Roth IRA Option For TSP

[CountryBoy]

Moved to TSP News Forum.

[unno2002]

An IRA can be invested in anything (such as real estate, an LLC, etc.) that is not prohibited by the IRS rules, and of course subject to such investments as the custodian is willing to handle transactions. The TSP investments are far to limited, and as we have seen in the time involved in the most recent option additions, it takes the bureaucracy "forever" to add a new investment options.

I've recently re-written Senator Kyl, Senator McCain, and Congressman Grijalva to propose the below addition to 5 USC 8433. This change would allow federal employees to make transfers from their Thrift Savings Plan (TSP) account, to a private sector IRA, while they are still in federal service.

Are you aware of any "forum" that that I could send the proposal to, so that it could get consideration for wider exposure to federal employees?

Ron G.
unno_2002@yahoo.com



PROPOSED ADDITION TO 5 USC 8433

(i)(1) An employee or Member may apply, before separation, to the Board once each calendar year to withdraw an amount in the form of a transfer directly to an eligible retirement plan or plans (as defined in section 402(c)(8) of the Internal Revenue Code of 1986) identified by the employee or Member.
(2) A withdrawal under paragraph (1) shall be available only for an amount not exceeding the value of that portion of such account which is attributable to the contributions made by the employee or Member.
(3) A withdrawal may not be made under this subsection unless the requirement sof section 8435(e) of this title are satisfied.

[tsptalk]

Good luck Ron, and welcome to the site. Are you sure you want that email address posted? People can email you if your member account is set up to allow it, but posting an email address on the board is dangerous in that web spiders will grab it and put it on spam lists everywhere. If you'd like me to remove it, please send me a PM (private message) and I will reword your contact instructions.

[roskopfm]

If your still employed and not yet old and gray, you cant rollover the TSP into a ROTH IRA. Having the Roth inside the TSP would be a great addition. I already max out my wife and my ROTH IRA. I would rather contibute to an after tax ROTH instead of a pretax retirement vehicle since we all know tax brackets will only go upwards. Look we got this mega deficit every year and baby boomers are starting to take out more social security. Its time for a ROTH Tsp. Much better option for people expecting to be in the same or higher tax bracket at retirement, becuase like I said tax rates wont go anywhere by higher. Then you can sit back and withdraw all the money tax free.

[luv2read]

Rosko is right. See this article I posted this morning in my account talk thread.

http://www.tsptalk.com/mb/showpost.php?p=168331&postcount=66

[hessian]

I suppose it sounds good, like you both say. I guess my concern is more on the specific options "they"-Congress, are kicking around - and then how the TSP Board, and FTRIB might actually implement this!

After the last decisions, limiting our IFTs, well, I just cannot say I've much confidence/trust. Expecting the above, to act in our interest doesn't seem a priority of theirs.
Maybe I'm off-base, but I've low-trust with all these folks. :cool:

I wish we could find more on the options being considered. My only hope is that we can find more on the what is being discussed, & maybe be able to provide input/perspective.
Valid concerns?

[SkyPilot]

What advantage would it serve for TSP to implement a ROTH? Except to include the 5% matching in a ROTH...

For those who are interested in a ROTH and can contribute more than 5%, they can establish one on their own right now. I have considered this, but still feel that pre-tax accumulation (I hope to accumulate instead of diminish) is the best way for me at this point.

However, if you really want to go ROTH, don't wait for the TSP board. Do your own, and choose your options which will be much greater than what the TSP board will offer.

I am sure that a TSP ROTH will be essentially the same options, but just packaged as post tax rather than pre tax i.e GFCSI and L funds.

[Silverbird]

Well, now that the armed forces may be enrolled automatically, a Roth may be a better option for them due to, as I understand it, certain tax breaks they get? That's the only advantage I can see, though that would also mean that those who get the breaks should have their automatic enrollment in the Roth rather than the regular TSP. Otherwise, I agree, as a civie I don't really see any reason to go get a Roth TSP with the same old investments.

[tsptalk]

"...The plan to give TSP investors a tax-free Roth IRA option has cleared two of the three hurdles facing it. The House approved it as part of the tobacco bill, and the Federal Thrift Retirement Investment Board has said it will set up the Roth option once approved by Congress and OK'd by the White House...."

http://washingtontimes.com/news/2009/may/11/causey-federal-benefits-now-face-senate/

[roskopfm]

Its in the senate now and the TSP board supports it but said it would take 12-18 months to start. My guess it would start 1-1-2011