Thread: Couple questions...

DN,
What are U going to do when U get out? retire? Work for the Govt.? Civilian job?

IMHO U should have a tax deferred savings and a tax paid savings. IRA, ROTH are both great! If U plan to get a Govt. job the TSP is great!

The problem is when folks don't have plan, don't save and get to retirement and say WOOPS!

Stick around, we have members with some good ideas.

Welcome aboard!
Spaf

Spaf,

FBI when I get out, however, I'm not looking to retire when I'm 60. I'm thinking more along the lines of somewhere between 40-50. I'm 21 right now.

From what I gather, most IRAs and the TSP allows you to withdraw when you are 60-70 tax free, which wouldn't really suit what I'm trying to do.

Almost wonder if having a separate account, comprised of mutual funds, auto-investing, is the best way for me to go...

dN

Originally Posted by devilsNIGHT

Spaf,
FBI when I get out, however, I'm not looking to retire when I'm 60. I'm thinking more along the lines of somewhere between 40-50. I'm 21 right now.

Ifn U going Govt job, TSP is the way to go!

From what I gather, most IRAs and the TSP allows you to withdraw when you are 60-70 tax free, which wouldn't really suit what I'm trying to do.

Na! you gotta pay taxes. In this area you need to ck with an accountant!

Almost wonder if having a separate account, comprised of mutual funds, auto-investing, is the best way for me to go...

IMHO: I'd go on line to USAA and see what they had to offer! They serve the military in savings, insurance and investments, plus they know about TSP. Guess that would be a starting point.

https://www.usaa.com/inet/ent_logon/Logon

You got a great gift of being 21 years old. The next 40 years can be quite eventful.....

Take care my friend!
Spaf

devilsNight---

your ace in the hole is your age---remember that. If you don't do some kind of investment for retirement, you will regret it twenty years from now. Spaf knows what he's talking about. Listen to him. One thing he did'nt mention is if you get a civilian goverment job after the military, you should get a percentage of matching of monetary funds. That's free money.

If you pull your money out when you ETS, normally you would be subject to a 20% federal witholding of federal taxes plus possible additional witholding for state, however with your deployment status I'm not sure how that would effect you. Of course if you roll it over into an IRA or some other retirement plan this should'nt apply. If you keep it in TSP, it won't apply. Hope this helps.

IMO if your not getting a match from TSP, don't forget your Roth IRA. If you do retire early and get in a pinch you can withdrawal the principal without penalty. And of course the principle and earning are completely tax free cuz you already paid taxes on it...................No wait YOU did NOT pay taxes on it because your in a tax free zone!!! BONUS!!!

I'd say max your TSP while you can, make sure you invest as much of your tax free monies as possible.

Jimmy

Originally Posted by Show-me

IMO if your not getting a match from TSP, don't forget your Roth IRA.

Absolutely. If it werent for the 5% match, I doubt I would use TSP at all.

Originally Posted by devilsNIGHT

Ok, here's my situation. I'm currently Active Army. As of this date, I have no contributions to TSP.

I get out of the Army in February of 2010.

(if I decide to do TSP) From now until I ets, I will have about 1.5 years of tax free contributions (deploying to Iraq in November for a year and a half), and another year of taxed contributions.

I want to contribute 60% of my paycheck while deployed, and 30% while not deployed.

Basically, I want to pull whatever I accumulate in my TSP account out, into a checking account, when I leave the Army in 2010.

What I'm trying to figure out is, if this would work out best for me, or if I should just not do TSP, and throw money as I earn it into mutual funds...

Of course, a lot of factors come into play, but hopefully I provided enough information to paint a picture.

TSP rates are nice, but that 20% tax withholding just makes me grin.

I already have a different method of savings for retirement...

dN

Hello dN,

Starting at the top -

**You want to contribute 60% of your income deployed and 30% when not deployed.

Realize that the maximum contributions for the 2007 tax year are $15,500. There are exceptions.

**Then at your military retirement you want to take the monies out.

Realize that you will suffer a monetary penalty of 10%.

**Analysis. TSP is a retirement plan, and should be utilized as such, not unlike a 401(k), IRA, etc. This is the reason for the penalty for "early" withdrawal.

I do not know what you would want to do with about $15,500, but I would not use the TSP to "save and leave".

**Recommendations: I would use the military's Saving Deposit Program that guarantee's a 10% annual interest for what I perceive as your purpose (save and leave). Check into it. Please.


More information about the Saving Deposit Program can be found at the following links:

http://www.dfas.mil/army2/investment...rogramsdp.html
http://www.defenselink.mil/comptroll...rch/07a_51.pdf

Hooah!

I would give the same advice as I gave in another thread tonight.

1. Max out your Roth contributions first. Since you will be tax free zone, you are giving yourself ~30% return right off the top. Then you get the miracle of compounding it. This will give you the best bang for the buck. Downside is contributions are capped at $4k a year right now, but that will be adjusted for inflation next year. Keep in mind that even though you are over there for 18 months, you should be able to get 2 full years of Roth contributions in.
2. Dump whatever cash you got left into TSP.