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domingo3
10-30-2008, 09:46 AM
Does anybody know anything about the future of Roth TSP (or have a guess)? I've been trying to watch HR 1108, but haven't seen any status change there. I guess congress has it's hands full with other things right now. I'd prefer if Roth TSP got added on its own instead of bundled with a bunch of other stuff, but either way, I'd like a Roth option.
If anyone knows anything or has insight into this, I'm all ears.


Thanks

James48843
10-30-2008, 07:38 PM
Roth is likely, but not for this year.

Thrift Board has discussed this several times in meetings. Greg Long says he's not sure if there would be a demand for it, although several members of the board have suggested moving it forward. Long asked earlier this year for more time to study it, the ramifications of it, and how it would be done.

They ended up this year recommending it be included in legislation, and that is how it ended up in HR 1108. That passed the house, but has died in the Senate. Any action yet this year on it in the Senate is very unlikely.


My best guess is Roth will happen, but probably not until 2009, and maybe not until late in the year

Congress is done for the year now for the most part. Anything will have to wait until next Congress, and it will be more than likely that there are other, more pressing things for the next Congress to start off with.

The good news is that both the Roth issue, and a "self-directed window" included in the HR1108 legislation, as well as a provision for Sick Leave Buyout for FERS has Senate Democrat attention. Assuming a major sweep for the Dems as is projected, this legislation is very much likely to survive to be reintroduced by the next Democratic held Congressional session.

I think we'll probably see it again in the House in the spring, and then in the Senate by next summer. Not the first thing out of the box in the new year, but somewhere in the middle of the session, and it should pass.

then- who knows- it may take the TSP Thrift Board a few months to get the software updated, and produce materials for people before it is released.

My best guess- Roth will become available as a Christmas special next year.

Ho Ho Ho.

domingo3
10-30-2008, 08:10 PM
Thanks for the scoop. That really helps me out.

roskopfm
11-18-2008, 11:35 AM
The TSP Board takes so long to make decisions. They have been "talking" about adding a ROTH 2 years ago. Why in the world does it take them so long to get on board with this and ask Congress to approve it back in 2007. Thats the government for you. This would be a great time to invest in the stock market tax free going forward with the market down so much.

Show-me
11-18-2008, 11:42 AM
Did not take them long to take away our unlimited IFT's.

domingo3
11-26-2008, 09:40 AM
My understanding is that the board considered Roth two years ago, but decided not to pursue it, so they did not ask Congress at the time. I'm hopeful that this now will happen sometime soon.

In the meantime, I have reduced my contributions and am saving the balance in a taxable account. (Holding my breath for change, so to speak) When Roth comes, I'll max it out until I make up for lost time. This makes sense for me, since I'm only in the 15% marginal tax bracket, so deductions are of minimal benefit.

Limiting IFTs didn't require a change in the tax law, so you can't really compare the two in terms of time to implement.

Show-me
11-26-2008, 09:50 AM
My understanding is the law is already in place and the private sector is already doing it. We just need the FRTIB and TSP to get off their asses and do it. Congress will fall in line, they are under the same system. They know how to vote on their own pay raises and they will like this one too.

Callme_CO
11-27-2008, 05:19 PM
gotta question. If i max out my TSP can i contribute to an outside ira to? a buddy of mine went to see an accountant about that and he said that if he maxed his tsp he wouldn't be able to contribute to an outside IRA.

domingo3
11-29-2008, 08:35 PM
Show-me - yes private sector is already doing Roth 401k, but TSP wasn't included in the law.

CallmeCO - Advise your friend to fire that accountant. My daughter's goldfish gives better financial advice.

Mike
12-03-2008, 02:42 AM
gotta question. If i max out my TSP can i contribute to an outside ira to?
The IRS rule applies to all tax deferred accounts. If you reach the contribution limit on one (i.e. your TSP), you cannot contribute any additional money to the other(s). However, you can contribute to a Roth (after tax) IRA, provided that you meet the income requirements.

roskopfm
12-12-2008, 05:33 PM
Maybe if we all fax the TSP asking for the ROTH maybe they would get the message. I fax them the same page once each month. It more people did, they might get the message.

tsptalk
02-28-2009, 11:47 PM
That's good - now that most TSP'ers would rather never be in stocks again. :)

I think I would roll mine into the Roth. I haven't decided, I'll just need to read the fine print if/when it's in place.

Rod
03-01-2009, 10:02 AM
That's good - now that most TSP'ers would rather never be in stocks again. :)

I think I would roll mine into the Roth. I haven't decided, I'll just need to read the fine print if/when it's in place.

If my thinking is correct, this would mean they would then tax our current funds already in our TSPs prior to converting those to a Roth, right?

In turn, the gov. would have more immediate funds in their coffers and we would have less in our TSPs. I'm sure that's one reason and incentive for the gov. to do this.

But yeah, I wouldn't mind paying taxes NOW in order to receive tax-free withdrawals. I'd support a Roth, even though the gov. is not doing it in our best interests, but in its best interests.

CountryBoy
03-01-2009, 11:44 AM
Question, I'm assuming that we would have to stop contributing to our personal ROTH's outside of our current TSP or would this be in addition to? And what would the TSP Roth invest in to increase the value of our investment or has that not been determined yet? And would we get the 5% match with each paychecks contribution? Or are these details yet TBD.

Thanks,
CB

Rod
03-01-2009, 02:43 PM
Question, I'm assuming that we would have to stop contributing to our personal ROTH's outside of our current TSP or would this be in addition to? And what would the TSP Roth invest in to increase the value of our investment or has that not been determined yet? And would we get the 5% match with each paychecks contribution? Or are these details yet TBD.

Thanks,
CB

I believe I can at least answer one of your questions. You can have as many Roths as you wish, as long as you do not exceed the IRS contribution limits which apply to yourself.

Now that I think about it, I don't believe I would convert to a Roth TSP because I already have a Roth Scottrade which I fully contribute to.

I'd MUCH rather fully fund a Roth that has NO restrictions on the number of trades than have a Roth that you can trade only twice a month.

CountryBoy
03-01-2009, 03:46 PM
I believe I can at least answer one of your questions. You can have as many Roths as you wish, as long as you do not exceed the IRS contribution limits which apply to yourself.

Now that I think about it, I don't believe I would convert to a Roth TSP because I already have a Roth Scottrade which I fully contribute to.

I'd MUCH rather fully fund a Roth that has NO restrictions on the number of trades than have a Roth that you can trade only twice a month.

Thanks Rod,

That was my initial impression on first blush, but since I max out my ROTH annually the TSP ROTH isn't an option to me, since like you, "I'd MUCH rather fully fund a Roth that has NO restrictions on the number of trades than have a Roth that you can trade only twice a month" - Rod :D

Thanks,
CB

ChemEng
03-01-2009, 05:10 PM
Thanks Rod,

That was my initial impression on first blush, but since I max out my ROTH annually the TSP ROTH isn't an option to me, since like you, "I'd MUCH rather fully fund a Roth that has NO restrictions on the number of trades than have a Roth that you can trade only twice a month" - Rod :D

Thanks,
CB
Have you found a place for your Roth with expense ratios as low as TSP?

IMHO-The trade restrictions are a red herring here because most brokerages have much more stringent trade restrictions than the TSP now has. (Required minimum amounts of time in a fund, penalties for leaving within a certain time period, not being able to go back into a fund traded out within a certain time period, et al)

domingo3
03-01-2009, 08:39 PM
There appears to be a lot of confusion around these issues. I don't "know" any of the following, because Roth TSP doesn't actually exist, but these assumptions are based on Roth 401ks, so it should be very similar.

The investment options should be identical inside Roth TSP. The only difference is the tax treatment.

You will likely not be able to convert between "traditional" and Roth TSP - ie you won't be able to pay tax on what's currently in your TSP account and make it Roth TSP. You can just elect to make future contributions to Roth TSP.

Employer match should be unaffected. If you choose to contribute to Roth, the employer match will likely still go into a tax deferred (traditional) account.

Just because you max out a Roth IRA does not mean that Roth TSP is not an option for you. Roth TSP (should it come into existence) should have the same limits as traditional TSP limits, so you can contribute $5k to a Roth IRA, and up to another $16.5k for Roth TSP.

The decision comes down to tax rates. The Roth option is most beneficial for military folks like me, who are only in the 15% marginal tax bracket (some of us are even lower than that). If you're in the 25% or higher brackets, then it's more of a guessing game about where tax rates are going in the future.

ChemEng
03-01-2009, 09:12 PM
You will likely not be able to convert between "traditional" and Roth TSP - ie you won't be able to pay tax on what's currently in your TSP account and make it Roth TSP.
Perhaps you would be able to carry losses forward from your standard TSP account to offset the tax burden of converting into the Roth account?

CountryBoy
03-02-2009, 06:16 AM
Have you found a place for your Roth with expense ratios as low as TSP?

IMHO-The trade restrictions are a red herring here because most brokerages have much more stringent trade restrictions than the TSP now has. (Required minimum amounts of time in a fund, penalties for leaving within a certain time period, not being able to go back into a fund traded out within a certain time period, et al)

I purchase individual divvy paying stocks for our ROTH's and have done better than anything the TSP has. When the TSP allows that, then I'll consider putting my money with barclays and their underlings. Until then it's all I can stomach to give them my 5%.

I can make as many trades as I want, at a cost, but that's all we wanted with the TSP was the same thing and most of us were willing to pay for the trades, so that is a moot point in my situation.

CB

RunningFool
03-02-2009, 08:33 AM
Well it sounds like, in regard to personal retirement plans, you may not have much choice in the matter. You can give it to the government now or they will take it later.

http://www.thelandofthefree.net/conservativeopinion/2009/02/07/social-security-bailout-bill/

CountryBoy
03-02-2009, 09:22 AM
Well it sounds like, in regard to personal retirement plans, you may not have much choice in the matter. You can give it to the government now or they will take it later.

http://www.thelandofthefree.net/conservativeopinion/2009/02/07/social-security-bailout-bill/

Sad to say, but there's more than just a grain of truth to that comment.

CB

roskopfm
03-10-2009, 06:23 PM
I have been faxing the tsp once a month every month requesting the TSP board to add a ROTH to the TSP. I'm hoping others will do the same and they will get the info to the TSP board. Its about time we get the ROTH. Now is the best time with the market down so low and could get our investments at such low prices and keep all the gains at retirement.

Rod
03-10-2009, 08:08 PM
I have been faxing the tsp once a month every month requesting the TSP board to add a ROTH to the TSP. I'm hoping others will do the same and they will get the info to the TSP board. Its about time we get the ROTH. Now is the best time with the market down so low and could get our investments at such low prices and keep all the gains at retirement.

Thank you for your persistence. Keep it up!

roskopfm
03-16-2009, 09:50 PM
Everyone that wants the ROTh, FAX THE TSP every month PLEASE!!
SAY WE WANT THE ROTH NOW!!!!!!!!!!!!

robo
03-19-2009, 07:42 PM
On March 18, during the House Oversight & Government Reform Committee’s mark-up of H.R. 1256, two provisions strongly supported by NARFE were approved. The first item conforms the treatment of accumulated sick leave toward retirement under the Federal Employee Retirement System (FERS) to same calculation as under the Civil Service Retirement System (CSRS). As quoted by Government Executive magazine’s web site, NARFE President, Margaret L. Baptiste, described the situation saying, “… with the benefit of 23 years of hindsight (since the inception of FERS), we recognize that the inequity in the treatment of accrued sick leave between FERS and CSRS has hurt productivity and increased agency costs.

For that reason, we strongly support the concept that all federal civilian retirement programs credit unused sick leave toward retirement.”

The second item, adopted with strong NARFE support, would make improvements to the Thrift Savings Plan: 1) automatic enrollment of new hires and an immediate matching contribution for FERS employees and 2) institution of a “Roth” option for TSP investors. As in many 401(k) plans already, a “Roth” option allows participants to make after-tax contributions to the plan and withdraw the principal and earnings tax-free upon retirement. (More details are provided on NARFE’s web site under Public Relations at http://www.narfe.org/departments/publicrelations/articles.cfm?ID=1744 and in Government Executive’s article at

roskopfm
03-28-2009, 07:02 PM
the question is how long will it take the TSp to add it. They do things very very slow. Hopefully it will be up and running before the end of the year if we are lucky, but I doubt it.

CountryBoy
04-03-2009, 10:10 AM
http://www.fedsmith.com/article/1935/

Maybe our Roth option is just around the corner.

CB

domingo3
04-03-2009, 03:01 PM
Thanks for the updates. Something to keep an eye on. My guess is that it may pass soon, but will probably not be implemented until next year or even the year after. I think there was something in the text of one of the the previous bills referring to 2010. I don't know that much about legislation, but I'm hopeful about this.

roskopfm
04-04-2009, 07:22 PM
The Million Dollar question is how long after Obama signs the bill will it take the TSP board to give us the option. I cant wait. If they open up the TSP to other fund choices and give us the ROTH, I will transfer all my outside Roth to the TSP and save a lot on costs. COME ON TSP BOARD, GET YOUR SOFTWARE UPDATED!!!!!!

James48843
04-05-2009, 09:53 AM
The Million Dollar question is how long after Obama signs the bill will it take the TSP board to give us the option. I cant wait. If they open up the TSP to other fund choices and give us the ROTH, I will transfer all my outside Roth to the TSP and save a lot on costs. COME ON TSP BOARD, GET YOUR SOFTWARE UPDATED!!!!!!

I was reading in one of the monthly minutes of the TSP Board that it would be, most likely, about six months after legislation got signed before they could have it up and running. There are a lot of tweaks that have to be done in order to do it- it's not as simple as simply starting a new account number and running with it.

We'll be waiting....

Now if the Senate will just cooperate, and move the bill.....

XL-entLady
04-05-2009, 09:59 AM
I'm going to be seriously interested in the mechanics of how it will work. For example, if you switch from G Fund to (R)oth Fund, do you have to pay taxes on the amount you put into R Fund? Will the R Fund only be open to certain situations, for example, current contributions as opposed to moving GFCSI funds into the Roth?

It will be interesting to see what the rules are on the Roth TSP if it passes.

Lady

domingo3
04-05-2009, 02:44 PM
The Million Dollar question is how long after Obama signs the bill will it take the TSP board to give us the option. I cant wait. If they open up the TSP to other fund choices and give us the ROTH, I will transfer all my outside Roth to the TSP and save a lot on costs. COME ON TSP BOARD, GET YOUR SOFTWARE UPDATED!!!!!!


I think it's highly unlikely that you will be able to transfer outside Roth to TSP. I assume you are talking about an IRA.

Also, it's improbable that you can convert current TSP holdings to Roth. It will probably be just future contributions that you have the option for.

Birchtree
04-05-2009, 03:07 PM
Don't put all your eggs in one basket - why mess with them. They'll just change things again - I wouldn't risk the chance with a Roth, you can do so much better in other places and buy individual stocks as well as ETFs. You want stuff that pays income when invested with a Roth.

roskopfm
04-06-2009, 09:27 PM
I'm going to be seriously interested in the mechanics of how it will work. For example, if you switch from G Fund to (R)oth Fund, do you have to pay taxes on the amount you put into R Fund? Will the R Fund only be open to certain situations, for example, current contributions as opposed to moving GFCSI funds into the Roth?

Lady


My wife has a 403B plan with the Roth Option. She can have her money put in a list of fund either Roth, or non roth. Both are the exact same funds with the same ticker and it would be the same as TSP.

Your money in the G, F, C, etc.. would be put in the same fund pool at the TSP board. Say you had 1000 shares of the C fund and started to invest all your new money in the C fund but as a Roth. All new shares would be coded as the Roth account. You still have that 1000 shares of tax deferred C fund shares and then you would have some others (new shares in the C fund valued in the Roth Account. They both would have the exact share price and have the same return. The only reason for seperating them is to determine which are tax free at withdrawal and which are not.

XL-entLady
04-07-2009, 06:26 AM
My wife has a 403B plan with the Roth Option. She can have her money put in a list of fund either Roth, or non roth. Both are the exact same funds with the same ticker and it would be the same as TSP.

Your money in the G, F, C, etc.. would be put in the same fund pool at the TSP board. Say you had 1000 shares of the C fund and started to invest all your new money in the C fund but as a Roth. All new shares would be coded as the Roth account. You still have that 1000 shares of tax deferred C fund shares and then you would have some others (new shares in the C fund valued in the Roth Account. They both would have the exact share price and have the same return. The only reason for seperating them is to determine which are tax free at withdrawal and which are not.
Thanks, roskopfm, for your contribution to the discussion. It's great to have information from someone who is already dealing with a similar situation. My (probably rhetorical) questions were generated because I'm already retired and am drawing a monthly income out of my TSP. So I'm not putting new contributions in. I was just musing about whether I could transfer funds from, say, C Fund to the new Roth and how I would pay the taxes if I could transfer funds. It will be interesting to find out. :)

Lady

roskopfm
04-12-2009, 08:11 PM
If you are retired from the govt but still working somewhere else, you can take a one time withdrawal and transfer to an IRA, then convert some/all of it into a Roth.

James48843
04-21-2009, 08:23 AM
from http://govexec.com today:

TSP board endorses Roth IRA option for enrollees
By Alex M. Parker aparker@govexec.com (aparker@govexec.com)
April 20, 2009

The Federal Retirement Thrift Investment Board on Monday officially endorsed a proposal to give Thrift Savings Plan participants the option to invest in a Roth Individual Retirement Account, but did not green light a move that would allow the TSP to create additional investment funds.

During its monthly meeting, the board also voted in favor of a provision that would allow the spouses of deceased federal employees to continue managing their funds in the TSP instead of requiring them to withdraw those funds 60 days after their spouse passed away and reinvesting them elsewhere.

The House passed legislation (H.R. 1256 (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1256rh.txt.pdf)) on April 2 that contained provisions that would create a Roth IRA account option for TSP participants and a mutual fund window in the plan that would allow enrollees to invest in more than 13,000 mutual funds in addition to the plan's core offerings. Roth accounts -- which allow participants to invest after-tax into their retirement accounts so it can be withdrawn later without taxes -- now are offered by many retirement plans.

The Senate has yet to take up legislation on either issue, and neither chamber has introduced bills regarding spousal accounts.

Of the four board members present, two supported allowing mutual fund offerings to enrollees, while two opposed the idea.

Opponents claimed it would complicate the TSP needlessly, and allow politics into the process.

"This would totally, radically alter a plan that has been in place since 1986," said board member Alejandro Sanchez. In a survey of TSP members, only 10 percent said they would enroll in the mutual fund offering if it meant paying an estimated $100 fee, according to Sanchez.

The board said because only a percentage of the overall federal workforce likely would participate, those who did choose to use the mutual fund window should pay for its implementation. The $100 fee they asked respondents about was a hypothetical annual fee, but that figure could be lower.

Supporters of a mutual fund option said it would remove political pressure from the process. By allowing TSP members to choose mutual funds for themselves, there would be no need to lobby the investment board to include a particular fund in its core programs, argued Tom Trabucco, director of external affairs.

"I see it as the equivalent of a pressure-cooker release valve," said Pamela Jeanne Moran, deputy director of external affairs.

Board member Gordon Whiting said the plan did not go far enough, and TSP members should be allowed to invest in individual securities as well as mutual funds.

Executive Director Greg Long opposed broader investments because he said he did not want to encourage "intraday trading" for retirement programs.

As for the Roth IRA account option, Long predicted the plan would be a "game-changer" for younger government employees -- especially those in the military -- who pay little in taxes now. While the board passed the proposal, it faced questions from some members who balked at the prospect of providing advice to TSP members considering how to invest their retirement funds.

Trabucco said the Employee Thrift Advisory Council would discuss the issues on Wednesday, before Congress takes them up again.

domingo3
04-21-2009, 01:48 PM
Thanks for the link! I posted the comment below. I hope that the mistake was on the part of the author and not the TSP board.

The reference to "Roth IRA" is wrong and confusing. IRA is an Individual Retirement Account. We can already have a Roth IRA. This is a program to allow qualified roth contributions to TSP. People are already confused about their options. Please correct this rather than propagating the confusion.

Intrepid_Timer
04-29-2009, 11:08 AM
You can have as many Roths as you like. You still have the same limits though. That's for all combined Roth accounts.

CountryBoy
04-29-2009, 11:18 AM
Thanks Lady and II,

That answers my question. We need Congress to raise the limit you can invest in a ROTH. :D

CB

domingo3
04-29-2009, 09:59 PM
`The reference to "Roth IRA" is wrong and confusing. IRA is an Individual Retirement Account. We can already have a Roth IRA. This is a program to allow qualified roth contributions to TSP. People are already confused about their options. Please correct this rather than propagating the confusion.

The Roth option for TSP is just an option for different tax treatment to your TSP contributions. It has NOTHING to do with IRAs. The contribution limit to your TSP remains the same. If this passes, you will be able to contribute some or all (your choice) of your contributions to TSP and have the income taxed now and withdrawn tax free. TSP match will still go into the "traditional" account, which is taxed on withdrawal. It's just like Roth 401k. Look it up if I'm not explaining it well enough.

Man, TSP has their work cut out for them. I thought it was a simple concept, but even folks who are interested are having a hard time with it sinking in. I can only imagine those who are not on these boards. It didn't help that the article had an erroneous title.

domingo3
06-01-2009, 05:30 PM
"May 21, 2009: Motion to proceed to consideration of measure withdrawn in Senate."

http://www.govtrack.us/congress/bill.xpd?bill=h111-1256

OK, I'm ignorant of how congress works. What does this mean? Does this mean they're going to stop thinking about it and move towards a vote, or does this mean that the bill is going to die?