Author Topic: TSP, 401k, and affirming the path to take  (Read 8755 times)

gggeek

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TSP, 401k, and affirming the path to take
« on: May 04, 2015, 06:10:58 AM »
First post; and I am late to the FI game.  We have one child and only I work.  I have a good paying job and am also in the Air Force Reserves.

I currently match 5% in my civilian employer 401k to max the company match (which is in stock that I cash out and reinvest in the 401k).
We currently max out our Roth IRA contributions at $5500 each every year (minus a couple tough medical years with our son).
After that we had been paying 2x our mortgage payment and are within $40k of paying it off, but that meant nothing else was going into retirement.
We do have an emergency fund that is 1 year of expenses.

My main question is should I be looking to take advantage of TSP after having not started it?  I have about 6 years left before I plan to retire (21 years in service).  Is TSP a better idea than funneling money to an account with Vanguard or Betterment?

I honestly kick myself that 15 years ago I didn't listen to the multitude of advisors the military put in front of me in basic training telling me to get started with TSP. 


mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #1 on: May 04, 2015, 06:21:24 AM »
Are you maxing out your company 401k?  If not, is there a reason why you can't/won't?  Seems to me that you should look at doing that prior to looking into Vanguard or something else on your own.

The TSP is great.  I didn't have much in it when I left my civilian job but since then I rolled over a 401k into the TSP.  A few things that I think the TSP does great:  inexpensive index funds with all the diversification you need in just the few funds.  Third, the ability to purchase immediate annuities with excellent pricing.  Few 401k plans last I heard offer this.  I'm not entirely sure if the military version of the TSP is the same as the civilian--be sure to check.

All that being said, if your "version" of the TSP is the same as mine, be sure to open it if you haven't. Even if you can only funnel a little money into it, it might give you good options as a place to park your retirement money going forward.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #2 on: May 04, 2015, 06:31:31 AM »
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Are you maxing out your company 401k?

What defines maxing? I contribute 5% which ensures I get the full 4% employer match.
I am at a point where, yes, I want to contribute more somewhere but I want to figure out where I should start (TSP vs 401k vs Betterment/Vanguard).

I am looking into the TSP further today.

mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #3 on: May 04, 2015, 07:17:57 AM »
Assuming you are under 50 the max you can contribute to your 401k is 18,000 in 2015...

https://401k.fidelity.com/public/content/401k/Home/VPContributionLimits


gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #4 on: May 04, 2015, 07:26:47 AM »
Assuming you are under 50 the max you can contribute to your 401k is 18,000 in 2015...

https://401k.fidelity.com/public/content/401k/Home/VPContributionLimits
Yes, under 50.  Thanks for the info; I honestly had not realized there was an $18k contribution limit to a 401k.  So reading around more on the forums and other FI sites the general consensus seems to be to invest in this order:

1. 401k up to employer match
2. Max Roth IRA
3. Max 401k contribution up $18,000

Follow up questions:
Does TSP and my 401k count against a single bucket of $18k or can I put $18k in each?
How does my employer match figure into that 18,000?  We receive our match via stock at the end of the year (received it in March this year for example).
I only make ~$8k a year in reserve pay so I don't believe I'd be able to max the TSP (barring a deployment obviously).

Thanks!

seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #5 on: May 04, 2015, 07:56:58 AM »
Is your income too high to make deductible contributions to a traditional IRA? If not, I would generally recommend traditional contributions over Roth contributions, especially if you have already built up a fairly sizable balance in your Roth account.

The elective deferral limit of $18k is combined across any TSP, 401(k) and 403(b) plans you may have. (source).

I have heard the TSP has some very nice low-fee funds available, which means you may want to make contributions there instead of the 401(k) after you have earned your maximum 401(k) match for the year. This depends on what funds are available in your 401(k). If you have low-fee index funds there as well (say, ≤0.1% expense ratio), you may just want to contribute only to the 401(k) to keep things simple.

The employer match does not count toward the $18k limit. Instead there is a higher limit of $53k. The total of your contributions plus your employer's contributions can't exceed this number.

tjrssibelle

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Re: TSP, 401k, and affirming the path to take
« Reply #6 on: May 04, 2015, 08:23:49 AM »
You can also contribute to an IRA (Roth or Traditional) for your wife

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #7 on: May 04, 2015, 08:31:46 AM »
Is your income too high to make deductible contributions to a traditional IRA? If not, I would generally recommend traditional contributions over Roth contributions, especially if you have already built up a fairly sizable balance in your Roth account.

Not sure to be honest; making ~$60k (assuming that would be less if I redirected my reserve pay to TSP; about $8k).  I think I could get to $18k between my 401k and TSP plus have the $5500 for a Roth IRA.  My wife rolled over her 401k to an IRA (I think that's a traditional IRA?) before she stopped working (stay at home mom now), but we've been converting that to her Roth IRA (and we're set up to convert the last amount this year).  We max her Roth IRA as well.

You can also contribute to an IRA (Roth or Traditional) for your wife
We currently do, see above.

seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #8 on: May 04, 2015, 08:47:39 AM »
Roth conversions while you're still working are generally a bad idea. You're voluntarily taking on more income at your current marginal tax rate so that when you retire, more of the money you take out will be tax-free. If you have a generous pension coming to you when you retire that may change things a bit. Do you plan for a taxable income higher than $60k when you retire? Remember that Roth withdrawals don't count as income. If not, you should probably wait on the Roth conversions until later.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #9 on: May 04, 2015, 09:06:57 AM »
Roth conversions while you're still working are generally a bad idea. You're voluntarily taking on more income at your current marginal tax rate so that when you retire, more of the money you take out will be tax-free. If you have a generous pension coming to you when you retire that may change things a bit. Do you plan for a taxable income higher than $60k when you retire? Remember that Roth withdrawals don't count as income. If not, you should probably wait on the Roth conversions until later.
This is my wife's IRA and she is no longer working. I will begin collecting my retirement from the AF Reserves at approximately age 55 (barring any changes to the way years get deducted for years served).  I don't plan to have income over $60k when I retire.  Unfortunately we have converted all but $11k which we were looking into converting this year (reasoning being that if I put my reserve pay into TSP then the $11k won't bump us up a tax bracket as we stay under the $74k income).

seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #10 on: May 04, 2015, 09:26:55 AM »
Okay, as long as you're staying within the 15% bracket you're not hurting yourself too badly. Just be aware that as a married couple, your gross taxable income will need to be over $39k before you start paying taxes at the 15% rate ($12,600 standard deduction, two $4,000 personal exemptions, plus $18,450 of 10% tax bracket). If you plan for this to be the case, there's really no difference between converting now and withdrawing later (assuming tax rates stay the same). Otherwise, you're better off waiting. 10% is lower than 15%.

mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #11 on: May 04, 2015, 09:55:40 AM »
which brings you back to determining where to invest now...

what do your 401k choices look like? 

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #12 on: May 04, 2015, 10:56:36 AM »
which brings you back to determining where to invest now...

what do your 401k choices look like?
Not entirely sure on how to tell what my choices are.  We have to invest through Merrill Lynch Benefits Online and currently I am utilizing the automated assistant tool.  It is currently invested in RERGX, BEEMT, BMCT, NSVAX, RRRRX, PYEQX, VINIX, and NTGMT; and shares of my company from the employer match (which I am selling off).  The largest amount is in VINIX, but I don't have exact breakdowns of %.


gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #13 on: May 04, 2015, 11:07:31 AM »
Okay, as long as you're staying within the 15% bracket you're not hurting yourself too badly. Just be aware that as a married couple, your gross taxable income will need to be over $39k before you start paying taxes at the 15% rate ($12,600 standard deduction, two $4,000 personal exemptions, plus $18,450 of 10% tax bracket). If you plan for this to be the case, there's really no difference between converting now and withdrawing later (assuming tax rates stay the same). Otherwise, you're better off waiting. 10% is lower than 15%.
Was over $39k without converting any on the IRA, but not sure if I took advantage during taxes to possibly get taxable income lower.  I know we had the standard deduction, but not sure what the $4k personal exemption is or the $18k number you noted.  Maybe something I can rectify going into next year.

seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #14 on: May 04, 2015, 11:13:16 AM »
Okay, as long as you're staying within the 15% bracket you're not hurting yourself too badly. Just be aware that as a married couple, your gross taxable income will need to be over $39k before you start paying taxes at the 15% rate ($12,600 standard deduction, two $4,000 personal exemptions, plus $18,450 of 10% tax bracket). If you plan for this to be the case, there's really no difference between converting now and withdrawing later (assuming tax rates stay the same). Otherwise, you're better off waiting. 10% is lower than 15%.
Was over $39k without converting any on the IRA, but not sure if I took advantage during taxes to possibly get taxable income lower.  I know we had the standard deduction, but not sure what the $4k personal exemption is or the $18k number you noted.  Maybe something I can rectify going into next year.

The $18,450 number I quoted is the boundary between the 10% tax bracket and the 15% tax bracket. Remember that these tax brackets don't apply to your gross income. Instead they apply to your taxable income, which is your gross income minus deductions (including IRA deductions, standard deduction, exemptions for each family member, etc.). So with a $60k gross salary and a three-person family, your taxable income would be $35,400 after subtracting the $12,600 standard deduction and three exemptions. That leaves you about $17k above the 10% bracket, which means that you would get there if you maxed out your 401(k).

MDM

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Re: TSP, 401k, and affirming the path to take
« Reply #15 on: May 04, 2015, 11:15:56 AM »
not sure what the $4k personal exemption is
See line 42 on http://www.irs.gov/pub/irs-pdf/f1040.pdf

Quote
or the $18k number you noted.
See page 101 in http://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Note the above numbers were for 2014 taxes.  The higher numbers will apply in 2015.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #16 on: May 04, 2015, 11:28:58 AM »
Okay, as long as you're staying within the 15% bracket you're not hurting yourself too badly. Just be aware that as a married couple, your gross taxable income will need to be over $39k before you start paying taxes at the 15% rate ($12,600 standard deduction, two $4,000 personal exemptions, plus $18,450 of 10% tax bracket). If you plan for this to be the case, there's really no difference between converting now and withdrawing later (assuming tax rates stay the same). Otherwise, you're better off waiting. 10% is lower than 15%.
Was over $39k without converting any on the IRA, but not sure if I took advantage during taxes to possibly get taxable income lower.  I know we had the standard deduction, but not sure what the $4k personal exemption is or the $18k number you noted.  Maybe something I can rectify going into next year.

The $18,450 number I quoted is the boundary between the 10% tax bracket and the 15% tax bracket. Remember that these tax brackets don't apply to your gross income. Instead they apply to your taxable income, which is your gross income minus deductions (including IRA deductions, standard deduction, exemptions for each family member, etc.). So with a $60k gross salary and a three-person family, your taxable income would be $35,400 after subtracting the $12,600 standard deduction and three exemptions. That leaves you about $17k above the 10% bracket, which means that you would get there if you maxed out your 401(k).
Amazing, thanks.  I just never looked at it that way.  Will have to actually sit down with the real numbers tonight to see how far off I am.  The response on this post have been just phenomenal; ties together a lot of bits and pieces from the various posts and other threads I have been reading.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #17 on: May 04, 2015, 07:20:31 PM »
which brings you back to determining where to invest now...

what do your 401k choices look like?

Alright got a chance to research it a bit more within my ML Benefits Online and I have a limited set of options in stock/equity, bond, and allocation funds.

I have attached a PDF with the options or alternately here is a Google spreadsheet: https://docs.google.com/spreadsheets/d/1m5RPGmsktZV11ziTAKPIAAe2driHDzzMMxRI-AXtcTo/edit?usp=sharing

The only name I recognize is Vanguard (VINIX in Stock/Equity and Vanguard Target Reitrement 20XX allocation funds).




seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #18 on: May 04, 2015, 07:50:14 PM »
Those are some pretty nice stock funds in your 401(k). VINIX is an S&P 500 fund, meaning only the largest 500 US companies. To approximate a total market fund, buy VINIX and the BlackRock Extended fund in an 80/20 ratio.

The BlackRock MSCI EAFE Equity fund is an international stock index fund. Whatever percentage of your holdings that you want in international stocks can do just great there.

I don't know much about the lowest-cost bond fund in your plan. Its expense ratio is reasonable, but you may want to hold bonds in a Vanguard account to do even better.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #19 on: May 05, 2015, 05:37:16 AM »
Those are some pretty nice stock funds in your 401(k). VINIX is an S&P 500 fund, meaning only the largest 500 US companies. To approximate a total market fund, buy VINIX and the BlackRock Extended fund in an 80/20 ratio.

The BlackRock MSCI EAFE Equity fund is an international stock index fund. Whatever percentage of your holdings that you want in international stocks can do just great there.

I don't know much about the lowest-cost bond fund in your plan. Its expense ratio is reasonable, but you may want to hold bonds in a Vanguard account to do even better.
So just to clarify; the general recommendation is a 90/10 split (90% stocks/equity and 10% bonds).  For your suggestion, that 90% would be divided 80/20 with VINIX/BlackRock Extended Fund (and as comfortable with a % possibly to international funds).  Then the 10% bonds portion into the low ER bond choice or into a Vanguard fund?

Over all, back to my original post, what I am looking at then is putting all of my ~$8k annual income from the reserves into TSP.  Then taking ~$10k and putting it into my 401k to max out my contribution for the year (split as discussed above).  Then from there I'd work to max our two Roth IRA contributions of $5500 x 2.  So I'd be looking at ~$29k being saved for retirement each year which is about 50% of my income (which I think I can get to IF we work on expenses a bit more).  If I had anything left after that I'd have to look at Vanguard directly or something like Betterment.

mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #20 on: May 05, 2015, 05:38:12 AM »
The choices do look pretty good.  If you buy the VINIX and the BlackRock Extended you will have a pretty complete US stock market exposure.  However, you may want to pick up some of the international fund so you have some exposure to non-US markets. 

I couldn't figure out what this is exactly:
NORTHERN TR CL AGG BD IDX TR M 1

It's a bond index fund I believe.  Could you post the symbol for it?

You could of course just keep it simple and pick an allocation fund that best suits your needs and keep pouring your money in there.  Each of the different funds will have different mixes of equity/debt/cash.  The 2050 fund will probably be the one that has the highest exposure to stocks (equity).  The costs are still quite reasonable at less than .2%

mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #21 on: May 05, 2015, 05:43:44 AM »
If you are looking at TSP here are your choices:

https://www.tsp.gov/investmentfunds/fundsoverview/comparisonMatrix.shtml

The "C" fund is an index of medium and large companies. 
The "S" fund is an index of small to medium companies.
The "I" fund is an index of international stocks. 
The "F" fund is an index of quality debt issued by the federal govt and large companies (prob not going to see junk bonds)
The "G" fund is a special fund unique to the TSP.  Consider it a bond/debt.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #22 on: May 05, 2015, 05:46:36 AM »
I couldn't figure out what this is exactly:
NORTHERN TR CL AGG BD IDX TR M 1

It's a bond index fund I believe.  Could you post the symbol for it?

NTGMT is the symbol as listed by Merrill Lynch.  It is under their "Bond/Fixed Income" section with a price of $500.88.

You could of course just keep it simple and pick an allocation fund that best suits your needs and keep pouring your money in there.  Each of the different funds will have different mixes of equity/debt/cash.  The 2050 fund will probably be the one that has the highest exposure to stocks (equity).  The costs are still quite reasonable at less than .2%

I was thinking about that as well last night when I was reading more bout the allocation funds (I didn't realize they were there as a choice until I started looking).


mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #23 on: May 05, 2015, 05:49:12 AM »
And to clarify:

"Then the 10% bonds portion into the low ER bond choice or into a Vanguard fund?"

The Vanguard funds are "complete" allocation funds.  That is, they are not equity only or bond only.  They expose you to many different types of investments.  The purpose of them is to allow people to put their money into something that is appropriate to their age/risk w/o having to choose from a mix.

And, the TSP also offers them, they are called the "L" funds.  Again, different mixes of investments. 


seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #24 on: May 05, 2015, 08:07:12 AM »
Those are some pretty nice stock funds in your 401(k). VINIX is an S&P 500 fund, meaning only the largest 500 US companies. To approximate a total market fund, buy VINIX and the BlackRock Extended fund in an 80/20 ratio.

The BlackRock MSCI EAFE Equity fund is an international stock index fund. Whatever percentage of your holdings that you want in international stocks can do just great there.

I don't know much about the lowest-cost bond fund in your plan. Its expense ratio is reasonable, but you may want to hold bonds in a Vanguard account to do even better.
So just to clarify; the general recommendation is a 90/10 split (90% stocks/equity and 10% bonds).  For your suggestion, that 90% would be divided 80/20 with VINIX/BlackRock Extended Fund (and as comfortable with a % possibly to international funds).  Then the 10% bonds portion into the low ER bond choice or into a Vanguard fund?

Yeah, this is basically right. The stock/bond split is something you'll have to decide for yourself. More stocks means more volatility, but likely more long-term gains. If you're comfortable with some ups and downs and won't panic sell during the next stock market correction, 90/10 should work out fine. If you want to play it a bit safer, use a higher percentage of bonds.

Within the stock market allocation, you'll want to pick a domestic/international split. For reference, Vanguard's target retirement funds do about a 2:1 domestic/international ratio. Then the domestic part can be split 80/20 between the VINIX and the BlackRock Extended to simulate a total market fund.

Or you can just put it all in Vanguard's Target Retirement 2050 (or whatever sufficiently far-off year) fund. You'll get roughly the same asset allocation with less to think about in exchange for about a 0.1% higher expense ratio. Up to you.

Quote
Over all, back to my original post, what I am looking at then is putting all of my ~$8k annual income from the reserves into TSP.

If you're worried about making your investments too complicated, I might recommend going with only the 401(k). That 401(k) has some good low-fee options, the fees in the TSP aren't that much lower, and you won't need to worry about coordinating contribution amounts between two different paychecks to make sure you get very close to the limit without going over.

If you do go with the TSP for part of your annual contribution, that's a signal that you're willing to put in some effort to shave off small fractions of a percentage point from your expense ratios. If that's the case, go all out. Focus on the bond, small-cap stock and international stock parts of your allocation in the TSP.

For S&P 500 funds, VINIX in your 401(k) has a 0.04% expense ratio, while the C fund in the TSP has a 0.028% expense ratio. This is only a 0.012% difference (really somewhere between 0.007% and 0.017% difference because the TSP uses more significant figures than Vanguard). On the other hand, your 0.16% bond index fund in your 401(k) is higher than the F fund's 0.029% expense ratio by 0.131%. Your BlackRock Extended fund has a 0.12% expense ratio, while the equivalent TSP S fund has a 0.029% expense ratio. That's a 0.091% difference. Similarly, the TSP I fund's 0.029% expense ratio is lower than your BlackRock international fund by 0.041%. Start with the highest-difference fund (bonds) in your TSP. Then go with the S fund, then the I fund if you still have more money to invest.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #25 on: May 05, 2015, 09:13:49 AM »
Quote
If you do go with the TSP for part of your annual contribution, that's a signal that you're willing to put in some effort to shave off small fractions of a percentage point from your expense ratios.
Definitely up to min/maxing and shaving for some saving.  However, wouldn't one of the benefits of contributing to the TSP be that it reduces my taxable income as my contributions are pre-tax?  I guess I still need to sit down and look a bit deeper at how it works contributing to both the 401k and TSP to max out my contribution.  I would worry I'd exceed the $18k limit as my Reserves pay can be variable based on per diem/etc. Perfect world the TSP and 401k talk to each other and stop allowing contributions when the max is reached.

seattlecyclone

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Re: TSP, 401k, and affirming the path to take
« Reply #26 on: May 05, 2015, 10:36:48 AM »
Does your 401(k) not allow you to make pre-tax contributions? I've never heard of a Roth-only 401(k). Your "perfect world" where the two employers talk to each other and coordinate to make sure you don't contribute too much is a fantasy. Not going to happen. You'll have to manage your contributions to stay below the limit, or when you do go over the limit you'll have to go through one plan or the other to get a refund of the excess contributions.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #27 on: May 05, 2015, 11:21:31 AM »
Does your 401(k) not allow you to make pre-tax contributions? I've never heard of a Roth-only 401(k). Your "perfect world" where the two employers talk to each other and coordinate to make sure you don't contribute too much is a fantasy. Not going to happen. You'll have to manage your contributions to stay below the limit, or when you do go over the limit you'll have to go through one plan or the other to get a refund of the excess contributions.
My fantasy world also has a different final two minutes to last years NFC championship game.... ha.  Reading up a little about the refund process which seems easy enough (albeit avoided if possible).

Back on topic; yes my 401k has both traditional and roth contributions (I only make standard contributions).  To elaborate; I can only contribute directly to my 401k via a paycheck deduction (I am not aware of a way to contribute outside of that or how to contribute a one time lump sum).  I can up my contribution to max out $18k a year direct from my civilian paycheck.  The only possible issue is since my reserve pay comes in at different points across the entire year I won't have smooth income to account for expenses.  I could "borrow" against a savings account and then refill it when that reserve pay comes in.  My estimated math, with our current expenses and not counting reserve pay, works out... it's just a question of timing and if a bill is due where do I move money from in the short term and how strict am I at paying it back to that source.

This is where just funneling close to 100% of the reserve pay to TSP made sense to me (though I would not be able to get to $18k a year as my reserve pay does not get anywhere near that).  If I could just transfer my reserve pay as it came in into my 401k that'd be best (but as far as I know is not possible).

The more I've read on MMM and elsewhere, I really want to try and keep the money in one pot to get an easier handle on managing it as we've discussed in this thread and over time start shaving away expense ratios.

NICE!

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Re: TSP, 401k, and affirming the path to take
« Reply #28 on: May 05, 2015, 12:28:37 PM »
The TSP is considered the gold-standard of 401k plans. I'm pretty sure your best route is to hit the employer match in your company's 401k and then do the rest of the 18k limit in the TSP.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #29 on: May 05, 2015, 05:59:18 PM »
The TSP is considered the gold-standard of 401k plans. I'm pretty sure your best route is to hit the employer match in your company's 401k and then do the rest of the 18k limit in the TSP.
I don't bring in enough reserves pay to hit $18k in TSP.  Going to think it over and do a bit more reading before making the final call.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #30 on: May 06, 2015, 07:54:02 AM »
So I've done a little prep work before final decision making (and fell out of my chair when I realized my wife's rollover IRA had been sitting as cash and not invested all this time).

I have set my 401k allocations going forward as:

EQUITY/STOCK 
BLACKROCK EXTENDED FD CL K 12%
BLACKROCK MSCI EAFE EQTY FD M 30%
VANGUARD INSTITUTIONAL INDEX 48%

BOND/FIXED INCOME 
NORTHERN TR CL AGG BD IDX TR M 10%

I will take time later to re-allocate current assets in the 401k to get the entire thing to the same allocation.

Secondly I did the math and I come up short about $3k to get to the 10% tax bracket ($21k adjusted income).  This includes max 401k/TSP contribution, all tax credits listed previously in the thread to reduce taxable income.  If anyone has a good checklist for me to go over I'd love to see if I am missing something that can bump me down that last $3k.  (stay at home wife + 1 kid if that info is needed).  One item I saw was the saver's credit, but when I did my taxes this year via H&R Blocks tool it stated I wasn't eligible, though reading the rules my adjusted income was well below the ceiling.

My wife and I are sitting down tonight to define our investment statement/plan going forward and will determine TSP vs 401k and evaluate the results eTrade has garnered our Roth IRAs (which as I look deeper into I'm terrified seeing some of the past fees we've paid and the expense ratios of the managed account).


mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #31 on: May 06, 2015, 09:16:01 AM »
Nice allocation. 

Take a look at this website:

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

You can play around with your situation and figure out your tax liability.  Perhaps you've already done that. 

Don't worry about what you've been paying or what you have already missed out on.  It's done.  Good news is that you are better prepared moving forward and figured it all out before it is time to retire. 

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #32 on: May 06, 2015, 01:36:55 PM »
Nice allocation. 

Take a look at this website:

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

You can play around with your situation and figure out your tax liability.  Perhaps you've already done that. 

Don't worry about what you've been paying or what you have already missed out on.  It's done.  Good news is that you are better prepared moving forward and figured it all out before it is time to retire.
I was using a similar calculator, yes.  Some items always get me tripped up; such as donations which I assumed you just ignored if you claimed the standard deduction.  I also don't have my mortgage information on me (not sure if the mortgage/property taxes play into the deductions... not clear on the calculator or in my Google searches immediately).  Also we may be close to 7.5% of adjusted income in medical expenses.  May miss it slightly here in 2015, but I have a better idea on what to do in 2016.

NICE!

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Re: TSP, 401k, and affirming the path to take
« Reply #33 on: May 06, 2015, 01:41:25 PM »
I don't bring in enough reserves pay to hit $18k in TSP.  Going to think it over and do a bit more reading before making the final call.

18k is the total individual contribution limit across all 401k accounts, so it doesn't matter if you don't make 18k in Reserve pay...you can do the rest in the other 401k.

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #34 on: May 06, 2015, 01:46:59 PM »
I don't bring in enough reserves pay to hit $18k in TSP.  Going to think it over and do a bit more reading before making the final call.

18k is the total individual contribution limit across all 401k accounts, so it doesn't matter if you don't make 18k in Reserve pay...you can do the rest in the other 401k.
Yep, got that educational moment earlier in the thread.  Unfortunately the nature of my reserve pay is making it hard to calculate out deductions from my pay without having to over-manage it.  Considering just going off my 401k at this point to make it easy to get to the max contribution.

MDM

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Re: TSP, 401k, and affirming the path to take
« Reply #35 on: May 06, 2015, 02:20:57 PM »
donations which I assumed you just ignored if you claimed the standard deduction.
That is correct, so I hope you are not now unassuming it....

Quote
I also don't have my mortgage information on me (not sure if the mortgage/property taxes play into the deductions... not clear on the calculator or in my Google searches immediately).
These are similar to charitable donations.  For most people if the total of your itemized deductions is greater than the standard deduction the itemized deductions are useful - otherwise they are irrelevant.

Do you do your taxes by hand, with software, or by paying a preparer?

gggeek

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Re: TSP, 401k, and affirming the path to take
« Reply #36 on: May 06, 2015, 03:13:45 PM »
Do you do your taxes by hand, with software, or by paying a preparer?
Via H&R Blocks software (it is free to military reservists).

MDM

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Re: TSP, 401k, and affirming the path to take
« Reply #37 on: May 06, 2015, 04:04:39 PM »
Via H&R Blocks software (it is free to military reservists).
Software is good for avoiding math errors.

Might be worthwhile for you to look at all the forms for your 2014 return (e.g., 1040, Schedule A, etc.) in enough detail that you understand how all the numbers are calculated.

You might even create a spreadsheet to reproduce the pertinent calculations from 2014.  Then you could use that spreadsheet to predict your 2015 situation.

mikesinWV

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Re: TSP, 401k, and affirming the path to take
« Reply #38 on: May 07, 2015, 05:49:12 AM »
I agree with the spreadsheet recommendation.  It may take a while to setup but I've used the same one for a few years now.