This publication shows an example of what ukhamps has shared with us, namely that RMDs are computed by both regular TSP and Roth TSP balances:
TSP Required Minimum Distribution Rules for Retired TSP Participants (myfederalretirement.com)
From: TSPStrategy@groups.io <TSPStrategy@groups.io> On Behalf Of Jim Budinger via groups.io
Sent: Wednesday, February 2, 2022 1:02 PM
To: TSPStrategy@groups.io
Subject: [EXTERNAL] Re: [TSPStrategy] Staying/Leaving TSP Upon Retirement
Good discussion, ukchamps. I retired 3-1/2 years ago as one of the TSP millionaires. But all of that was in the traditional TSP, none in Roth TSP.
You mentioned that TSP includes your Roth balance when factoring RMDs. But since the Roth portion of your TSP account was already taxed, doesn't that help reduce the taxable amount of your RMD that year?
Traditional or Roth, Uncle Sam will take his tax share at some point. You can decide when you THINK your tax rate will be more favorable over your lifetime. But don't forget that Congress can easily impact your best laid tax plans whenever they change the tax code, like they did in 2017!
On Wed, Feb 2, 2022 at 7:27 AM ukchamps29_1999 via groups.io <ukchamps29_1999=yahoo.com@groups.io> wrote:
Probably not going to change your mind much, but TSP includes your roth balance when factoring Required Minimum Distributions. Commercial accounts do not do this, relying solely on your traditional year end balance.
The Fees are lower on the commercial side. Set up a Schwab account is free, and place your holdings in an ETF costs nothing. The expenses on those funds are .03% but you pay nothing, like the TSP they magically are paid and factored into share price. Vanguard, Fidelity, etc all a similar story.
Shop around and make an informed decision, but don't rely on TSP brainwashing that says they have the lowest fees around. They have actually become quite more expensive than commercial offerings over the last 20 years.
Keep in mind, I am not advocating you pay a firm a 1% management fee of your assets, unless you find the management fee is offset by much higher returns. Know there are options out there without management fees tied to them and less fees than TSP.
It would be interesting if one of the chart gurus could plot VTI and SCHB vs C, S and I offerings of the TSP.
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