I like your analogy! Thanks.
On Fri, Apr 26, 2019 at 5:49 AM da.true.dave@gmail.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:
The problem is much of the consideration is speculation based on what you think will happen in the future.Are taxes lower now and you'll be paying a higher rate later? Go Roth.Is your income (and therefore your tax bracket) lower now and you'll be earning more later? Go Roth.If you're near the end of your career, earning close to the most you'll ever earn, you're likely in the highest tax bracket you'll ever be in, paying your highest tax rate, so go Traditional.The hard part is determining where the line is between low tax rate and high tax rate, lower income and higher income.Personally, I decided to switch my contributions to Roth this year because of the tax reform. I also got a promotion a couple of years ago. So, as I work my way up through the steps of my new pay grade, there will absolutely come a time when it will make sense to switch back to Traditional. Heck, maybe just the new pay grade is the point at which I should've switched to Traditional. I'm no good with crunching numbers, I just understand the logic between when Roth or Traditional has the advantage.I will point out one massive advantage of a Roth IRA that we don't get (I don't think) in the TSP: With a Roth IRA, you can do whatever you want with the principle with zero tax penalty. Since you've already paid income taxes on it, it's perfect to use as an emergency fund as well as a retirement account. Any interest earned has to stay (or rather, is subject to severe tax penalties), but you can pull the principle whenever you want for whatever you want.Because of this, you'll often hear people recommend contributing so that you get full matching funds into TSP, then max out a Roth IRA outside the TSP, then, if you still have money to invest, max out your TSP contributions.
Deborah Flores
Outdoor Recreation Planner
BLM Barstow Field Office
2601 Barstow Rd
Barstow, CA 92311
P 760-252-6041
F 760-252-6099
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Posted by: "Flores, Deborah" <dmflores@blm.gov>
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