Big bonus question?

[hiker777]

I am about to get a nice bonus in the $100,000 range. I already invest 18% in TSP, max my Roth IRA and have mutual funds so what looks good?

[WorkFE]

A new Harley. :D

[Show-me]

I need your job.

[Show-me]

It depends on your situation. Is the bonus taxable?

Figure out how much you have contributed to your TSP and then max out your TSP, $16,500, to lower your AGI.

Front load next years TSP contributions during the first few months but be careful if you get a match because TSP will cut you off at the limit. This requires a little creative planning.

Good luck and congrates.:D Your not the Postmaster General, are you?:laugh:

[hiker777]

It depends on your situation. Is the bonus taxable?
No I will be deployed.
Figure out how much you have contributed to your TSP and then max out your TSP, $16,500, to lower your AGI.

Front load next years TSP contributions during the first few months but be careful if you get a match because TSP will cut you off at the limit. This requires a little creative planning.
No matching funds for military. Why the front load?
Good luck and congrates.:D Your not the Postmaster General, are you?:laugh:
No.
During the time I get my bonus I will be deployed so I am planning contributing more to my TSP so that portion will be non taxable.

[Frixxxx]

A new Harley. :D
Yeah, I need another Harley!

No.
During the time I get my bonus I will be deployed so I am planning contributing more to my TSP so that portion will be non taxable.
If you are in a "tax free" designated area, you may want to consider a ROTH IRA first:
A. You are not getting taxed on the income right now.
B. All interest on a ROTH IRA is NOT TAXABLE.

Then TSP second:
A: AGI is not taxable earned - deployed
B. Interest and principal taxed in retirement

Third traditional IRA.
A. AGI is not taxable earned - deployed
B. Interest taxed in retirement

Your military retirement will be taxed so you might as well get the best BANG for your buck.

I'm not sure if the yearly limits apply to you, I'd check with your military pay/JAG for rules and laws....
Also, you may need to "buy" other investments like gold or silver to protect long term, but research that for yourself to see if it is a way you want to go.

I have a few friends that used their bonus for a down payment for a house that they now rent.

Also, you may want to grab some dividend paying stocks ad well!

You're smart to want to invest it...just choose the right investment for you!:D

[Show-me]

Front loading would just get the funds into the TSP quicker to make you money, even if it was in the G fund. I would not do it now that I know it is tax free.

After what you just posted I would look for a tax exempt investment outside TSP. Why put tax free money into a account that will be taxed when you withdrawal it. TSP is a tax deferred account. Even if you just laddered a bunch of CD's with a crappy rate of return you would not pay tax on the principle. It would give you some time to research too.

Load your Roth IRA and pray the Roth TSP gets here quicker.

Look on some of the sites like Clark Howard to find a investment that will be tax exempt.

Also, you can only contribute $5000 to a Roth and/or Traditional IRA. Go Roth.

Splitting Your Contribution

If you are eligible to contribute to both types of IRAs, you might want to divide your contributions between your Roth and Traditional IRA; however, your total contribution to both IRAs still must not exceed the limit for that tax year (plus the catch-up contribution).

[crws]

A new Harley. :D

There you go!
And one for your new best friend too! ;)

[hiker777]

I believe that what ever I invest in the TSP is tax exempt while deployed. I just pulled this from my account (Tax-Exempt Contributions Year to Date: $10,736.12) that is from three trips over there. I am able to drop any amount of my bonus in the TSP and it would be tax exempt. Am I reading this correct?

[hiker777]

Front loading would just get the funds into the TSP quicker to make you money, even if it was in the G fund. I would not do it now that I know it is tax free.

After what you just posted I would look for a tax exempt investment outside TSP. Why put tax free money into a account that will be taxed when you withdrawal it. TSP is a tax deferred account. Even if you just laddered a bunch of CD's with a crappy rate of return you would not pay tax on the principle. It would give you some time to research too.

Load your Roth IRA and pray the Roth TSP gets here quicker.

Look on some of the sites like Clark Howard to find a investment that will be tax exempt.

Also, you can only contribute $5000 to a Roth and/or Traditional IRA. Go Roth.

Splitting Your Contribution
I am going to look into Clark Howard and I already max out my Roth.

[alevin]

munibonds are also exempt from fed taxes as I understand it, never bought any yet. They are riskier than in the past tho, since many municipalities may be bordering on bankruptcy due to bad investment guidance during the last 10 years-do lots of homework. 3 megacredit unions just got taken over into receivership in the past couple weeks too. the kinds that stand behind your local credit unions.

[OBGibby]

Put the first third towards some fast women. Then the second third towards some fast cars. Use the final third for some decent whiskey.

Whatever you have left - go ahead and waste...

[Handballer]

What looks good? $100,000. I am headed to Vegas tomorrow night. I could invest that amount and only ask 1% for my time. Note: there is a slight possibily you could collect less than $99,000. :D



I am about to get a nice bonus in the $100,000 range. I already invest 18% in TSP, max my Roth IRA and have mutual funds so what looks good?

[domingo3]

Hiker,
I'm late on this one, but if you're still out there, you should know that you can contribute more than the $16500 while you're deployed. If you're in a tax free zone, you can contribute up to $44000.
I agree with what other people said, that you should first put the $5k into a roth. After that, you can dump a bunch into TSP. When you get out or retire, you can roll over the tax-free contributions into a Roth IRA, assuming the laws still allow rollovers and converstions.

[OMA]

No.
During the time I get my bonus I will be deployed so I am planning contributing more to my TSP so that portion will be non taxable.

That's what I would have done. Not a financial planner, myself. Make sure all your credit card debts are paid as well, make sure your college loans are paid if you have any. Be careful about buying real estate - military members move so much that it might not be cost effective to buy then have to rent/sell.

If you have money left over from all of that, recommend dollar-cost averaging into a variety of funds from different sectors and fund categories.

Think about your kid's education funding. Not sure what the current GI Bill allows - and whether your benefits are transferable to a wife/child.

Keep a portion to have as an emergency fund- place in short term CD (6 mo) if needed to resist the temptation to spend spend spend.

I retired after 23 yrs of service at a young age. I saved a large portion of my salary, maxed TSP, maxed ROTH, lived comfortably and now I'm enjoying life. You can do the same thing as well, just resist the temptation to spend too much of your bonus. Of course, after tough deployments, you do deserve to treat yourself to something, imo.

Thanks for your service, to say the least.

[OMA]

Hiker,
I'm late on this one, but if you're still out there, you should know that you can contribute more than the $16500 while you're deployed. If you're in a tax free zone, you can contribute up to $44000.
I agree with what other people said, that you should first put the $5k into a roth. After that, you can dump a bunch into TSP. When you get out or retire, you can roll over the tax-free contributions into a Roth IRA, assuming the laws still allow rollovers and converstions.

If you can afford to, put $44k in the TSP. I did that while in Afghanistan.