Contact Us: (877) 864-1145

NEWSLETTERS

Roth TSP & Roth IRA In Action

Understanding Roth TSP & Roth IRA In Action

Federal employees typically have two types of Roth accounts available: Roth TSP & Roth IRA. It is important to understand how each works and how you may be able to maximize your own savings using either Roth TSP or Roth IRA elements. We will continue looking at hypothetical examples of federal employees and retirees.


Understanding Roth TSP and Roth IRA In Action

Understanding Roth TSPFederal employees typically have two types of Roth accounts available: Roth TSP and Roth IRA. Understanding Roth TSP and Roth IRA, how each works and how you may be able to maximize your own savings using these different elements is important as your plan your federal retirement.

A Roth is a tax “wrapper” (or “bucket”) to hold different investments of your choosing. When might you use this option? We will look at several hypothetical examples of federal employees and retirees.


Understanding Roth TSP

Understanding Roth TSP - Retirement Benefits InstituteUnderstanding Roth TSP and what this federal retirement savings plan offers is a great opportunity for federal employees. Employees have the option to direct any portion of their TSP contributions to the Roth TSP; however, you may not transfer current TSP funds into the Roth TSP.

A Roth, like traditional TSP, is not itself an investment, but rather a tax “wrapper” (or “bucket”) to hold different investments of your choosing.


Required Minimum Distributions

Required Minimum DistributionsDid you know that participants have Required Minimum Distributions (RMDs) from their TSP accounts, 401(k)s, and IRAs beginning April 1st of the year following the year they reach age 70½ and every year after?

For Example
Frank and Bonnie are 70 years old. Bonnie retired under CSRS and receives an annuity of $4,000 per month. Frank also receives a pension of $3,500 per month from his previous employer and Social Security of $1,200 per month. They live comfortably with the income received, and they have no need to draw from their investments.


Social Security Earnings Test

Social Security Earnings Test

Social Security Earnings Test - Retirement Benefits instituteThe Social Security earnings test is an important aspect to consider as you plan for your federal retirement. Many federal employees retire before they have reached their full retirement age for Social Security (see chart below) and begin employment in the private sector to supplement their retirement income. This could cause a reduction or loss of their Social Security benefit due to the earnings test.


Page 1 of 12123...Last