Page 1 of 2 12 LastLast
Results 1 to 12 of 20

Thread: Hello and a question on TSP loan and contributions

  1. Default Hello and a question on TSP loan and contributions

    Hi All,

    I am 50 and been in the service for little over 13 years. I did not know about this forum. So glad to find it. Please bare with me in case I do not follow a decorum or have the question posted in the wrong thread. I have a ways to go before I retire. I have a paltry $205K in the TSP. I also have a $25K loan that I have to pay off at 2.835% I took to purchase a home. I pay about $310/month for the loan. At this rate I will pay the loan off in about seven years. I am thinking of keep paying my loan at the current rate and increase my TSP contributions to the max and also do the extra catch up as I turned 50 last month. Should I pay off my loan down faster instead of increasing my retirement contribution and lose out on potential gains that I could get more than 2.835%? I'd appreciate your thoughts. Many thanks in advance! Respects and a lot of smiles. Mufasa


  2.  
  3. #2

    Join Date
    Sep 2006
    Location
    Upstate NY
    Posts
    3,849
    Blog Entries
    46

    Default Re: Hello and a question on TSP loan and contributions

    Without a doubt I would increase TSP contributions to include catch-up. Your loan is VERY low, and in seven years the loan should be paid off which is great. Once paid off, it would give you around three more years of additional savings you could add to catch-up or other retirement vehicle. Based on your post, your minimum retirement age wouldn't be until 60 for full benefits so there is still plenty of time to save if you start now.

  4.  
  5. Default Re: Hello and a question on TSP loan and contributions

    Thank you Bullit for the reply! I like your profile picture

  6.  
  7. #4

    Join Date
    Jul 2016
    Location
    Texas
    Posts
    2,272

    Default Re: Hello and a question on TSP loan and contributions

    Mufasa,
    You are ahead of 75% of the population in retirement savings. Before increasing your TSP, I would consider fully funding an outside Roth IRA each year for several reasons. There is a 5 year rule that starts the year of your 1st contribution*, since it is after tax you can withdraw contributions without penalty and if you leave your job for any reason that loan has to be paid back within 90 days or you will have a taxable distribution & penalty for early withdrawal. If you are under the income limits for Roth, you could still put $6,000 in for 2020* and $7,000 for 2021 https://www.irs.gov/retirement-plans/roth-iras Even if you don't have full amount for 2020, I would put what I could in for 2020 (you have to tell them that it for prior year of they will assume it is for the current year).
    *Note: You have until April 15th to fund one for 2020.


    Quote Originally Posted by mufasa View Post
    Hi All,

    I am 50 and been in the service for little over 13 years. I did not know about this forum. So glad to find it. Please bare with me in case I do not follow a decorum or have the question posted in the wrong thread. I have a ways to go before I retire. I have a paltry $205K in the TSP. I also have a $25K loan that I have to pay off at 2.835% I took to purchase a home. I pay about $310/month for the loan. At this rate I will pay the loan off in about seven years. I am thinking of keep paying my loan at the current rate and increase my TSP contributions to the max and also do the extra catch up as I turned 50 last month. Should I pay off my loan down faster instead of increasing my retirement contribution and lose out on potential gains that I could get more than 2.835%? I'd appreciate your thoughts. Many thanks in advance! Respects and a lot of smiles. Mufasa

  8.  
  9. #5

    Default Re: Hello and a question on TSP loan and contributions

    Hi EA, Assuming we must open the Roth through TSP: No other outside options?
    Don't take my comments as trading advice /IFT: 2-13-24=100G/https://redstate.com & http://www.ewg.org/PermaCharts@p430#5159/strategy#4918p.410

  10.  
  11. #6

    Join Date
    May 2010
    Location
    California
    Posts
    150

    Default Re: Hello and a question on TSP loan and contributions

    It should be outside of tsp since no more commission trading stocks market. My IRA and ROTH IRA combine less than 10x TSP account, but I make more than 10X TSP by selling PUT and cover-call.

  12.  
  13. Default Re: Hello and a question on TSP loan and contributions

    I have thinking about this myself since I have been doing well on my trading account problem is the cap gains so I might move it to IRA if I am eligible like EA mentions below. I think I am barely missing out on creating a Roth IRA. Yes, I came to public service from a high paying private sector job almost halving my salary but did it for work life balance mainly and to spend more time with my little kids.

  14.  
  15. Default Re: Hello and a question on TSP loan and contributions

    Thank you EA for the IRA idea. Do you happen to know if TSP allows backdoor IRA conversions? I manage a trading account that I have been doing well but do not want go all in due to the cap gains taxes. I have been thinking of IRA's but I do not think I qualify. Would appreciate some insights. Glad to know I am 75% better than many but that also makes me terribly sad for all of them. I might even not live state side and retire probably in a low income country.

  16.  
  17. #9

    Join Date
    Sep 2006
    Location
    Upstate NY
    Posts
    3,849
    Blog Entries
    46

    Default Re: Hello and a question on TSP loan and contributions

    Roth IRA contribution limits from IRS: https://www.irs.gov/retirement-plans...-make-for-2021

    You can't do a conversion unless five tax years have passed since your first Roth IRA contribution. Once you do the conversion, you have to wait another five years to withdraw that conversion money penalty free.

    If you open an account today, you can still make the first contribution for the 2020 tax year. Dumping a mere $100 into it would start the clock ticking. If it's not for you, you can always withdraw that money.


  18.  
  19. Default Re: Hello and a question on TSP loan and contributions

    This is great SWAVET, do you pay taxes for the IRA when you contribute over your maximum? Say your maximum contribution limit is 6000, what if we you contribute 3000 more to the account? Do you pay taxes for the excess? What about gains from capital? Does it stay tax free no matter how much the gain is? I am assuming you actively manage your traditional and Roth IRA.

    Quote Originally Posted by SWAVET View Post
    It should be outside of tsp since no more commission trading stocks market. My IRA and ROTH IRA combine less than 10x TSP account, but I make more than 10X TSP by selling PUT and cover-call.

  20.  
  21. #11

    Join Date
    Jul 2016
    Location
    Texas
    Posts
    2,272

    Default Re: Hello and a question on TSP loan and contributions

    Quote Originally Posted by DreamboatAnnie View Post
    Hi EA, Assuming we must open the Roth through TSP: No other outside options?
    I'm not sure I understand your question.

  22.  
  23. #12

    Join Date
    Jul 2016
    Location
    Texas
    Posts
    2,272

    Default Re: Hello and a question on TSP loan and contributions

    Quote Originally Posted by mufasa View Post
    Thank you EA for the IRA idea. Do you happen to know if TSP allows backdoor IRA conversions? I manage a trading account that I have been doing well but do not want go all in due to the cap gains taxes. I have been thinking of IRA's but I do not think I qualify. Would appreciate some insights. Glad to know I am 75% better than many but that also makes me terribly sad for all of them. I might even not live state side and retire probably in a low income country.
    I don't think TSP will allow anything backdoor and no conversions, but if you have an existing traditional IRA you can transfer it into your TSP. You can also transfer in other retirement accounts from qualified plans. see https://www.tsp.gov/account-basics/move-money-into-tsp/

  24.  
Page 1 of 2 12 LastLast

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
S&P500 (C Fund) (delayed)
Hello and a question on TSP loan and contributions
(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)
Hello and a question on TSP loan and contributions
(Stockcharts.com Real-time)
EFA (I Fund) (delayed)
Hello and a question on TSP loan and contributions
(Stockcharts.com Real-time)
BND (F Fund) (delayed)
Hello and a question on TSP loan and contributions
(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes