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I am a gov't employee and contribute 8% of my salary to my TSP.The TSP is essentially like a traditional IRA; the money is tax-deferred until you pull it out.
I am considering opening up a Roth IRA with Fidelity or Vanguard, but the TSP also has a Roth function, where you can contribute "Roth" money to your account.
With that being said, would it be better for me to just open up a Roth IRA with Fidelity or Vanguard to have a seperate retirement account away from my TSP? Or should I just use the TSP Roth function?
Are you satisfied with the TSP performance and choices of investment options? If so, why not use the Roth TSP options? The TSP expense ratio is very, very low, and usually only index funds from a broker approach that level of expenses. However, if you are looking for more options than the TSP offers, go ahead and open one with a broker.
The ROTH-TSP is not exactly the same as a ROTH IRA. For example the ROTH-TSP there is a RMD after you reach 70.5 years, while the regular ROTH IRA there is no such requirement. Also you cannot transfer money from a ROTH IRA to a ROTH-TSP.
You can have both a ROTH IRA and a TSP/-ROTH-TSP if you want to go that route.
ROTH IRA has some income limits and can only contribute up to $5K a year. You can technically contribute up to $17500 to a ROTH-TSP.
The ROTH-TSP is not exactly the same as a ROTH IRA. For example the ROTH-TSP there is a RMD after you reach 70.5 years, while the regular ROTH IRA there is no such requirement. Also you cannot transfer money from a ROTH IRA to a ROTH-TSP.
You can have both a ROTH IRA and a TSP/-ROTH-TSP if you want to go that route.
ROTH IRA has some income limits and can only contribute up to $5K a year. You can technically contribute up to $17500 to a ROTH-TSP.
That's very odd. What would be the purpose of an RMD if the money is not being taxed? Is there a tax detail missing here?
The maximum contribution to IRAs this year is $5500 (unless 50 yrs or older).
Quote:
Originally Posted by oneasterisk
The ROTH-TSP is not exactly the same as a ROTH IRA. For example the ROTH-TSP there is a RMD after you reach 70.5 years, while the regular ROTH IRA there is no such requirement. Also you cannot transfer money from a ROTH IRA to a ROTH-TSP.
You can have both a ROTH IRA and a TSP/-ROTH-TSP if you want to go that route.
ROTH IRA has some income limits and can only contribute up to $5K a year. You can technically contribute up to $17500 to a ROTH-TSP.
IRS requirements for RMDs apply to employer-sponsored retirement plans like the TSP with no exceptions; therefore, RMDs will apply to Roth money in your TSP account, even though
they do not apply to Roth IRAs.
It makes no sense but I suppose is just a quirk of the law as written. I guess you can sock that money elsewhere if you don't need it immediately, so long as you don't pay taxes on Roth-qualified money. Still seems silly.
I want to retire within the next 18 months (at age 65), and would like to know how the tax rate will be determined if I take the entire payout in one sum? For example, if I had accumulated $100,000 and took it as a one-time payout, would this be considered annual income and taxes levied accordingly?
And if I took the entire amount in one sum, could I invest it in something else right away to avoid the taxes (e.g., buying a house or property). Just wondering.
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