do in my house. I really like the idea of having a tax-free income stream.

Hey, T-ROTH, thanks for reading my account-talk thread.

Dave

[charmedboi82]

Yes, but current tax rates (thanks to Bush) are pretty low, aren't they? In many ways, it makes more sense to put money into a Roth IRA or 401k because of the historically low rates. The tax savings will be even greater on standard 401k money when tax rates go back up. Of course, I still put money into the TSP because of the match (that I'll be getting soon).

[IllinifanMichael]

Looked over some articles about this and seen some figures to support the information below.

Always get into your 401K first to get any matching from your employer.

Second choice, Max the Roth before maxing out 401K

Next Max out your 401K plus catch-up if over 50
( Currently 20K per person as Birchtree pointed out)

In my opinion this is the way to go!!!!

I have a couple questions about this to get some clarification. Someone at work said that Roth was better than TSP. I couldn't see it. Can ANYONE explain the benefits of Roth over maxing out TSP first??? Playing catch up later in life (over 50) seems like a waste of some free money. I am not versed in investments at all. I see the matching 401K easily enough, after that it's unclear to me. Thanks ahead of time.

[Spaf]

I have a couple questions about this to get some clarification. Someone at work said that Roth was better than TSP. I couldn't see it.

Well, I can't see it either. If a Roth is tax paid and TSP is tax deferred, then TSP whoul have a compounding advantage.

Maybe rokid, Georgiagal, or tsptalk could better answer it. It's too cold outside to work on the lilly pad!

[IllinifanMichael]

Well, I can't see it either. If a Roth is tax paid and TSP is tax deferred, then TSP whoul have a compounding advantage.

Maybe rokid, Georgiagal, or tsptalk could better answer it. It's too cold outside to work on the lilly pad!
Yea my youngest son and I were going to play golf, but 35 degrees and dropping here in Illinois doesn't make for relaxing time. I do hope someone can enlighten me. The compounding issue is my hurdle I'm thinking. I have 5 days off before heading back to work and I would like to go back armed, :) one way or another.

[EW_ret]

Do you like to pay taxes on your investments? Does it give you a thrill to see federal and state governments rob you of your hard earned money? Then I guess it feels good when you put that money away in your 401k, because your deferring the taxes on it. It reduces your taxable income and the government gets less of your money. It’s a sweet deal when you get that government 5% match. Also, as your pay increases you may you reach the “highly paid” employee status. If this happens you may need to put more in the TSP to reduce your adjusted gross income to get below the Roth IRA thresholds ($98,000-$110,000 single, 150,000-160,000 married joint).

But the day will arrive when the tax man will extract its due at whatever the income tax rate is at the time. Do you think the rates will be lower or higher in 10, 20, or 30 years? In my opinion, the income tax rates will be higher. So it’s better to pay the taxes now, and have tax-free income in the future, by putting some money in a Roth. There are others reasons why the Roth is a good thing. A Money magazine article from last summer points out other advantages of a Roth. A Roth allows you to earn a tax-advantaged return on more dollars when you fund it to the max. This is the link to the Money article.
http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/08/01/8382153/index.htm (http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/08/01/8382153/index.htm)

It’s my belief that the best investment strategy is to fund your TSP/401k to get the max employer match, then the Roth IRA, then 5% or so in taxable investments. Of course you also need to fund the emergency fund, which could be second or third in the list. If you have money remaining to invest, go back and put more in the TSP/401K. You really should have a balanced retirement portfolio having investments in taxable, tax-deferred, and tax-free accounts. That way you will have the flexibility to withdraw from accounts that minimizes the tax bill, whatever the rates will be in the future.

[Birchtree]

Let me take a few minutes and give you my light weight answer and this from someone who doesn't own a Roth. When you shake it all out, it comes down to AGI (adjusted gross income). Your AGI will determine your tax basis and anything that adds to it keeps you in a higher bracket. The TSP account comes with a required minimum distribution eventually that adds to AGI, your annuity also adds to AGI, any savings you have adds to AGI, social security will also add to AGI. Your Uncle wants you in a higher AGI if you haven't guessed that yet. The Roth IRA is one way to avoid any contribution to your AGI. Plus there is no required minimum distribution and annual withdrawals from inherited Roth IRAs are required, but they are tax-free. Money in a Roth can live on in perpetuity if treated correctly. I would even suggest when you retire that you develope a monthly withdrawl from TSP into a Roth IRA - you will be taxed of course, but if you live off savings for a year and postpone your annuity until you are ready your taxes will be minimal - you won't have an AGI. My hope is that my capital gains and dividend income will be 95% tax free - all I have to do is keep myself and wife in the AGI of the 15% bracket - and my friend that requires strategic planning. Anytime you can take your 1099 income voluntarily you are more in control of your own destiny. Just ask Spaf if he found anyplace to hide from the build up of his AGI this past year? I should say interest from savings in added to AGI.

[IllinifanMichael]

Thank you EWguy and Birchtree... starting to clear up this fog. :o The magazine article was informative, and I will have to spend some time investigating the Roth to find out more. Many tidbits of information in magazine article I am ignorant about right now, such as "A couple of notes: First, the new provision doesn't kick in until 2010. Second, the new law dealt only with conversions, leaving in place rules that prevent you from contributing to a regular Roth account each year if your income is $110,000 or more ($160,000 for couples).
But there's an easy way around this. Just open a nondeductible IRA - which anyone with earned income can do - and then convert it to a Roth.
So by 2010 everyone will be able to have a Roth one way or another." My wife and I are very close to that $160K ceiling. I am getting the gist of it though.

Do you like to pay taxes on your investments? Does it give you a thrill to see federal and state governments rob you of your hard earned money? Then I guess it feels good when you put that money away in your 401k, because your deferring the taxes on it. It reduces your taxable income and the government gets less of your money. It’s a sweet deal when you get that government 5% match. Also, as your pay increases you may you reach the “highly paid” employee status. If this happens you may need to put more in the TSP to reduce your adjusted gross income to get below the Roth IRA thresholds ($98,000-$110,000 single, 150,000-160,000 married joint).

But the day will arrive when the tax man will extract its due at whatever the income tax rate is at the time. Do you think the rates will be lower or higher in 10, 20, or 30 years? In my opinion, the income tax rates will be higher. So it’s better to pay the taxes now, and have tax-free income in the future, by putting some money in a Roth. There are others reasons why the Roth is a good thing. My "problem" here is mostly what my wife and I make now, versus as to what we'll have when we retire. I can see the taxes going up, but what bracket will I be in then? For the most part, depending on future rates of return etc. we'll have same income as we do now if I retire in 15 years at 62, but less outgoing/bills (house is paid off this Sept. youngest son starting college this fall) when I run the numbers and use TSP calculator I get some astonishing figures, if I work 20 more years until I'm 67 my monthy retirement would be double what we make now! The tax portion does concern and even frightens me.

My hope is that my capital gains and dividend income will be 95% tax free - all I have to do is keep myself and wife in the AGI of the 15% bracket - and my friend that requires strategic planning. Anytime you can take your 1099 income voluntarily you are more in control of your own destiny.
That's what I want to attain, maximize my money. I am getting a clearer picture on tax portions, what about rates of return of TSP vs. a Roth? A lot to consider and think about.

[Spaf]

Yea, there is a few things you can do to reduce the tax bite, plus other stuff!
You want to itemize!
1. Have a computer program to account for all checks! i.e., MS Money.
especially medical bills and prescriptions.
2. Consider a small home mortgage.
Other!
3. Get as debt free as you can.
4. Things that have COLA are good.
5. Run estimates on what retirement funds will look like, and adjust as necessary (use your personnel agency).
6. Make sure you have an emergency fund (10K or more)
7. Within 5 years start maxing out your saved annual leave.

[Tempest]

I always have 29 to 30 days in my 'leave' piggy bank at the end of the year. I take credit hours and am off on Fridays so I usually end up donating annual leave at the end of the year. A lot of 3-day weekends.
Money in a mattress-but still money.:D

[Birchtree]

Michael,

I would suggest you consider opening a stock Roth IRA online - Sharebuilders or one of the others. Buy stock and don't mess with mutual funds, stocks pay a dividend every three months and usually increase their payouts yearly. All dividends are usually reinvested for free. You can borrow from your Roth anything you put into it, no paper work. You can trade with impunity if you so desire, no paper work. The IRS is not concerned. All funds and gains come out tax free and the heirs are treated better than in a nondeductable IRA. When you retire begin to move as much money as you can into a Roth and don't forget the value the Mrs has locked away. If you are ever presented with the opportunity to take a defined contribution plan over the annuity please think seriously about taking it - the money automatically becomes your. Look for Uncle to follow the private sector down the road and this will undoubtedly be offered. You only take the money you need and that way keep your AGI lower. Spaf mentioned medical deductions - even there you have a threshold of 7.5% of AGI to meet before you are allowed a deduction - the key is the AGI. 12% will miss all this great stuff - too bad.

[IllinifanMichael]

Yea, there is a few things you can do to reduce the tax bite, plus other stuff!
You want to itemize!
1. Have a computer program to account for all checks! i.e., MS Money.
especially medical bills and prescriptions.
2. Consider a small home mortgage.
Other!
3. Get as debt free as you can.
4. Things that have COLA are good.
5. Run estimates on what retirement funds will look like, and adjust as necessary (use your personnel agency).
6. Make sure you have an emergency fund (10K or more)
7. Within 5 years start maxing out your saved annual leave.
Well lets see here now.. 1 we do keep track of everything, especially medical, but nowhere near enough to itemize, but we try every year... 2 house is paid off this coming September we believe. 3 other than house only debt will be youngest son in college this fall. 4 Unsure what that falls into. 5. We started looking at that more seriously last couple weeks, thats why instead of lurking and playing I've joined and more serious about maximizing my money. Seems like some unbelievable numbers though when I do run esimates. 6. Neither of the 2 older kids had ANY debt leaving college and middle son joined Navy (electronic technician) and my youngest daughter is suppose to be going into Army here in about a month (medical field, we think) and youngest son going this fall into college in pre-veterinarian program. Now oldest daughter getting married in September of '08, this is lacking the $10K level but fluctuates. 7. Working for Post Office and being FERs what does maxing out leave do for me?

[IllinifanMichael]

I always have 29 to 30 days in my 'leave' piggy bank at the end of the year. I take credit hours and am off on Fridays so I usually end up donating annual leave at the end of the year. A lot of 3-day weekends.
Money in a mattress-but still money.:D
Being in post office and with kids and loving golf ... well I don't think I can do any of that in what you do Tempest. WOULD love 3 day weekends though!! :D I could save up to like 11 weeks of leave, but I don't even work overtime (exempt) nor holidays (unless mandated, which is kind of rare because of seniority)

[IllinifanMichael]

Michael,

I would suggest you consider opening a stock Roth IRA online - Sharebuilders or one of the others. Buy stock and don't mess with mutual funds, stocks pay a dividend every three months and usually increase their payouts yearly.
I am coming to the conclusion to buy a Roth, not immediately, still checking into things, but definitely by end of year. I seriously doubt that I will change my 15% contribution to TSP, mainly because I am used to it right now. :o

[Spaf]

Well lets see here now.. 1 we do keep track of everything, especially medical, but nowhere near enough to itemize, but we try every year...

7. Working for Post Office and being FERs what does maxing out leave do for me?

1. My 2nd biggest expenses are medical (hospitals, doctors and prescriptions). It comes with age, same, same dearh and taxes....;)

7. FERS; you retire at the end of the month. Your next checks (FERS/SSA) could be +/- 45 days. Govt will send you a check for unused leave that can tide you over....:nuts:

[ChemEng]

I would even suggest when you retire that you develope a monthly withdrawl from TSP into a Roth IRA - you will be taxed of course, but if you live off savings for a year and postpone your annuity until you are ready your taxes will be minimal - you won't have an AGI.

I didnt think that you could contribute to a Roth if you didnt have an income?

[Show-me]

I didnt think that you could contribute to a Roth if you didnt have an income?

No minimum income just maximum income limits. I believe.

Sidebar I will move the A/L discussion to a thread of its own this evening. Sorry for hijacking the ROTH thread.

[Warrenlm]

I bellieve you can only contribute EARNED income.

[offtrack]

I didnt think that you could contribute to a Roth if you didnt have an income?


Birchtree is talking partial payment rollovers to a Roth I believe. After this year you will be able to rollover all or part of your tsp to a Roth but will owe taxes on the portion rolled.You would elect a series of partial payments spread over 10 years of which a certain percentage would roll into a roth. Your tax rate would be based on your total AGI. For this year:

10% on the first $7,825
then 15% up to $31,850
then 25% up to $77,100
then 28% up to $160,850
then 33% up to $349,700
then 35% on the restThe lower you keep other sources of income the less you would pay in taxes on the amount rolled into a Roth. Hopefully laws may change that may benefit you in the future on these rollovers but I wouldn't hold my breath. Things might easily go the other way. I do think the withdrwal options need to be improved. The benefits of the Roth are more measurable when you look at historical tax rate charts.

http://www.irs.gov/pub/irs-soi/02inpetr.pdf

Things can change and we are not in a period of high taxes on income. It is good to look at your retirement plans and run expectations using a variety of criteria that could affect those plans like tax rate changes (and not only Federal rates), health changes, family changes, etc.. FWIW, my retirement plans totally changed after I failed to anticipate the bubble in real estate prices, but things turned out quite well since I had so much more flexibility in my life options. I just moved.

[weatherweenie]

http://biz.yahoo.com/cbsm/070404/9d5e5d651d1d4c91bddec37fcfba4e78.html?.v=1&.pf=oneclick

Meet one dissenter from Roth 401 (k) rah-rah chorus

BOSTON (MarketWatch) -- To many, the newly introduced Roth 401(k) is the greatest retirement account (along with the Roth IRA) ever created. With a Roth 401(k), one contributes after-tax dollars into an employer-sponsored retirement account in which the money grows (as it does in a traditional IRA) tax-free and (unlike a traditional IRA) is distributed tax-free too.
But while many experts praise the benefits of Roth 401(k)s, there's a lone wolf out there with a contrary point of view, penning articles under such headlines as "Roth 401(k): Dumb and Dumber" and "Roth 401(k): Still Dumber."

[Birchtree]

Be aware of this IRS trap regarding a Roth IRA. To ensure a lifetime income stream from a Roth, heirs must make the first withdrawal by Dec. '31 of the year following the IRA owner's death. If they don't, they must cash out the account by the end of the fifth year following the year of death. Leaving a Roth for grandchildren can be particularly effective, because they would get tax-free compounding for many decades.

[Show-me]

I bellieve you can only contribute EARNED income.

You are correct! I stand corrected.

http://www.bankrate.com/brm/itax/tips/20010328a.asp

Contribution limits
In general, Roth contributions are the same as traditional IRAs. Last year, you were able to contribute up to $4,000. The maximum annual contribution stays at that amount this year.
If you were 50-years old or older last year, you could have contributed in an extra $1,000. That catch-up contribution amount remains the same for 2007.
However, you can't put more money than you make in any IRA. So if your income is only $1,500, then $1,500 is the most you can contribute to a Roth.
Income
Speaking of income, you must earn money to open any IRA. That means your only income can't be from unearned sources, such as investments. You must get paid wages, a salary, tips, professional fees or bonuses.
There is an exception that allows Roth accounts for nonworking spouses. If you and your spouse file a joint return but one does not work, the employed spouse can open and contribute to a Roth IRA for the unemployed partner.
Generally, the contribution limits for a spousal IRA are the same as for the account held by the working wife or husband. Check Chapter 2 of IRS Publication 590, Individual Retirement Arrangements (http://www.irs.gov/pub/irs-pdf/p590.pdf) for complete guidelines on opening a Roth spousal IRA.
But if you make too much money, you're not eligible to open a Roth or to contribute to the account you opened when you were earning less. For a Roth, your earned income (with some deductions you might have taken, such as for student loan interest, added back in), must be less than:

<LI class=body>$160,000 if you're married filing jointly <LI class=body>$110,000 if you file as single, head of household, or married filing separately and did not live with your spouse during the year
$10,000 if you lived with your spouse at any time during the tax year but decide to file separately.And even if you're not quite at the top of these pay ranges, your Roth contribution could be limited if your modified adjusted gross income falls within these limits:

<LI class=body>$150,000 to $160,000 for married couples filing jointly <LI class=body>$95,000 to $110,000 for single or head-of-household taxpayers or married couples filing separately and who did not live with their spouse
$0 to $10,000 for married couples filing separately who lived together at any time during the tax year.You still can add to your Roth in these cases, but not the full allowable amount. Publication 590 contains work sheets and examples to help you determine your reduced Roth IRA contribution amount.

[roskopfm]

Birchtree is talking partial payment rollovers to a Roth I believe. After this year you will be able to rollover all or part of your tsp to a Roth but will owe taxes on the portion rolled.You would elect a series of partial payments spread over 10 years of which a certain percentage would roll into a roth. Your tax rate would be based on your total AGI. For this year:

10% on the first $7,825
then 15% up to $31,850
then 25% up to $77,100
then 28% up to $160,850
then 33% up to $349,700
then 35% on the restThe lower you keep other sources of income the less you would pay in taxes on the amount rolled into a Roth. Hopefully laws may change that may benefit you in the future on these rollovers but I wouldn't hold my breath. Things might easily go the other way. I do think the withdrwal options need to be improved. The benefits of the Roth are more measurable when you look at historical tax rate charts.

http://www.irs.gov/pub/irs-soi/02inpetr.pdf

Things can change and we are not in a period of high taxes on income. It is good to look at your retirement plans and run expectations using a variety of criteria that could affect those plans like tax rate changes (and not only Federal rates), health changes, family changes, etc.. FWIW, my retirement plans totally changed after I failed to anticipate the bubble in real estate prices, but things turned out quite well since I had so much more flexibility in my life options. I just moved.
If your in the 15% tax bracket right now, a roth is much better than investing in the tsp (beyond the govt match amount). If for example you invest 10,000 in 2007 in the tsp at 8%. THis would grow to $21589 in ten years. Say you pull it out while still in the 15% tax braket, this would be worth $18351.
Now instead say you invest the 10,000 after tax in a roth. So you would have the $8500 after tax to invest (10,000 less 15% tax). $8500 at the same 8% rate for 10 years. THis would be worth $18351 after taxes. So if you retire in the same tax braket as you are now there is no difference between a roth and TSP. But instead say you retire and are in a higher tax bracket . Then the 21589 pretax would be worth $16195 (in the 25% bracket) after tax. So you would get $16185 after tax in the TSP but $18365 in a Roth. This would be a win/win for anyone that is in the early years in their career and expect to make more money down the road.

[roskopfm]

The TSP board doesnt think people will use the ROTH TSP since only 20% of respondence say they have a ROTH outside of the TSP. But the thing they are missing is that you cant have a roth if your income is above 95,000 single or 150,000 married. So any higher paid employees cant contribute to a roth even if they wanted to. BUt if the TPS had a roth they could.

[IllinifanMichael]

If your in the 15% tax bracket right now, a roth is much better than investing in the tsp (beyond the govt match amount). If for example you invest 10,000 in 2007 in the tsp at 8%. THis would grow to $21589 in ten years. Say you pull it out while still in the 15% tax braket, this would be worth $18351.
Now instead say you invest the 10,000 after tax in a roth. So you would have the $8500 after tax to invest (10,000 less 15% tax). $8500 at the same 8% rate for 10 years. THis would be worth $18351 after taxes. So if you retire in the same tax braket as you are now there is no difference between a roth and TSP. But instead say you retire and are in a higher tax bracket . Then the 21589 pretax would be worth $16195 (in the 25% bracket) after tax. So you would get $16185 after tax in the TSP but $18365 in a Roth. This would be a win/win for anyone that is in the early years in their career and expect to make more money down the road.:confused: :confused: Okay now I am confused... sorry for my ignorance.. I am planning on 15 more years of working is a roth worth it at this time?? I have almost 27 years in at post office...also if you die on december 30th my heirs must withdrawl on dec 31????

[IllinifanMichael]

The TSP board doesnt think people will use the ROTH TSP since only 20% of respondence say they have a ROTH outside of the TSP. But the thing they are missing is that you cant have a roth if your income is above 95,000 single or 150,000 married. So any higher paid employees cant contribute to a roth even if they wanted to. BUt if the TPS had a roth they could. does this change in 2008?? I work for USPS, my wife is private sector and we are above 150, but not 160 though.........

[EW_ret]

When figuring your modified adjusted gross income for 2007 you need to use the new income limits which were increased to $156,000 - $166,000 for married jointly, and $99,000 - $114,000 for single and head of household. These income limits are now adjusted yearly for cost of living increases. Secondly, any money you put aside in your flexible spending accounts, health insurance premium, and TSP/401k reduces your gross income reposted on your W2. This money is not added back in when calculating your modified adjusted gross income. Therefore, when you increase your TSP/401k contributions you may be able to reduce your modified adjusted gross income enough to fall below $156,000.

does this change in 2008?? I work for USPS, my wife is private sector and we are above 150, but not 160 though.........

[IllinifanMichael]

I see where you are headed about more into tsp to lower AGI to get to level ( I already have 15% going there) .. Thats why I don't work holidays nor OT and my wife has turned down numerous pay increases/job promotions. BUT in talking to my wife about this it turns out we have, well she has, a Franklin Templeton Investment account with both a Tax free Income Fund and a Value Fund... I have no idea what this means though :nuts: Will have to check into it and talk to one of their representatives I guess. My head is spinning trying to get a handle on everything... :sick:

[Birchtree]

That value fund has been rolling down the track at a good clip for the last eight years. That game is about to gently change to large cap growth. I'm sure your account will have eligible large caps funds waiting for purchase. If you don't mind being one of the few that may own large caps you would be buying on the cheap.

[IllinifanMichael]

Well... I don't think a Roth is the way to go for me. Our AGI I'm thinking will be well above maximum allowed for 2007 and beyond. Have to go to plan B (birchtree??? :D ) of course I don't really have a plan B as of yet, but I did stay at a holiday inn last night and joined sharebuilders.com this morning :laugh:

[roskopfm]

Looks like the Feds are serious about adding a roth

http://www.govexec.com/story_page.cfm?articleid=36996&dcn=todaysnews

[SkyPilot]

Looks like the Feds are serious about adding a roth

http://www.govexec.com/story_page.cfm?articleid=36996&dcn=todaysnews

I think it will be a mistake to duplicate what is already availabe.

I suspect that it will raise the cost of adminstering TSP without creating an advantage.

[Callme_CO]

My plan in the next year is to start a Roth IRA. I like that my earning will be tax free. I would like the TSP board to bring that option to the table more for the simple fact that it would be convient for me to watch and manage with it in the same place. i'm lazy what can i say.

[offtrack]

Personally I think Roth is one of the greatest opportunities I have seen. The chance to receive lifrtime tax free compounded interest on initial investment---gimmme gimme gimme!!!!!! :nuts:

The upside of a TSP ROTH would be that:
Those that are disallowed an individual ROTH cause of a high AGI would now be able to contribute.
Allowable after tax contributions would be at the employer ROTH level, presently $15k + and rising compared to 1/3 of that for the individual ROTH
The downside is that the more money pumped into ROTH plans the more attention those plans are going to get from the government and the more chance of the government changing the rules.
Also a possibility of added costs in maintenance to our retirement accounts and with any major revamp there is also a possibility of a change in the frequency we make moves. Don't forget the luxury we have of moving money between funds is not one granted to all. My daughter's 401k frowns on prohibits such changes even at a monthly frequency.

I dropped a couple of links that might be of use.The 1st illustrates some of the details of a emplyer ROTH. The other 2nd is a calculator comparing investment realizations in ROTH vs Traditional plans. 3rd, a calculator to show the difference if one rolled over their traditional account to a ROTH.

http://www.rothira-advisor.com/roth401k.htm

http://www.youngmoney.com/calculators/retirement_planning/roth_vs_ira

http://www.planningtips.com/cgi-bin/roth.pl

[domingo3]

Here's a story that talks of survey results. A slim majority want Roth TSP, and so do I. Has anyone heard more about this topic?


http://stripes.com/article.asp?section=104&article=54301&archive=true

I'm excited that it MIGHT become a reality.

[domingo3]

Doesn't this board have an edit feature for posts? I didn't see it, but I thought it was there before.

Anyway, I think I found the answer to my question here:

http://www.govexec.com/dailyfed/0707/071307rp.htm

If these articles are in the chronology I think they are, we have to wait another two years for them to look at Roth TSP again.

[nnuut]

Domingo3 there is an edit function on each post but it only lasts a couple of minutes after you finish the post. You need to be QUICK!!:D You can contact a Moderator and ask him to edit your post if it's important and you missed the deadline.

[fabijo]

I think it will be a mistake to duplicate what is already availabe.

It's not really duplicating. A Roth 401(k) and a Traditional 401(k) can have a combined maximum annual contribution of $15,500, while the Roth IRA and the Traditional IRA having annual contribution limits of $4000.