Roth IRA

Twingrlie

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Should I be contributing to my Roth IRA as well? I have the TSP set to 5% and my Roth at 0%. Does the PO contribute to both?
 
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Cliff Clavin

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Good que
Should I be contributing to my Roth IRA as a well? I have the TSP set to 5% and my Roth at 0%. Does the PO contribute to both?
Good question. I have been wondering that myself and whhat the total amount is that I can contribute yearly.
 

eomr

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Should I be contributing to my Roth IRA as a well? I have the TSP set to 5% and my Roth at 0%. Does the PO contribute to both?
They only contribute to TSP. What you are doing is fine. They contribute dollar for dollar for the first 3%, 50 cents on the dollar for 4 and 5 % and they give you 1%. Contribute more as you get in a better position down the line. Pay down your debt and try to go into retirement relatively debt free. Try to get out by your minimum retirement age which should be in your late 50's. Good luck to you.
 

Gotrope

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Put what you can afford to into TSP. The program works based upon compound interest over time. Your savings grow best when you front load the first 5 years. Trying to do catch-up just before retirement weakens your Interest gain over the years. But, as eomr said, don't try to save at the expense of going into debt. Most successful retirees try to put 10% into their TSP. The Roth is a bet against higher taxes in retirement. If you think your income tax will lessen in retirement don't bother. I started putting money into the Roth as soon as it became available. But, I live in a highly taxed state. I asked my accountant and she said to try to have one years income in the Roth in case you leave employment sooner than expected but after applicable age.

All your USPS matching funds will automatically invest in tax deferred investments of your choice. In the tax deferred accounts a $100 TSP election will only be noticable for about $70 of take-home difference. The roth is actual after tax money. It costs a little more from your pay at initial plan participation but, after you retire all income and interest from that account is tax free unlike the traditional accounts. You should probably ask your tax person to see where you would benefit most. But, it's awesome you are thinking of your future 😀
 

WestCoastRural

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I agreed with @Gotrope, you should put at least 10% into your tsp. Since it’s already drawn out of your paycheck you are not going to notice it one bit.

You can open a personal Roth IRA with Fidelity, Vanguard, or some other investment firm. You can contribute up to $6000 a year.
 

Morty

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Whatever USPS contributes goes into a traditional IRA. 2.5%? It's on the TSP site.

My contribution is set at 20% and mimics the S&P500. You can set your own investment percentages. Or choose a managed fund, multiple options.

I had a PM my age yucking it up about his monstrous 6% gains. I had 26% gains. And with the market up nearly 10,000 points this year. Im setting good. And of course it goes up and down. But I put in 20% no matter what. In 21 years when I can retire, hopefully the payoff will be huge.
 

Gotrope

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Whatever USPS contributes goes into a traditional IRA. 2.5%? It's on the TSP site.

My contribution is set at 20% and mimics the S&P500. You can set your own investment percentages. Or choose a managed fund, multiple options.

I had a PM my age yucking it up about his monstrous 6% gains. I had 26% gains. And with the market up nearly 10,000 points this year. Im setting good. And of course it goes up and down. But I put in 20% no matter what. In 21 years when I can retire, hopefully the payoff will be huge.
Mine is set up very similar. Its a long game, dont panic about momentary blips in the market. Too, many put their money into safe accounts during bear markets and miss the bull run gains. Markets are notoriously hard to time. Be comfortable with your investments but don't watch the daily numbers if you have more than 5years to go. You will stress too much over occasional volatility.
 

Voglio-il mio

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Should I be contributing to my Roth IRA as well? I have the TSP set to 5% and my Roth at 0%. Does the PO contribute to both?
USPS will match 5% of your total contribution amount! Where you place your money, as far as ratio into each account will determine how much is contributed into each. So for example you contribute $100 to TSP, with $60 going to Traditional and $40 going to Roth. You will get $5 match from USPS with $3 going to the Traditional and $2 going to the Roth. I kept the numbers simple and rounded for purposes of explanation and understanding only. Hopefully you contribute more than $100 a pay period.

When other Carriers ask my advise on how much to contribute, I always stress that it an individual's monthly budget and ability to manage money that determines how much to invest. That being said it would be absolutely foolish to contribute less that 5% of your income. The 5% match on your investment dollars are the easiest money you can make.

The strategy that I would recommend to those Carriers that have control of their fiances and have a fair amount of disposable income. They should be contributing between 5% & 10% of their before tax income. Placing 70% in a Traditional account and 30% in a Roth account. Additionally each year, annually increase the contribution amount by 1%. So for example when you opened the account you started by contributing 5% and you have now been in TSP for 8 years you are now having 13% of your before taxes income being invested. Trust me when I say by doing it this way you won't miss it! Think about it, if you are early in your career, how much do you think will be in your account by the time you retire?

I'm personally closing in on retirement for the USPS. I started my employment with USPS later in life as a second career in and I'm financially stable. What I have done for the last several years is max out my annual contribution and have also taken advantage of the catch up contribution allowed for those over the age of 50. If you are in a similar situation and can afford to do the same I would highly recommend doing so! This years max with catch up is $26,000 and is going up to $26,500 in 2021.
 
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Cliff Clavin

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Mine is set up very similar. Its a long game, dont panic about momentary blips in the market. Too, many put their money into safe accounts during bear markets and miss the bull run gains. Markets are notoriously hard to time. Be comfortable with your investments but don't watch the daily numbers if you have more than 5years to go. You will stress too much over occasional volatility.
Mine is presently set up at 20% in a regular account. I haven't decided if I should split it between regular and Roth at this point as I am not sure that I will be making any other money after I retire. Since I just turned 46 Yrs Old I am getting a late start, but do want to be able to contribute as much as I can towards retirement.
 

hockey94

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Mine is presently set up at 20% in a regular account. I haven't decided if I should split it between regular and Roth at this point as I am not sure that I will be making any other money after I retire. Since I just turned 46 Yrs Old I am getting a late start, but do want to be able to contribute as much as I can towards retirement.

If I were you, I would contact a financial planner for advice on what to do. TSP is a good deal because of little or no fees !
 

Voglio-il mio

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Mine is presently set up at 20% in a regular account. I haven't decided if I should split it between regular and Roth at this point as I am not sure that I will be making any other money after I retire. Since I just turned 46 Yrs Old I am getting a late start, but do want to be able to contribute as much as I can towards retirement.
One of the major advantages to having a Roth is that distributions won't be taxed. Unfortunately a requirement of TSP is that distributions or withdrawals are taken equally from all accounts. So if your strategy is to use the Roth as a tax free source to go to for emergency money it won't work with TSP. What you should do in that case is set up an Roth account somewhere else other than TSP. One of the reasons individuals will invest more in a Roth is that they expect their taxable income from all sources will be high. Having a Roth that has already been taxed will serve them like another savings account that can be tapped into without being taxed on for withdrawals.
 

Voglio-il mio

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Mine is presently set up at 20% in a regular account. I haven't decided if I should split it between regular and Roth at this point as I am not sure that I will be making any other money after I retire. Since I just turned 46 Yrs Old I am getting a late start, but do want to be able to contribute as much as I can towards retirement.
If I remember correctly in retirement you need to have income in the range of 60% of what you made while working to maintain the same lifestyle in retirement. One option for distribution of TSP money is to receive it monthly (4% is the recommended amount). So having a good understanding of what sources and how much each of your retirement income source will give you is important.
 

Voglio-il mio

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You can withdraw at 59.5 without penalty but you still pay tax on the IRA portion of your TSP..
If you have both a Traditional & Roth with TSP, the withdrawal amount will be taken equally from each account and you will have to pay taxes on the amount taken from the Traditional account.
 

Old Fart

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Mine is set up very similar. Its a long game, dont panic about momentary blips in the market. Too, many put their money into safe accounts during bear markets and miss the bull run gains. Markets are notoriously hard to time. Be comfortable with your investments but don't watch the daily numbers if you have more than 5years to go. You will stress too much over occasional volatility.
Yes. I'm at 20% and take every COLA and raise net and put that fixed amount into TSP. You can move from one fund to another easily once you're logged onto the website. Set the risk to your personal tolerance. Whatever you invest in, as long as it's for the long haul, its a huge benefit as it's compounded savings in most cases.
 

Voglio-il mio

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Thanks stillfirstclass!
I wasn't aware of the changes, it seems that most of my concerns were changed to a better option.


With this news I may now stay in TSP in retirement. It's fee's are the some of the lowest available. Its restrictions and limitations for withdrawal is what concerned me. But it looks like they have addressed them now!
 
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Gotrope

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All usps matched funds will go only to pretax accounts. They never contribute to roth option. That is the was a roth is written by law.
 
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