Retirement (FAQ)

[32andBelow]

Tsp all into a Roth. Way more beneficial, I don’t care about the tax reduction now. All of my money plus its growth tax free later and passes to my kids tax free and no mandatory withdrawals? Yes please

Tsp all into traditional and take all the money you save from not paying taxes now and max out a Roth externally

 

[jdatc]

Tsp all into traditional and take all the money you save from not paying taxes now and max out a Roth externally

Let’s be honest, If you are getting your financial advice from. .65 you are doing it wrong.

 

[32andBelow]

Let’s be honest, If you are getting your financial advice from. .65 you are doing it wrong.

Prolly. This is my starategy at least. Give me a tax split and I feel like it uses my current cash flow better

 

[jdatc]

Prolly. This is my starategy at least. Give me a tax split and I feel like it uses my current cash flow better

I married a CPA with an MBA in finance. I do what she says.

I’m retiring when eligible at 50 with 25 years. 6 years to go.

 

[32andBelow]

I married a CPA with an MBA in finance. I do what she says.

I’m retiring when eligible at 50 with 25 years. 6 years to go.

Well if she makes a shit ton then yah prolly a different strategies

 

[AB19]

Tsp all into traditional and take all the money you save from not paying taxes now and max out a Roth externally

But are you that close to the difference that it makes it worth it? Your post retirement income is likely to be in the same bracket if not just 2% lower

 

[32andBelow]

But are you that close to the difference that it makes it worth it? Your post retirement income is likely to be in the same bracket if not just 2% lower

It depends how much my your account grows to see if the extra money was worth it. A lot of people can’t afford to spend 18k post tax and I’d rather spend 18k pre tax and 6k Post tax

 

[AB19]

It depends how much my your account grows to see if the extra money was worth it. A lot of people can’t afford to spend 18k post tax and I’d rather spend 18k pre tax and 6k Post tax

Por que no los dos, cali ain’t that expensive compared to here and I know you’re making way more than me

 

[jdatc]

Well if she makes a shit ton then yah prolly a different strategies

In fairness it depends on the year and her occasional consulting work. But she worked for a startup in the past that paid off quite well.

She requires a work life balance, so she takes ‘lower’ paying jobs. She won’t take the CFO role, lol.

Best part of our job is really the health insurance after we retire, not the pension.

 

[Electricfence]

Tsp all into traditional and take all the money you save from not paying taxes now and max out a Roth externally

You are choosing to pay more tax later on a much larger sum of money. Most people’s effective tax rate when they file is somewhere between 12-16 percent or less on a single income family. look at your taxes the last few years to see what have you paid. Lowering your tax now is extremely short sided when you’ll pay 20 percent later on a much larger sum of money, plus at 70 you have to start withdrawing it, and your kids, if you have any will have to pay taxes when you die.
You can only contribute 6k to a Roth outside of the tsp which allows $19500. The benefits far outweigh not paying the tax on the money now.

edit: also if you are above around 200k income combined I forget the exact number, with a spouse you can’t contribute into a Roth outside of the tsp.

 

[Spaceforce]

I married a CPA with an MBA in finance. I do what she says.

Does she do consulting work? I may have questions. Not trying to dig at your wife

You are choosing to pay more tax later on a much larger sum of money. Most people’s effective tax rate when they file is somewhere between 12-16 percent or less on a single income family. look at your taxes the last few years to see what have you paid. Lowering your tax now is extremely short sided when you’ll pay 20 percent later on a much larger sum of money, plus at 70 you have to start withdrawing it, and your kids, if you have any will have to pay taxes when you die.
You can only contribute 6k to a Roth outside of the tsp which allows $19500. The benefits far outweigh not paying the tax on the money now.

edit: also if you are above around 200k income combined I forget the exact number, with a spouse you can’t contribute into a Roth outside of the tsp.

Your Modified AGI hits 208k, you cannot contribute to Roth IRA. My question is why do you guys not do backdoor Roth IRAs

 

[Electricfence]

Your Modified AGI hits 208k, you cannot contribute to Roth IRA. My question is why do you guys not do backdoor Roth IRAs

I do that also but didn’t think it was relevant to this particular discussion since he said he can’t afford the 18k post tax. My wife and I make way more than the 208, so back door is the way to go on top of what I already do

 

[Mike Kilo]

I do that also but didn’t think it was relevant to this particular discussion since he said he can’t afford the 18k post tax. My wife and I make way more than the 208, so back door is the way to go on top of what I already do

What’s the scoop on the Roth trick? Have a separate IRA and roll it over into your TSP Roth every year?

 

[Electricfence]

What’s the scoop on the Roth trick? Have a separate IRA and roll it over into your TSP Roth every year?

Honestly don’t know all the specifics, but I do roll all my contributions from that year into the Roth once a year. Wether or not that’s more or less beneficial than another way I’m not sure.

Edit:for the record I do it before I even claim the tax benefits on the ira contributions, so I never really have to pay the tax “out of pocket” so to speak, after the fact. Yes it’s painful to see some portion of my money go to the man, but it is what it is. To me I’d just rather not have to pay a larger number later in life all at once when and if I did it all at once, like many closer to retirement have done

 

[Golf delta]

If joined the FAA when I was 25, and I bought back 5 years of military time would I be eligible to retire at 45 or 50? In other words, for the 25 years at any age retirement, does that include all federal time, or just FAA time?

 

[MJ]

Military time has no bearing on when you can retire.

 

[PDee]

Recommendation,
Go to a NATCA and/or FAA retirement seminar. Go to them more then once. Great information, you will something each time. I found NATCA better then FAA, but both very similar and informative. Go early in career and later in career.

Basic ATC retirement
Eligible 20 years and age 50, 2152 time. 25 years 2152 time any age.
OPM pays supplement from Retirement to eligible for Social Security. Wage earnings tested from MRA (56-57).Supplement does not increase each year with COLA.
FERS ANNUITY gets COLA ( cost of living ajustment) as follows
COLA. Increase
0-2%. Raise equals cola
2-3%. Raise is 2%
3% or more. Raise is 1% less then COLA

Cannot add military time to BECOME eligible. Military time is added after being eligible.

Must be in FEHB for 5 years to carry it into retirement. Spouse can continue FEHB after retiree passed away, as long as it is continuously paid. Once stop paying, cannot get FEHB back. Make sure spouse knows this information.

 

[Troutnado]

Are you able to Max out in ROTH TSP without any penalty? I've got 21ish years left and been maxing out traditional. I'm willing to start full ROTH but just want to know if that 6,000 limit kicks in with TSP as well? Also does agency matching switch to ROTH if you go full ROTH?

 

[MJ]

Are you able to Max out in ROTH TSP without any penalty? I've got 21ish years left and been maxing out traditional. I'm willing to start full ROTH but just want to know if that 6,000 limit kicks in with TSP as well? Also does agency matching switch to ROTH if you go full ROTH?

Individual accounts and employer accounts are separate. You can contribute the max to both.
Agency contribution can never be roth.

 

[TimShady]

6,000 limit is for IRA. You can max out Roth TSP in 2022 at 20,500. There’s no penalty or anything. I’m not sure what you’re referring to. The Agency match always goes into traditional because you have to pay tax on it eventually. If you’re below the income limit for Roth IRA you can max out both. There’s no income limit or restrictions for maxing out Roth TSP.