YEAh!
I check my agency finance webpage this morning, and I can finally sign up for the ROTH TSP effective Pay Period 10.
ROTH TSP now available in my agency
ROTH TSP now available in my agency
Burnsh |
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VFIAX 17%, VVIAX 17%, VEXAX 16%, VTIAX 21%, VGSIX 9%, VIPSX 10%, VBMFX 10%
- Taylor Larimore
- Posts: 32842
- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
Traditional vs. Roth IRAs
Hi Burnish:
Be careful what you wish for. A Roth IRA is not the best IRA for everyone.
The general rule is that if you expect your income tax bracket to be the same or higher (than it is now) when you withdraw the money, the Roth is probably the better choice. If you expect your income tax bracket to be lower when you withdraw, it is probably better to enjoy the current tax-deduction of a Traditional IRA.
Below are two links you should find helpful:
https://personal.vanguard.com/us/whatwe ... a/whichira
Morningstar IRA Calculator
Best wishes.
Taylor
Be careful what you wish for. A Roth IRA is not the best IRA for everyone.
The general rule is that if you expect your income tax bracket to be the same or higher (than it is now) when you withdraw the money, the Roth is probably the better choice. If you expect your income tax bracket to be lower when you withdraw, it is probably better to enjoy the current tax-deduction of a Traditional IRA.
Below are two links you should find helpful:
https://personal.vanguard.com/us/whatwe ... a/whichira
Morningstar IRA Calculator
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Re: ROTH TSP now available in my agency
My effective tax rate has hovered around 2% for years. I definetely think my tax rate will be higher when they force me to retire in 16 years. I also personally believe we will be affected by higher tax rates in the future due to the growing national debt. I rather pay the taxes now than later.
Burnsh |
______________________________________ |
VFIAX 17%, VVIAX 17%, VEXAX 16%, VTIAX 21%, VGSIX 9%, VIPSX 10%, VBMFX 10%
Re: ROTH TSP now available in my agency
You should check your marginal tax rate, not your effective (average) tax rate. It's probably 15%, though, and with your pension and traditional TSP withdrawals, you'll retire in a 15% bracket even under current law (and if you are FERS, more likely 22.5% or 27.75% over most of your retirement because of the phase-in of Social Security taxation).burnsh wrote:My effective tax rate has hovered around 2% for years. I definetely think my tax rate will be higher when they force me to retire in 16 years.
If you are in this situation, you may want to split your contributions between the Roth and traditional TSP to avoid going into the 25% bracket.