Thrift Savings Plan
The Thrift Savings Plan is a retirement matching plan for
employees of the United States government. It provides
exposure and participation in 5 stock and bond index
funds. The TSP is administered by the The Federal
Retirement Investment Board and each of its index funds in managed
by professional third-party investment managers.
All about the Thrift Savings Plan (TSP)
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Roth IRA quick links
Definition of a Roth IRA - what is a Roth IRA as
defined by the IRS?
Roth IRA rules - review eligibility requirements
Roth IRA contribution limits - reviewing how much
you can contribute
Roth IRA conversions - moving financial
assets into a Roth IRA from traditional IRA accounts
Roth IRA
distributions - withdrawal rules for Roth IRA
accounts to avoid taxation
Self directed Roth IRAs - take control of your
investment decisions
Roth IRA calculator - calculate and plan your
contribution decisions
Roth IRA investments - reviewing the types of
eligible investments
Purchase a Roth IRA - how to open a Roth IRA
account. |
A quick review of the major Roth IRA guidelines and decisions you
will need to make to maximize this powerful tax-free retirement
plan.
Contributions to Roth IRAs
Roth IRAs do not have strict requirements about when you have to
start making withdrawals as do other IRAs. With an IRA, the owner is
required to start making periodic withdrawals at the age of 70 ½
years old or risk forfeiting a portion of their savings to the
government. These withdrawals are then taxed at the retiree’s
current tax rate, generally lower than that from when they were
working. With a Roth IRA, if the funds are not currently needed they
can be left in the account for as long as the owner would like while
they continue to earn interest. When the funds are needed, they can
be withdrawn and often usually free of any taxes.
Deciding on whether a Roth IRA is the best investment choice needs
to take into consideration personal lifestyle and the prospect of
retirement income. If greater tax deductions are needed to offset
higher earnings, then a traditional IRA or 401k plan offers that
type of tax deferral. However, if retirement income is expected to
exceed current income from such sources as inheritances or other
investments from mutual funds, the stock market or the sale of
property, then having a tax-free source of income in retirement may
be advantageous. If it is certain that the funds from a Roth IRA
will not be needed by age 70 ½, and are going to be used primarily
to leave as and inheritance or act as back up income then a Roth IRA
may be the right choice.
If there is the chance the funds from a retirement account may be
needed well before retirement, then a Roth IRA offers more
flexibility with and fewer restrictions than other retirement
accounts. If savings toward a first home are not enough, funds from
a Roth IRA can often be used free of penalty. If large medical bills
unexpectedly arise, then those Roth IRA funds are also more
accessible than monies in other types of retirement accounts. Not
only are they more accessible, but the restrictions will ultimately
save money with fewer penalties and no taxes, since the funds were
taxed prior to investing.
Next: Roth
IRA eligibility rules >>
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