AI Legalese Decoder: Simplifying Financial Planning Decisions for TSP, Roth IRA, and Brokerage Accounts
- May 10, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Maximizing Investments and Understanding Tax Situations
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Additionally, it is crucial to consider the tax implications of different investment vehicles, such as a Roth TSP or Roth IRA. While Roth accounts offer the benefit of tax-free withdrawals in retirement, there may be specific rules and regulations that you need to be aware of. Using the AI Legalese Decoder can help you navigate these complexities and make more informed decisions about your investments and retirement planning.
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No, you should only put as much as you need for the match on the TSP, then max out your IRA. Then finish out maxing your TSP. Anything else can go to your brokerage.
Are you getting a TSP match? Or are you high 3?
It doesn’t really matter after you earn your 5% match in the TSP BRS. Money is fungible.
I used to do max TSP then max Roth IRA. The Roth IRA is more flexible on withdrawals so there’s an argument to be made there, but if you never touch the money until age 59.5, then it’s all penalty free.
Roth IRA and Roth TSP accounts you already paid the tax on, so tax free withdrawals after age 59.5.
So most people seem to be assuming this, but I’ll say this to ensure you’re tracking: maxing out retirement savings is great, BUT ensure you’re free of any debt with an interest rate higher than say 8%. Basically any loan other than a mortgage and maybe a super awesome car loan. Potentially low interest subsidized student loans as well. Also, at some point saving money to live is taking away your actual life experiences. Don’t be afraid to actually enjoy life and create amazing experiences even if it means you aren’t “maxing” your savings. Most people don’t save nearly enough, but chances are most people on this thread are saving too much. Read “Die with Zero.”
My recommendation is to set Roth TSP to contribute [15% of RMC](https://militarypay.defense.gov/calculators/rmc-calculator/). This is going to be over 20% of base pay.
Buy C.
Contribute whatever else you don’t spend to Roth IRA. Once you can max your Roth IRA, increase TSP contributions.
6% to TSP isn’t nearly enough. No one’s giving 60 year old you free room, food, and healthcare.
I’d match the max that the military will allow (which is 5% I believe) then put the rest in a Roth IRA. The beauty of a Roth IRA is you can withdraw your contributions without any penalty. So your money grows tax free, and if you need the cash for whatever reason, you can pull out whatever you put in, just not any gains. After that, then start messing around with taxable brokerage accounts. Also, I recommend 100% C fund for the TSP.
All correct. Earnings are tax free after 59.5 years old.
In order: 7.5% TSP -> max Roth IRA -> max TSP -> taxable accounts
With the Roth IRA, you can access the principal contributions without penalty since tax was already paid. Useful if you need access before 59.5 years of age (of course you loose that tax advantaged/ deferred space with the IRA as an opportunity cost).