TSP changes contained inside Secure Act 2.0

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Aitrus
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TSP changes contained inside Secure Act 2.0

Post by Aitrus »

With the recent passing of Secure Act 2.0, there have been some changes made to TSP and retirement investing in general. This article outlines a few of them:

https://www.fedsmith.com/2023/01/23/key ... ure-act-2/

Of the changes in the article, here's the highlights that caught my eye:

- We can now request that agency matching funds go to TSP Roth instead of to Traditional
- IRS-required RMDs now begin at 75
- IRS-required RMDs are no longer required for Roth accounts
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ubascuba
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Re: TSP changes contained inside Secure Act 2.0

Post by ubascuba »

So, if I elect to put the matching funds into the Roth, but continue to put my contribution into the traditional TSP, will the matching funds have an affect on my taxes?
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bloobs
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Re: TSP changes contained inside Secure Act 2.0

Post by bloobs »

Aitrus wrote: Mon Jan 23, 2023 10:40 am - We can now request that agency matching funds go to TSP Roth instead of to Traditional
Awesome.....but how to request this with that POS interface they have now? How long will they take to build that feature in?

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Scarfinger
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Re: TSP changes contained inside Secure Act 2.0

Post by Scarfinger »

Also a major change is that the Roth TSP isn't required to have RMD withdrawals anymore. Which was a major complaint and a good reason to take your money out of the TSP. Now what are the reasons to take your money out of the TSP? Less diversity in TSP? No large/small value tilts? hmm. T
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Aitrus
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Re: TSP changes contained inside Secure Act 2.0

Post by Aitrus »

ubascuba wrote: Mon Jan 23, 2023 11:08 am So, if I elect to put the matching funds into the Roth, but continue to put my contribution into the traditional TSP, will the matching funds have an affect on my taxes?
Good question. It's one of the things I was wondering about as well: do we have to pay taxes on the agency matching contributions before they go in?
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bloobs
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Re: TSP changes contained inside Secure Act 2.0

Post by bloobs »

Aitrus wrote: Mon Jan 23, 2023 12:21 pm
ubascuba wrote: Mon Jan 23, 2023 11:08 am So, if I elect to put the matching funds into the Roth, but continue to put my contribution into the traditional TSP, will the matching funds have an affect on my taxes?
Good question. It's one of the things I was wondering about as well: do we have to pay taxes on the agency matching contributions before they go in?
Since withdrawals, comprised of both employee and matching contributions, are taxed at the same rate, is it possible the matching Roth-specific contributions may be reduced by whatever one's estimated tax rate is BEFORE being added to your TSP? For example, your 5% matching may end being 4% if you're in the 20% tax bracket.

This can get confusing really fast.

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evilanne
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Re: TSP changes contained inside Secure Act 2.0

Post by evilanne »

I think the Government Matching amount, if Roth, would have to be included in your earnings in Block 1 of your W-2 so it wouldn't make any difference what an individual's tax rate is.

Note to Aitrus' original post-I know 75 is the age for you & me but the current age is 73. It doesn't go up to 75 until January 1, 2033, so anyone born before 1960 would still be at 73 (unless they change it again)

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Aitrus
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Re: TSP changes contained inside Secure Act 2.0

Post by Aitrus »

evilanne wrote: Tue Jan 24, 2023 8:15 pm Note to Aitrus' original post-I know 75 is the age for you & me but the current age is 73. It doesn't go up to 75 until January 1, 2033, so anyone born before 1960 would still be at 73 (unless they change it again)
Thanks for that clarification, evilanne. I didn't catch that nuance. I thought it was an immediate change, didn't realize it was going to go into effect for a decade.
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Fund Prices2023-01-30

FundPriceDayYTD
G $17.29 0.03% 0.33%
F $18.73 -0.29% 2.87%
C $61.70 -1.29% 4.74%
S $66.60 -1.54% 8.24%
I $36.63 -0.59% 7.93%
L2065 $13.03 -1.07% 6.31%
L2060 $13.04 -1.07% 6.31%
L2055 $13.04 -1.07% 6.31%
L2050 $26.89 -0.90% 5.44%
L2045 $12.36 -0.85% 5.14%
L2040 $45.46 -0.79% 4.82%
L2035 $12.11 -0.72% 4.45%
L2030 $40.67 -0.66% 4.08%
L2025 $11.74 -0.41% 2.77%
Linc $23.29 -0.26% 1.92%

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