Stay or Go

General TSP Discussion.

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winsprint
Posts: 55
Joined: Sat Dec 03, 2011 12:16 pm

Stay or Go

Post by winsprint »

Will this make enough difference to stay in the TSP?

https://l.facebook.com/l.php?u=http%3A% ... H-r1I9F7iQ

mindofmush
Posts: 353
Joined: Mon Jul 02, 2012 1:38 pm

Re: Stay or Go

Post by mindofmush »

It depends on why you want to leave the TSP.

Stay if you're happy with your TSP fund growth, these new rules gives more control of your money after retirement. (About the same as Vanguard or Fidelity)

Move some or most of your TSP account if you want to invest in something the TSP doesn't offer like emerging market funds, inverse ETFs or options. (crondanet5 will show you how to daytrade)

It only takes $200 to keep your TSP account open in case you would want to transfer your retirement funds back into the TSP. (Remember that Roth IRA doesn't have RMDs but RothTSP does require RMDs after age 70.5)

The new rules provide a lot of incentive to stay with the TSP (since it is your money and you should be able to withdraw it as you see fit).
mo meng, mo ching (which loosely means: no money, no life)

winsprint
Posts: 55
Joined: Sat Dec 03, 2011 12:16 pm

Re: Stay or Go

Post by winsprint »

I was looking at rolling over 50% of my TSP @ retirement in to a Vanguard IRA as I already have a Vanguard Brokerage & Roth Account now. Don't really see this changing my mind on anything, but I think it adds some good options that enhances the TSP that I can definitely take advantage of.

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evilanne
Posts: 2067
Joined: Thu May 14, 2015 6:52 pm

Re: Stay or Go

Post by evilanne »

I think the provision that allows you to transfer Roth portion of TSP Transfers or payments to Roth IRA was created to avoid RMD requirement that doesn't apply to Roth. New rules could change by allowing individuals to designate which type of funds they are withdrawing rather than the current proportional system. TSP wants more people to keep their funds in TSP so it would make sense for them to make changes similar rules that you have with IRAs.

The current proportional rules actually seems to encourage people to move away from TSP, particularly for people that chose Roth because of it not requiring RMDs. For those doing partial rollover or withdrawal, the proportional rules forces them to withdraw more money or transfer totally out if they are unable to do what they want given the existing rules.

winsprint
Posts: 55
Joined: Sat Dec 03, 2011 12:16 pm

Re: Stay or Go

Post by winsprint »

The proportional rules is the biggest reason I stayed away from the the ROTH TSP and started a Roth with Vanguard. To me with the proportional rules as they are, kinda defeats the purpose if they are going to dictate for you how much from what pot of money based on balances and not take anything else in to consideration. ie taxes.

mindofmush
Posts: 353
Joined: Mon Jul 02, 2012 1:38 pm

Re: Stay or Go

Post by mindofmush »

The TSP said they should have most of the new rules implemented by February but I haven't seen any mention of changes to the existing proportional withdrawals. It is possible to transfer most of the TSP account out into the 2 IRA accounts as one event and then transfer back the Traditional IRA into the TSP. The TSP says it takes 3 to 8 weeks to transfer TSP to an IRA if the paperwork is properly filled out and notarized but should take less time to transfer funds into the TSP.

Definitely a hassle but possible.
mo meng, mo ching (which loosely means: no money, no life)

winsprint
Posts: 55
Joined: Sat Dec 03, 2011 12:16 pm

Re: Stay or Go

Post by winsprint »

mindofmush wrote:The TSP said they should have most of the new rules implemented by February but I haven't seen any mention of changes to the existing proportional withdrawals. It is possible to transfer most of the TSP account out into the 2 IRA accounts as one event and then transfer back the Traditional IRA into the TSP. The TSP says it takes 3 to 8 weeks to transfer TSP to an IRA if the paperwork is properly filled out and notarized but should take less time to transfer funds into the TSP.

Definitely a hassle but possible.
That would not be a far fetched option, I don't mind hassle if it saves money. I have a friend that plans on doing exactly that. My plan was after it is transferred to Vanguard Traditional IRA is to move as much as possible during a 10-12 year time period to my Vanguard ROTH (keeping tax brackets in mind) before 70.5 and RMD's kick in.

mindofmush
Posts: 353
Joined: Mon Jul 02, 2012 1:38 pm

Re: Stay or Go

Post by mindofmush »

Somebody on this site referenced GoCurryCracker.com in the Roth vs Traditional debate. After reading that and other articles he wrote, there might be some applicable ideas for reducing taxes when converting a Traditional IRA to Roth IRA. He called it a "conversion ladder" and while FED retirees may have difficulty duplicating his plan, many parts are possible depending on your situation. (Might even be easier to get into the future 12% tax bracket especially if delaying SS is financially feasible while doing a "conversion ladder".)

http://gocurrycracker.com/never-pay-taxes-again/ and also

https://www.madfientist.com/traditional ... -roth-ira/

See for yourself if anything presented could work for you.
mo meng, mo ching (which loosely means: no money, no life)

winsprint
Posts: 55
Joined: Sat Dec 03, 2011 12:16 pm

Re: Stay or Go

Post by winsprint »

mindofmush wrote:Somebody on this site referenced GoCurryCracker.com in the Roth vs Traditional debate. After reading that and other articles he wrote, there might be some applicable ideas for reducing taxes when converting a Traditional IRA to Roth IRA. He called it a "conversion ladder" and while FED retirees may have difficulty duplicating his plan, many parts are possible depending on your situation. (Might even be easier to get into the future 12% tax bracket especially if delaying SS is financially feasible while doing a "conversion ladder".)

http://gocurrycracker.com/never-pay-taxes-again/ and also

https://www.madfientist.com/traditional ... -roth-ira/

See for yourself if anything presented could work for you.
This is good info and very doable with a little effort and focus. Thanks for the links.

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