G Fund, pay down mortgage, or IBonds?
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G Fund, pay down mortgage, or IBonds?
I've been deciding what I should do with 10k of tax exempt income. Here's a quick background, and feel free to ask for any more information:
Mortgage: Less than a year into a 30 year fixed at 5.00% interest rate. To be honest, I'm not completely sure of the true after tax rate. It will not be lower than 3.75%, and my guess is it is somewhere around 4.00% or maybe a little higher.
I have sufficient liquid assets and insurance to cover the most likely emergencies, and to prevent less likely emergencies from financially ruining me. Liquidity isn't a major issue, but IBonds would still help to bolster my reserves after being held for a year. My main plan would be to hold the IBonds until maturity, or redeem them for a higher rate in the future.
I max out the 402(g) limit on my 401(k), and I max out the Roth IRA and SDP. (The SDP is a savings account which allows for deployed service members to earn 10% interest annually on amounts up to $10k. Interest stops being earned after three months from returning from the deployment.) After the SDP stops earning interest, I will probably put the balance towards the mortgage principal.
I could choose to split the $10k between these three options, but I'd be interested in knowing which of the three options other bogleheads consider the best.
Mortgage: Less than a year into a 30 year fixed at 5.00% interest rate. To be honest, I'm not completely sure of the true after tax rate. It will not be lower than 3.75%, and my guess is it is somewhere around 4.00% or maybe a little higher.
I have sufficient liquid assets and insurance to cover the most likely emergencies, and to prevent less likely emergencies from financially ruining me. Liquidity isn't a major issue, but IBonds would still help to bolster my reserves after being held for a year. My main plan would be to hold the IBonds until maturity, or redeem them for a higher rate in the future.
I max out the 402(g) limit on my 401(k), and I max out the Roth IRA and SDP. (The SDP is a savings account which allows for deployed service members to earn 10% interest annually on amounts up to $10k. Interest stops being earned after three months from returning from the deployment.) After the SDP stops earning interest, I will probably put the balance towards the mortgage principal.
I could choose to split the $10k between these three options, but I'd be interested in knowing which of the three options other bogleheads consider the best.
Re: G Fund, pay down mortgage, or IBonds?
My two cents:SpecialK22 wrote:I've been deciding what I should do with 10k of tax exempt income. Here's a quick background, and feel free to ask for any more information:
I max out the 402(g) limit on my 401(k), and I max out the Roth IRA and SDP. (The SDP is a savings account which allows for deployed service members to earn 10% interest annually on amounts up to $10k. Interest stops being earned after three months from returning from the deployment.) After the SDP stops earning interest, I will probably put the balance towards the mortgage principal.
I could choose to split the $10k between these three options, but I'd be interested in knowing which of the three options other bogleheads consider the best.
If you are deployed and you can still contribute it tax exempt into TSP, that is what I would suggest for a couple of reasons:
You have enough liquidity, G fund is free money, later down the road you have the potential to convert the tax exempt part to Roth. You also have the option to borrow the money back out of TSP if needed for liquidity.
I would not opt for I bonds. Tax-wise those seem equivalent to tax exempt TSP investment (except for liquidity), yet their real returns are going to be below the historical real return for G fund and you have no option of Roth conversion.
If you don't fully fund your TSP in a given year, then that opportunity is lost.
If you had to, you could put 10K in the TSP and the borrow it back out no additional costs to pay down the mortgage. Then you have not lost that chance to fund TSP for a given amount that evaporates at the end of every year.
So, I think it always better to fully fund TSP each year than to pay down a debt, regardless of the interest rate on the debt.
If you had to, you could put 10K in the TSP and the borrow it back out no additional costs to pay down the mortgage. Then you have not lost that chance to fund TSP for a given amount that evaporates at the end of every year.
So, I think it always better to fully fund TSP each year than to pay down a debt, regardless of the interest rate on the debt.
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Also a G fund fan, but keep in mind tax-exempt TSP contributions are not always a no-brainer. I ran the numbers once and I think it took 30 years to break even with a taxable investment. That changes dramatically IF you do a Roth conversion and get those bucks out of there. Not sure how the TSP is going to treat after-tax money after the Roth TSP starts up next year. Perhaps it'll be lumped in there, which would be awesome. (for you anyway)
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Generally speaking given the same tax rates, isn't deferring taxes as least as good as or better than taxable? Am I missing something? What was the assumptions/scenario for your numbers?EmergDoc wrote:Also a G fund fan, but keep in mind tax-exempt TSP contributions are not always a no-brainer. I ran the numbers once and I think it took 30 years to break even with a taxable investment. That changes dramatically IF you do a Roth conversion and get those bucks out of there. Not sure how the TSP is going to treat after-tax money after the Roth TSP starts up next year. Perhaps it'll be lumped in there, which would be awesome. (for you anyway)
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Thanks for all the replies so far. It seems that paying down the mortgage or buying shares of the G Fund are both almost equally favored. However, only bogleheads favoring the G Fund have posted their reasoning. Any of the pro mortgage pay down voters care to elaborate on their reasoning? Regardless, I appreciate everyone who took the time to vote.
I do fully maximize the 402(g) limits for my Roth 401(k) and contribute the full amount to my Roth IRA. The contributions going into my TSP are tax exempt. Would that happen to change your decision?tadamsmar wrote:If you don't fully fund your TSP in a given year, then that opportunity is lost.
How can this be true? How can tax exempt money put into a taxable bond fund (I'm assuming that the G Fund would be taxable if made available to the investing public) which grows tax deferred need thirty years to break even with tax exempt money put in a taxable bond fund where taxes are not deferred?EmergDoc wrote:
...keep in mind tax-exempt TSP contributions are not always a no-brainer. I ran the numbers once and I think it took 30 years to break even with a taxable investment.
I find this post extremely confusing.SpecialK22 wrote:Thanks for all the replies so far. It seems that paying down the mortgage or buying shares of the G Fund are both almost equally favored. However, only bogleheads favoring the G Fund have posted their reasoning. Any of the pro mortgage pay down voters care to elaborate on their reasoning? Regardless, I appreciate everyone who took the time to vote.
I do fully maximize the 402(g) limits for my Roth 401(k) and contribute the full amount to my Roth IRA. The contributions going into my TSP are tax exempt. Would that happen to change your decision?tadamsmar wrote:If you don't fully fund your TSP in a given year, then that opportunity is lost.
How can this be true? How can tax exempt money put into a taxable bond fund (I'm assuming that the G Fund would be taxable if made available to the investing public) which grows tax deferred need thirty years to break even with tax exempt money put in a taxable bond fund where taxes are not deferred?EmergDoc wrote:
...keep in mind tax-exempt TSP contributions are not always a no-brainer. I ran the numbers once and I think it took 30 years to break even with a taxable investment.
Are you asking some sort of hypothetical question about what if the G Fund was available outside of the TSP like a taxable MM fund?
I was assuming you were talking about the real G Fund and all that that would imply.
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Sorry for the confusion. In effect I am asking a hypothetical question, since the G Fund is not found outside the TSP. I am assuming that if the G Fund was made available to the investing public, it would be a taxable bond fund. Given this hypothetical situation is true, here's my question: Would you prefer tax exempt contributions to go into a taxable account or a tax deferred account? Simplified; is it better to have taxable bonds in a tax deferred account or a taxable account? I always thought tax deferred space was preferred for bonds.tadamsmar wrote:
I find this post extremely confusing.
Are you asking some sort of hypothetical question about what if the G Fund was available outside of the TSP like a taxable MM fund?
I was assuming you were talking about the real G Fund and all that that would imply.
Maybe a more realistic question: Should I invest tax exempt income in the G Fund or invest it in a taxable bond fund at Vanguard?
That is hashed out pretty well in this thread:SpecialK22 wrote:Maybe a more realistic question: Should I invest tax exempt income in the G Fund or invest it in a taxable bond fund at Vanguard?
http://www.bogleheads.org/forum/viewtop ... highlight=
To answer what I think is the root of your question, it is better to hold taxable bonds in tax advantaged accounts (Roth, TSP,etc) rather than hold the same bonds in taxable accounts.SpecialK22 wrote:Sorry for the confusion. In effect I am asking a hypothetical question, since the G Fund is not found outside the TSP. I am assuming that if the G Fund was made available to the investing public, it would be a taxable bond fund. Given this hypothetical situation is true, here's my question: Would you prefer tax exempt contributions to go into a taxable account or a tax deferred account? Simplified; is it better to have taxable bonds in a tax deferred account or a taxable account? I always thought tax deferred space was preferred for bonds.tadamsmar wrote:
I find this post extremely confusing.
Are you asking some sort of hypothetical question about what if the G Fund was available outside of the TSP like a taxable MM fund?
I was assuming you were talking about the real G Fund and all that that would imply.
Maybe a more realistic question: Should I invest tax exempt income in the G Fund or invest it in a taxable bond fund at Vanguard?
While I like the TSP, why would you put tax exempt money into it? That means it will be fully taxable when you withdraw it. Wouldn't it make more sense to put it into a Roth IRA ($5K each for you and your wife). That way, both the money you put in and all the proceeds will always be tax free. If you are not married, put $5K in thr Roth and $5K in I Bonds.
Last edited by NYnative on Fri Apr 30, 2010 2:30 pm, edited 1 time in total.
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I think we need to back this up, since you are taking this train way off course
I am not questioning what the G Fund is and I am aware that in the real world it is only found in the TSP. My initial question does refer to purchasing G Fund shares within my TSP account. Keep in mind that my income is already tax exempt. In essence, I receive no upfront tax break for contributing to the TSP; I do gain tax deferred space, however.
EmergDoc claims this:
I am not questioning what the G Fund is and I am aware that in the real world it is only found in the TSP. My initial question does refer to purchasing G Fund shares within my TSP account. Keep in mind that my income is already tax exempt. In essence, I receive no upfront tax break for contributing to the TSP; I do gain tax deferred space, however.
EmergDoc claims this:
I am asking how it is possible that a bond fund put in tax deferred space takes 30 years to break even with a bond fund placed in taxable space.Also a G fund fan, but keep in mind tax-exempt TSP contributions are not always a no-brainer. I ran the numbers once and I think it took 30 years to break even with a taxable investment. That changes dramatically IF you do a Roth conversion and get those bucks out of there. Not sure how the TSP is going to treat after-tax money after the Roth TSP starts up next year. Perhaps it'll be lumped in there, which would be awesome. (for you anyway).
If you put money in the TSP, then you reduce your AGI by that amount and thereby save on taxes at your marginal rate in that year. It does not matter what the source of the money is.restonham wrote:While I like the TSP, why would you put tax exempt money into it? That means it will be fully taxable when you withdraw it. Wouldn't it make more sense to put it into a Roth IRA ($5K each for you and your wife). That way, both the money you put in and all the proceeds will always be tax free.
If your marginal rate is zero then you save nothing.
What matters in your marginal rate, not whether the money is tax-exempt.
It isn't, as addressed above. I'm guessing EmergDocs analysis and assumptions centered around stocks and perhaps included lower LT cap gains and lower QDI number for stocks, vs deferring and pay ordinary income tax.SpecialK22 wrote:I think we need to back this up, since you are taking this train way off course
I am not questioning what the G Fund is and I am aware that in the real world it is only found in the TSP. My initial question does refer to purchasing G Fund shares within my TSP account. Keep in mind that my income is already tax exempt. In essence, I receive no upfront tax break for contributing to the TSP; I do gain tax deferred space, however.
EmergDoc claims this:
I am asking how it is possible that a bond fund put in tax deferred space takes 30 years to break even with a bond fund placed in taxable space.Also a G fund fan, but keep in mind tax-exempt TSP contributions are not always a no-brainer. I ran the numbers once and I think it took 30 years to break even with a taxable investment. That changes dramatically IF you do a Roth conversion and get those bucks out of there. Not sure how the TSP is going to treat after-tax money after the Roth TSP starts up next year. Perhaps it'll be lumped in there, which would be awesome. (for you anyway).
[quote="tadamsmar"][quote="restonham"]While I like the TSP, why would you put tax exempt money into it? That means it will be fully taxable when you withdraw it. Wouldn't it make more sense to put it into a Roth IRA ($5K each for you and your wife). That way, both the money you put in and all the proceeds will always be tax free.[/quote]
If you put money in the TSP, then you reduce your AGI by that amount and thereby save on taxes at your marginal rate in that year. It does not matter what the source of the money is.
If your marginal rate is zero then you save nothing.
What matters in your marginal rate, not whether the money is tax-exempt.[/quote]
Actually, the only way he can put money into the TSP is to have it deducted from his salary. He can't take other money and put it in the TSP unless it's a qualified rollover. From the OPs comments, I take it that he is already putting plenty into his TSP, though he could put more. What he would have to do is have the money deducted from his salary and then spend or invest the tax free $10K. Which is why I suggested IBonds. When they mature, he will not have to pay tax on the $10K, but only on the interest earned.
If you put money in the TSP, then you reduce your AGI by that amount and thereby save on taxes at your marginal rate in that year. It does not matter what the source of the money is.
If your marginal rate is zero then you save nothing.
What matters in your marginal rate, not whether the money is tax-exempt.[/quote]
Actually, the only way he can put money into the TSP is to have it deducted from his salary. He can't take other money and put it in the TSP unless it's a qualified rollover. From the OPs comments, I take it that he is already putting plenty into his TSP, though he could put more. What he would have to do is have the money deducted from his salary and then spend or invest the tax free $10K. Which is why I suggested IBonds. When they mature, he will not have to pay tax on the $10K, but only on the interest earned.
All tax-exempt income does is possibly lower your marginal tax rate.
When you spend or invest it, it's just like all the other money you spend or invest.
We all get a personal exemption of $3,650 under the IRS rules. This is tax-free income. Are you all actually thinking that you need to avoid putting $3,650 in your tax deferred acccount because of this?
What am I missing here?
When you spend or invest it, it's just like all the other money you spend or invest.
We all get a personal exemption of $3,650 under the IRS rules. This is tax-free income. Are you all actually thinking that you need to avoid putting $3,650 in your tax deferred acccount because of this?
What am I missing here?
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My analysis, back in the day, was using a 15% CG tax rate, a 25 or 28% marginal tax rate at withdrawal and predominantly stock funds. I was surprised too.SpecialK22 wrote:
I am asking how it is possible that a bond fund put in tax deferred space takes 30 years to break even with a bond fund placed in taxable space.
I'm sure the data is different when looking at just bonds in taxable vs the G fund. The OP should run the numbers before making a decision though.
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4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Try it again with 20-23.6% cap gains and ordinary income tax rate + 0-3.6% for dividends. This assumes you don't already have enough stocks in taxable.EmergDoc wrote:My analysis, back in the day, was using a 15% CG tax rate, a 25 or 28% marginal tax rate at withdrawal and predominantly stock funds. I was surprised too.
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I regretted my decision to contribute for a while after that analysis, but now that Roth conversions have come along, it seems like a smart move. I'll convert all that exempt money this fall.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
As above, this is the taxation equivalent to putting tax exempt money into TSP, except not as good, since: you can't do Roth conversions, G fund will probably have higher real yields than I bonds, and you can only do 10K/yr.restonham wrote:Which is why I suggested IBonds. When they mature, he will not have to pay tax on the $10K, but only on the interest earned.
Fabreze,Febreze wrote:The G-Fund is free money. Subsidized by the government to give artificially higher yields. All else equal, it will ALWAYS be better to put money into G-Fund then other cash instruments such as negative bond (mortgage) or i-bonds.
I don't understand what you are saying: Free money - artificial yields. Could you explain that a bit? Thanks
The "Government Securities Investment Fund" or G fund holds non-marketable special obligations issued by the Treasury. The yield is prescribed by statute and the maturity is chosen by the director. Since the yield and maturity are independent, the director chooses one day maturities, but still with a yield of about a ten year Treasury note.bartbill wrote:Fabreze,Febreze wrote:The G-Fund is free money. Subsidized by the government to give artificially higher yields. All else equal, it will ALWAYS be better to put money into G-Fund then other cash instruments such as negative bond (mortgage) or i-bonds.
I don't understand what you are saying: Free money - artificial yields. Could you explain that a bit? Thanks
Code: Select all
Obligations issued for the purpose of this subsection shall have maturities fixed with due regard to the needs of such Fund as determined by the Executive Director, and shall bear interest at a rate equal to the average market yield (computed by the Secretary of the Treasury on the basis of market quotations as of the end of the calendar month next preceding the date of issue of such obligations) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable earlier than 4 years after the end of such calendar month.
Your mortgage loan or other loan could have such a high rate that it would be better to pay it off.Febreze wrote:The G-Fund is free money. Subsidized by the government to give artificially higher yields. All else equal, it will ALWAYS be better to put money into G-Fund then other cash instruments such as negative bond (mortgage) or i-bonds.
If you get 10K in the middle of the year then you can increase the contribution rate to your TSP before the end of the year.restonham wrote:Actually, the only way he can put money into the TSP is to have it deducted from his salary. He can't take other money and put it in the TSP unless it's a qualified rollover. From the OPs comments, I take it that he is already putting plenty into his TSP, though he could put more. What he would have to do is have the money deducted from his salary and then spend or invest the tax free $10K. Which is why I suggested IBonds. When they mature, he will not have to pay tax on the $10K, but only on the interest earned.tadamsmar wrote:If you put money in the TSP, then you reduce your AGI by that amount and thereby save on taxes at your marginal rate in that year. It does not matter what the source of the money is.restonham wrote:While I like the TSP, why would you put tax exempt money into it? That means it will be fully taxable when you withdraw it. Wouldn't it make more sense to put it into a Roth IRA ($5K each for you and your wife). That way, both the money you put in and all the proceeds will always be tax free.
If your marginal rate is zero then you save nothing.
What matters in your marginal rate, not whether the money is tax-exempt.
If you get it late in the year then there is no choice to consider.
Re: G Fund, pay down mortgage, or IBonds?
Is all your government income going to be tax-exempt for the rest of the year? If not, then you should use the tax-exempt $10K for living expenses or taxable investments, and invest a taxable $10K in the G fund later in the year.SpecialK22 wrote:I've been deciding what I should do with 10k of tax exempt income. Here's a quick background, and feel free to ask for any more information:
If you are going to be deployed for the rest of the year, then you will have a lot of tax-exempt income and will probably be in a lower tax bracket this year. This makes paying down the mortgage slightly more attractive, as you save less in taxes from the interest deduction if you drop into the 15% bracket.
If you are in a 25% tax bracket, then the marginal return on paying down the mortgage is 3.75%, independent of your average tax rate. That is, if you pay the $10,000 towards the mortgage, your mortgage balance next year will be $10,500 less, but you will pay $125 more in taxes. (You also need to adjust for state taxes.)Mortgage: Less than a year into a 30 year fixed at 5.00% interest rate. To be honest, I'm not completely sure of the true after tax rate. It will not be lower than 3.75%, and my guess is it is somewhere around 4.00% or maybe a little higher.
That's a long-term investment, as you won't get any benefit from it until the mortgage is paid off. In contrast, the G fund is a short-term investment Therefore, even though the G fund is currently yielding about 3%, the risk differential is worthwhile; if interest rates rise to 5%, you can earn 5% on the G fund and keep your mortgage.
However, if you put tax-exempt money into the G fund, you lose much of that benefit to taxes, probably about 1% a year. If you put $10K of tax-exempt money in the G fund and withdraw $30K twenty years later, you will pay taxes on the $20K gain, which leaves you with $25K in a 25% tax bracket. That reduces the return from 5.6% to 4.6%; you can work out similar numbers for other time horizons and rates of return. In contrast, if you put taxable money into the G fund, you can put $13,333 into the fund by paying $10K out of pocket; if the fund triples in value, you will have $40K, which is $30K after taxes, so you gained the full return.
Thanks much Fabreze.tarnation wrote:The "Government Securities Investment Fund" or G fund holds non-marketable special obligations issued by the Treasury. The yield is prescribed by statute and the maturity is chosen by the director. Since the yield and maturity are independent, the director chooses one day maturities, but still with a yield of about a ten year Treasury note.bartbill wrote:Fabreze,Febreze wrote:The G-Fund is free money. Subsidized by the government to give artificially higher yields. All else equal, it will ALWAYS be better to put money into G-Fund then other cash instruments such as negative bond (mortgage) or i-bonds.
I don't understand what you are saying: Free money - artificial yields. Could you explain that a bit? Thanks
Code: Select all
Obligations issued for the purpose of this subsection shall have maturities fixed with due regard to the needs of such Fund as determined by the Executive Director, and shall bear interest at a rate equal to the average market yield (computed by the Secretary of the Treasury on the basis of market quotations as of the end of the calendar month next preceding the date of issue of such obligations) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable earlier than 4 years after the end of such calendar month.
Gosh this is a good site. Wish I'd found it earlier. I struggle to keep up with all that is said and all that is implied in the comments.
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Re: G Fund, pay down mortgage, or IBonds?
No, I am only deployed for a few months. I'm also a guardsman, so the amount of military taxable income I have left to earn once returning from the deployment is relatively paltry (probably a couple thousand). My primary employer savings vehicle is my Roth 401(k) at my civilian job. I put 25% of my after tax dollars into it throughout the year, so I max out the 402(g) limit of 16,500 within that plan.grabiner wrote:
Is all your government income going to be tax-exempt for the rest of the year? If not, then you should use the tax-exempt $10K for living expenses or taxable investments, and invest a taxable $10K in the G fund later in the year.
What I am essentially looking to do with this $10k is to beef up my bond allocation through actually purchasing bonds or paying down the negative bond mortgage. I was thinking either money put into the TSP or IBonds would be a good choice due to tax deferral, if I took the bond route. I would figure tax exempt money put into a bond fund in a tax deferred status would still be better than tax exempt money put into a taxable bond account.grabiner wrote: However, if you put tax-exempt money into the G fund, you lose much of that benefit to taxes, probably about 1% a year. If you put $10K of tax-exempt money in the G fund and withdraw $30K twenty years later, you will pay taxes on the $20K gain, which leaves you with $25K in a 25% tax bracket. That reduces the return from 5.6% to 4.6%; you can work out similar numbers for other time horizons and rates of return. In contrast, if you put taxable money into the G fund, you can put $13,333 into the fund by paying $10K out of pocket; if the fund triples in value, you will have $40K, which is $30K after taxes, so you gained the full return.
Something else I could do would be to change my allocation within the Roth 401(k), and purchase a greater number of bond shares. Currently, I just use a broad market bond index for bond money within my 401(k); however, my employer recently added a couple of new bond funds. Of note is a TIPS fund. I could invest this tax exempt $10k in something like TSM within a taxable account, and then change my future contributions to 100% TIPS for my Roth 401(k) for most of the rest of the year. Effectively, this would allow me to purchase $10k worth of a TIPS fund in Roth space.
Hopefully my thoughts didn't get too jumbled up, and thanks for your insight.
Re: G Fund, pay down mortgage, or IBonds?
IMO, you should be using G fund for all your fixed income part of your allocation. The only exception I might make is perhaps for long term individual TIPS and then only if real rates are very high.SpecialK22 wrote:No, I am only deployed for a few months. I'm also a guardsman, so the amount of military taxable income I have left to earn once returning from the deployment is relatively paltry (probably a couple thousand). My primary employer savings vehicle is my Roth 401(k) at my civilian job. I put 25% of my after tax dollars into it throughout the year, so I max out the 402(g) limit of 16,500 within that plan.grabiner wrote:
Is all your government income going to be tax-exempt for the rest of the year? If not, then you should use the tax-exempt $10K for living expenses or taxable investments, and invest a taxable $10K in the G fund later in the year.
What I am essentially looking to do with this $10k is to beef up my bond allocation through actually purchasing bonds or paying down the negative bond mortgage. I was thinking either money put into the TSP or IBonds would be a good choice due to tax deferral, if I took the bond route. I would figure tax exempt money put into a bond fund in a tax deferred status would still be better than tax exempt money put into a taxable bond account.grabiner wrote: However, if you put tax-exempt money into the G fund, you lose much of that benefit to taxes, probably about 1% a year. If you put $10K of tax-exempt money in the G fund and withdraw $30K twenty years later, you will pay taxes on the $20K gain, which leaves you with $25K in a 25% tax bracket. That reduces the return from 5.6% to 4.6%; you can work out similar numbers for other time horizons and rates of return. In contrast, if you put taxable money into the G fund, you can put $13,333 into the fund by paying $10K out of pocket; if the fund triples in value, you will have $40K, which is $30K after taxes, so you gained the full return.
Something else I could do would be to change my allocation within the Roth 401(k), and purchase a greater number of bond shares. Currently, I just use a broad market bond index for bond money within my 401(k); however, my employer recently added a couple of new bond funds. Of note is a TIPS fund. I could invest this tax exempt $10k in something like TSM within a taxable account, and then change my future contributions to 100% TIPS for my Roth 401(k) for most of the rest of the year. Effectively, this would allow me to purchase $10k worth of a TIPS fund in Roth space.
Hopefully my thoughts didn't get too jumbled up, and thanks for your insight.