Roth Tsp

[roskopfm]

I just dont understand why our plan is so slow in adding a ROTH option. We all know they will evenually need. I guess they are just waiting until enough people complain. We need this added to our plan for people in lower tax brackets. People in lower tax brakets that expect to withdraw the money in a higher tax braket would benefit greatly from this added benefit. LETS ADD A ROTH TO THE TSP.

[Viva La Migra]

After what they did with our regular TSP accounts, I wouldn't buy in to a Roth TSP option if they offered it. Get a Roth IRA if you want a Roth option. At least then you'll have more control over your funds.

[luv2read]

IMO if you are FERS - TSP 5% matching, max out your Roth, and open a brokerage account. If you want to put more in TSP after that, go for it. Me, I want more control over MY money.

[jon]

While a TSP Roth makes sense, when was the last time TSP mgt adopted any member suggestion? I retired a yr ago age 63, but had never considered the need or benefit of a Roth IRA. I opened a Roth earlier this yr. I am considering transferring the TSP into the Roth. I would appreciate others input on this.

If OPM had sent me 1 or 2 notices between age 57 and 59 explaining why opening a Roth could be beneficial, hopefully, I might have done so. If federal employees aged 55 - 65 were surveyed to determine how much they knew about Roth's, it might surprise or shock not only most fed. employees administering fed employee retirements but Congress.

[The Fugitive]

Here's another Wash. Post on a ROTH for the the TSP.

http://www.washingtonpost.com/wp-dyn/content/article/2008/05/19/AR2008051902536_pf.html

The best quote was this"....
TSP officials have not ruled out adding a Roth option, but they said they need time to determine whether such a feature would have broad appeal and how much it would cost to set up. "Our position on Roth is that we need to do some homework," Gregory T. Long (http://www.washingtonpost.com/ac2/related/topic/Gregory+T.+Long?tid=informline), chief executive of the TSP, said yesterday."

Need time to determine broad appeal? Maybe time for the leader and board to get the ok from barclays. Maybe they need to get their nose's exposed to the sun and some fresh air and not so invested in what barclays want's them to do. If barclay's can't make any money on it then it'll get the thumbs down from the Keystone Kops.....er tsp board. :sick:

We've been asking for this for quite awhile. What a joke these guys are.

The Fugitive

[luv2read]

Here's another Wash. Post on a ROTH for the the TSP.

http://www.washingtonpost.com/wp-dyn/content/article/2008/05/19/AR2008051902536_pf.html

The best quote was this"....
TSP officials have not ruled out adding a Roth option, but they said they need time to determine whether such a feature would have broad appeal and how much it would cost to set up. "Our position on Roth is that we need to do some homework," Gregory T. Long (http://www.washingtonpost.com/ac2/related/topic/Gregory+T.+Long?tid=informline), chief executive of the TSP, said yesterday."

Need time to determine broad appeal? Maybe time for the leader and board to get the ok from barclays. Maybe they need to get their nose's exposed to the sun and some fresh air and not so invested in what barclays want's them to do. If barclay's can't make any money on it then it'll get the thumbs down from the Keystone Kops.....er tsp board. :sick:

We've been asking for this for quite awhile. What a joke these guys are.

The Fugitive
Barclay's is considering buying out one of two banks. Maybe they'll give the OK for our Roth once they finish spending our money.

[roskopfm]

I already max out my ROTH, but Since I am in the 15% Bracket (because of multible kids) it makes no sence to invest more the minimum in the TSP(5% for the match). I would max out the TSP if I could after tax(then I could withdraw it after tax at retirement). I know I am not alone. I talked to several friends and 3 of 4 people have the Roth Option in their 401(K), why is the TSP so slow in pursuing this with Congress. Congress would approve this if the TSP Board reconmended it. Lets get the computer programs updated and add the ROTH. Its a no brainer that it would increase participation.

[nnuut]

June 2nd, 2008
Lawmakers propose ‘Roth’ options for TSP
By STEPHEN LOSEY (slosey@federaltimes.com?subject=Question from FederalTimes.com reader)
May 27, 2008
A bipartisan group of lawmakers has drafted legislation to add new features to the primary retirement plan for federal civilian and military personnel, the Thrift Savings Plan.
One proposed feature is the addition of a Roth 401(k) option for TSP participants, which would offer a hedge against future tax increases.
The draft bill, released publicly May 16, also would automatically enroll all new federal employees — military and civilian — in TSP. The Pentagon is expected soon to decide if it backs automatic enrollment for new military recruits.
The bill would require that employees who are automatically enrolled contribute a percentage of their salary determined by the board that governs the TSP. That rate would be between 2 percent and 5 percent; the bill suggests 3 percent.
http://federaltimes.com/images/adtab_h.gif

The bill would make the plan’s L Funds the default choice for employees who voluntarily or are automatically enrolled in TSP but who do not select a fund in which to invest. The L Funds — which are mixes of TSP’s five stock, bond and government securities funds that vary based on when participants expect to begin making withdrawals — balance risk and return on a sliding scale, with risk increasingly mitigated as the employee ages. The G Fund — a government securities fund that usually carries the lowest risk and lowest return of TSP’s five funds — is the default choice today.
If the proposed Roth investment option becomes reality, experts say participants should think long and hard before using it.
The difference in the Roth option lies in when participants pay taxes. Under the TSP system today, participants invest pretax earnings in the plan and pay taxes when they withdraw their savings in retirement.
Under a Roth option, participants would invest their after-tax earnings in TSP, and be able to withdraw them tax-free in retirement.
If the tax rates a person pays remain the same between the time he invests in his plan and his retirement, there would be no difference between the Roth and the traditional TSP plan. A TSP participant would have to predict how his tax rates are going to change over time when trying to determine whether a Roth would pay off. And experts differ on whether a Roth is worthwhile.
Some say that future tax increases are inevitable and would make a Roth portfolio the right move.
“The feeling of most people in accounting and financial management is that tax rates will go up,” said Dave Ponder, a private financial adviser who advises the National Active and Retired Federal Employees Association. “Historically, we’re at a place where tax rates are very low. And when you consider financial crises such as Social Security and Medicare, it’s a good guess that future rates will be higher than now.”
A Roth option would be a smart move for participants who expect to get inheritances or other windfalls that would place them in a higher tax bracket, Miles said.
And Ponder said the Roth option would help people with higher incomes, who are more likely to get bumped into a higher tax bracket. Young people looking forward to a whole career of pay raises — and the accompanying tax increases — would also benefit from a Roth, according to New York Life Investment Management LLC.
But Miles said he is underwhelmed by the prospect of a Roth option in the TSP. A Roth plan could hurt investors if they drop into a lower tax bracket in retirement, which he said is a more common scenario.
“How many cases are there where federal employees are subject to higher tax burdens in retirement than when they work?” Miles asked. “It’s possible, but it’s not that likely. The rule is, if anything, taxable income goes down” in retirement. [More]
http://federaltimes.com/index.php?S=3548239

[Silverbird]

I'm skeptical on a TSP Roth because if I'm going to get a Roth, I'd want to diversify out of the GFCSI Funds.

[Frixxxx]

June 2nd, 2008
Lawmakers propose ‘Roth’ options for TSP
By STEPHEN LOSEY
May 27, 2008
......The draft bill, released publicly May 16, also would automatically enroll all new federal employees — military and civilian — in TSP. The Pentagon is expected soon to decide if it backs automatic enrollment for new military recruits.
The bill would require that employees who are automatically enrolled contribute a percentage of their salary determined by the board that governs the TSP. That rate would be between 2 percent and 5 percent; the bill suggests 3 percent.........


Ok, automatically enrolled seems like an employee is FORCED to save for retirement. No Choice? YOU WILL SAVE MONEY REGARDLESS OF FINANCIAL SITUATION.

And then the board that governs TSP decides the amount? Suggests 3 percent? Yea right. They'll go for the 5 to boost assets.

Am I reading this right? Seems kinda kookie to force people to save. What's next??? You are taking leave on Monday because you have 188 hours on the books and its August 10th and we aren't going to waste time trying to wait for you to plan your life?

Somebody point out the sanity in this article?:cool:

[squalebear]

I believe a waiver is offered should new hires prefer to wait based on their
financial circumstances. The idea of getting in early is still the best way
to ensure a fruitful retirement. But not by being forced or by misleading
newbies into believing they have no choice. Exposure and education are
the keys.

[luv2read]

The worst part of this is the FORCED % CONTRIBUTION and the DEFAULT L FUND.

1. Nobody should be misled into thinking they have no choice in enrollment.

2. Nobody should be automatically enrolled in RISK.

3. Nobody should be automatically enrolled for more than 1%.

IMO if they want to force automatic enrollment, then default fund should remain the G fund and the amount should be 1%. Who are they to judge what someone can afford? We all know TSP and HR offices fail abysmally at educating new hires about their retirement. This won't be any different. There are 2 opt-out options 1) opt out of TSP entirely 2) opt out of L fund into another fund. But the way the bill reads if you don't opt out, you will be forced to contribute whatever % TSP Board decides is the default amount. Sort of like SS....

Looks like they are creating a whole new set of rules for new hires, just like when they created FERS. You WILL contribute what we decide, where we decide. You can opt out altogether or contribute to a different fund, but you WILL contribute WHAT we decide, not any less.

[Silverbird]

Even more silly for military, I assume they picked 3% because of the matching since the 4th and 5th percentile are at 50% matching because the first 1 percent is just for participating.

Also, how are they going to determine your expected retirement date? Age 56 (minimum)? Social Security Retirement date (67 for me)? I had no idea what my retirement date would be when I joined Federal Service, so what's going to be the default?

[Frixxxx]

Even more silly for military, I assume they picked 3% because of the matching since the 4th and 5th percentile are at 50% matching because the first 1 percent is just for participating.

Also, how are they going to determine your expected retirement date? Age 56 (minimum)? Social Security Retirement date (67 for me)? I had no idea what my retirement date would be when I joined Federal Service, so what's going to be the default?

Ok retirees, answer me this, my wife became disabled and receives SS, of which 85% ($.85 tax for every $1.00), is taxed because I make over 44,000/yr. Now, with that in mind, can you verify that this is also the same for retirement. That is, I retire and my "income" from TSP, retirements and other 401k's should and will be over 44,000/yr that my SS is also taxed at 85%??????

[luv2read]

both my parents are retired feds. They have no earned income. Their SS is taxed.:mad:

This stinks. SS deposits are taxed when you EARN them. Taxing again at disbursement is double taxation. How did they ever get away with passing this on top of the WEP and OFFSET?

[Frixxxx]

both my parents are retired feds. They have no earned income. Their SS is taxed.:mad:

This stinks. SS deposits are taxed when you EARN them. Taxing again at disbursement is double taxation. How did they ever get away with passing this on top of the WEP and OFFSET?

I went to this site, and it said if you are at the full retirement age you get full benefits:
http://www.ssa.gov/pubs/10003.html

What I love is it doesn't tell you the tax level you will have to pay.

http://www.socialsecurity.gov/retire2/annuities.htm

Says no pensions or retirements, interest or dividends affect your benefit.

but
http://www.socialsecurity.gov/planners/taxes.htm

nails ya, and my wife is 6 years older than me.

Which means SHE won't get full benefits until she is 71, because I work...Nice freakin system.

luv2read: Well, there once was a group of people that needed to support their programs. So, these people got together and decided TAX SS because they didn't want the rich to get richer, so there's your tax.

pssst.....(whisper mode) It wasn't the Republicans.

BTW, a Roth IRA explanation on how it affects your benefits:

http://www.fairmark.com/rothira/socsec.htm

[Frixxxx]

And if that wasn't enough:

http://abcnews.go.com/Politics/Story?id=3638710&page=1

Let them take even more from those who prepare for their retirement.:cool:

[roskopfm]

I know the prefered thing to do is open a Roth on the outside, but in my case, my wife and I both put in the $5000 in our Vanguard Roths. I contribute about 7% to the TSP. I contribute up to the point where I cross into the 25% bracket. Why contribute more? Since every dollar I save I get a 15% reduction in taxes, but when I retire I will be in at the minimum of the 15% bracket, but more likely higher based on the spending rate of congress (I see tax hikes coming). Give us the Roth TSP so we can have a full rounded plan like many private companies have. I thought the government was suppose to lead by example.