Thread: 17,500 TSP yearly limit, how to split between Roth 401k and TSP?

That is the $10 dollar question that probably depends on what you are currently making right now and on what tax bracket you may be in.

Originally Posted by Pemolis

From my understanding, the 2013 limit in contributions will be $17,500. That is combined Roth 401k and the TSP traditional.

What is a general strategy of how to divide up what percentage goes into the Roth 401k, and what goes into the Traditional TSP. I know that at MINIMUM 5% goes into the TSP.

How do you divide up the $17,500 between the Roth and TSP? And why?

It's usually based on taxes. Do you need to shelter your income to pay less taxes now? Or do you need less taxes during your retirement?

Depending how you are paid, what your tax bracket is and what your goals are will greatly determine your selection.

Now, that being said and I hope this will make sense:

Remember that what you make and what you can invest will determine the amount you can invest in an IRA whether Roth or not.

2013 Roth IRA Contribution Limits

Also, you have to stay on top of your tax brackets and where your income falls. I use the Roth when I can't get any more relief on my tax bracket. That means I pay one-time on the tax this year and never again on my money in the future.

Good luck!

For the lucky few CSRS who may have an inheritance to invest or extra cash enrolling into the Roth may make sense. They can put up to 10% of your entirement government earnings into the Volunteer Contribution Plan where when you retire you have two options, one buying a higher percentage of your retirement, (not a real bargain), or rolling the contribution account into an existing TSp ROTH. Certain restrictions, like not being able to use the money right away, but it is worth looking into if you are a goverment employee who has a large sum of money and not sure where to invest. For more information google up CSRS Volunteer Contribution Plan.

I've heard for most people, the standard TSP is the better choice. For me, I just do what I've been doing, if it ain't broke no need to fix it. $5000 a year goes into a Roth IRA that I manage, and 20% goes to TSP. I like the contributions before taxes, but also like the idea of all capital gains coming to me tax free, so I decided to to both.

I chose Roth IRA instead of just moving that extra money into TSP Roth because I like full control

My plan ultimately is to have multiple sources of income when I retire. Coming from pension, TSP, capital gains on both Roth IRA and brokerage accounts, SS

Originally Posted by sniper

I've heard for most people, the standard TSP is the better choice. For me, I just do what I've been doing, if it ain't broke no need to fix it. $5000 a year goes into a Roth IRA that I manage, and 20% goes to TSP. I like the contributions before taxes, but also like the idea of all capital gains coming to me tax free, so I decided to to both.

I chose Roth IRA instead of just moving that extra money into TSP Roth because I like full control

My plan ultimately is to have multiple sources of income when I retire. Coming from pension, TSP, capital gains on both Roth IRA and brokerage accounts, SS

Quite a few of us wrote about the Roth TSP when it first came out (search for 'roth' threads). Bottom line is that I am doing the same as Sniper.

Your 'minimum 5%' can be either Roth or Traditional. Doesn't matter, gov will match either one (but match goes into Traditional no matter what.)

What I don't like about Roth TSP is that you cannot move funds separately from Traditional. If you do a Fund Transfer it affects both in same %. When you withdraw, you must withdraw from both in equal %'s. I really like the idea of Roth for tax diversification, but doing Roth within the TSP does NOT allow tax diversification.

Has anyone used the NEW Comparison calculator on the tsp.gov site between traditional and Roth TSP?

I found it captivating.

Good information. A bit complicated, but useful.

Here's a question that seems, at least on the surface, to be straightforward...

Can I contribute the max $17,500 to TSP AND another $5,500 to a (non-TSP) Roth IRA?

Background:
I'm married, we both work, and she is 7 years younger so I may need the tax-deferred growth between my retirement and hers.
I can contribute $17,500 to TSP in 2013, which includes traditional TSP & Roth TSP.
Seems to me that I might be better off just maxxing out TSP, not contributing anything to RothTSP and getting a Roth IRA outside of the TSP umbrella and maxxing that out also.

Am I missing something?

Originally Posted by Rogue

Good information. A bit complicated, but useful.

Here's a question that seems, at least on the surface, to be straightforward...

Can I contribute the max $17,500 to TSP AND another $5,500 to a (non-TSP) Roth IRA?

Background:
I'm married, we both work, and she is 7 years younger so I may need the tax-deferred growth between my retirement and hers.
I can contribute $17,500 to TSP in 2013, which includes traditional TSP & Roth TSP.
Seems to me that I might be better off just maxxing out TSP, not contributing anything to RothTSP and getting a Roth IRA outside of the TSP umbrella and maxxing that out also.

Am I missing something?

Yes, if your MAGI (Modified Adjusted Gross Income) doesn't limit or cancel your eligibility. Or more if you enter "Catch-up" ages.

The real question is how you address your current tax footprint based on goals. (pay now or pay later)

Here's a link: Link

And the www.irs.gov site is accurate albeit boring.