Directing contributions to a traditional IRA

[TSPking]

How do I set this up? I currently contribute 10% to TSP. I want to reduce that to 5% to keep the 5% matching and direct the other 5% to a traditional IRA.

Any recommendations on the best place to setup the IRA?

Thanks

[tspgo]

How do I set this up? I currently contribute 10% to TSP. I want to reduce that to 5% to keep the 5% matching and direct the other 5% to a traditional IRA.

Any recommendations on the best place to setup the IRA?

Thanks

If you are planing to do it to manage your investment and you know that you know how to navigate the market I would suggest to open a regular IRA account with E-trade, TDameritrade or Zecco trading. Zecco trading gives you no transaction fees. Then you would go to your Employee Express page and make an allotment of 5% of your pay check to go to your new IRA account.

Remember that the 5% is coming out after taxes. TSP is coming out before taxes. So you lose a little bit here. Also remember the limitation in how much you can contribute to an IRA account.

Think twice before you do it because if you are not careful it might not be the best thing to do. You can access you IRA money any time, the TSP you can't. For someone who knows how to invest in the market it could be a good idea. For someone who doesn't, it could be a disaster. Believe it or not, sometimes having limitations of where and when to invest may be the best thing for those who are sailing the market by themselves and not knowing where they are.

Keep in mind some people are making thousands while other are losing millions, including WB. Some of them are excellent investors.

Good luck!

[crondanet5]

in addition to TSPGO's excellent comments I would caution you to approach this carefully to ensure your plan is permitted under IRS rules. First, you may make too much money to qualify for an IRA contribution. Second, the long term difference between putting your 10% into the TSP may turn out to have been a better choice for growing your retirement assets as compared to having it in an IRA account. I would suggest consulting a fee based financial advisor (not an insurance agent or broker) to get their retirement calculations on which plan is better. I would also consult your CPA to make sure all IRS rules are met before you do anything. This advice does not replace my position that we all need a seperate brokerage account to build personal wealth. The problem is partly that we are so tuned into the idea of a 401k or IRA for tax deferred treatment that we don't realize having the money in an outside account and paying taxes now means we have full access to the money any time we need it. Go to the following web site: NPR.org and on the left hand side select the "Fresh Air" program. Then in the upper right, select "past shows" get it back to July 7, 2008. If you can figure out how to download that interview you'll hear 40 minutes of non stop vitriolic attack on the whole IRA/401k system with factual situations thrown in. And you might consider getting her book as well.

[jeffvan1]

Actually you don't lose anything. The contributions to your IRA are applied against your gross income at tax time resulting in a lower AGI, hence lower income tax. Remember that you can only contribute $5000.00 in 2008 (+ $1000.00 in catch-up contributions if over age 50) to an IRA. What type of IRA(s) are you looking for ? Stocks, Bonds, CD's, Money Markets, Mutual Funds ???

[TSPking]

Thanks for the great information/advice everyone! I think I may back off of this idea. I didn't realize I couldn't do this as a pre-tax contribution like is done with TSP

[alphaalpha]

New member here. Like the site. Just read this thread. I am wondering---I contribute the max to my TSP (G fund only)
and wanted to confirm that I can also contribute to an outside IRA. That is the fact that I contribute to the TSP doesn't disqualify me from contributing to an IRA does it? Any effect on contribution limits? I am over 50 so for 2008 and 2009 what are the limits, $6000? Thanks for any replies...

[crondanet5]

I believe you are not permitted to do both under IRS rules. Also your AGI may limit what you can and cannot do. Rummage around the site and see what I've written about the importance of having a brokerage account outside of the IRA/401k/Roth program. They've suckered everybody with the tax deferral thing and the match. Who cares about that when there is so much money to be made in the real world of investing? Rummage, then send me a private message if you need more info. I also open this offer to anyone else who sees the need for an outside brokerage account. Your action.

[TSP Navy]

New member here. Like the site. Just read this thread. I am wondering---I contribute the max to my TSP (G fund only)
and wanted to confirm that I can also contribute to an outside IRA. That is the fact that I contribute to the TSP doesn't disqualify me from contributing to an IRA does it? Any effect on contribution limits? I am over 50 so for 2008 and 2009 what are the limits, $6000? Thanks for any replies...

Check out this link: http://www.wellsfargoadvantagefunds.com/wfweb/wf/retirement/start/faq.jsp. The following quote is taken from there:

Can I contribute to an IRA and my 401(k) at the same time?
Yes. You can contribute $5,000 ($4,000 in 2007) to a traditional or Roth IRA and maximize your 401(k) contributions without any penalty.

[alphaalpha]

New member here. Like the site. Just read this thread. I am wondering---I contribute the max to my TSP (G fund only)
and wanted to confirm that I can also contribute to an outside IRA. That is the fact that I contribute to the TSP doesn't disqualify me from contributing to an IRA does it? Any effect on contribution limits? I am over 50 so for 2008 and 2009 what are the limits, $6000? Thanks for any replies...

Check out this link: http://www.wellsfargoadvantagefunds.com/wfweb/wf/retirement/start/faq.jsp. The following quote is taken from there:

Can I contribute to an IRA and my 401(k) at the same time?
Yes. You can contribute $5,000 ($4,000 in 2007) to a traditional or Roth IRA and maximize your 401(k) contributions without any penalty.

This appears to say that, yes, one can contribute to both the TSP and an outside IRA and contribute the max to both. Does anyone disagree with this?

[jeffvan1]

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