Reply to TSP or TSP Roth Help

Forum Index » Money and Finances

Reply to "TSP or TSP Roth Help"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous]Roth makes great sense to young workers with good earning potential (start retirement savings when your tax rate is really low) or for high earners who are saving as much as they can in tax advantaged accounts (because you can invest "more" in a Roth, as the PP explained, since the contribution max is the same, but it is after-tax money, plus their marginal tax rate will be the same or higher if they are saving so much).

For everyone in the middle, Roth is not that big an advantage, it is just a gamble between paying tax now or later. If you are not to the point of maxing your retirement account I would use the traditional TSP, maybe open a Roth IRA if you have some extra at the end of the year, or contribute enough to the traditional TSP to put your taxable income for the year down around the threshold for the 15% marginal rate and then put any extra into a Roth, since that money would go in with tax paid at 15% rather than 25%.

If you retired now, your tax bracket would likely be lower than while you were working, but when you won't return for 20-30 years, you don't know how the tax rates will change. Eventually the government will have to pay off the debt, that money has to come from somewhere, many expect tax rates to rise eventually. Many heavy savers plan to be able to draw enough from their retirement to match or nearly match their working income. [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics