Why tsp

Breadcrumb Home About News. Page rating loading You must have JavaScript enabled to use this form. It helped me complete my goal s. It had the information I needed. It had accurate information. It was easy to read. Something else.

The federal government's Thrift Savings Plan, also known as the TSP, serves the same function as private k plans, but it also has a number of advantages that k s and other private plans usually don't match.

Let's take a look at five reasons why the TSP might just be the best retirement plan available to U. Plan options in cost between 0. Compared to the hundreds or even thousands of dollars that some k participants pay, the TSP is a huge bargain for cost-conscious retirement savers. The TSP's investment options are simple but comprehensive The Thrift Savings Plan offers two sets of pooled funds, with each fund designated by a letter.

One set includes five funds tied to specific asset classes. The G Fund owns short-term government securities and fills the same role as a money market or short-term bond fund. The F Fund, meanwhile, owns longer-term fixed-income securities, tracking an index that includes not only government bonds but also corporate, mortgage-backed, and foreign government bonds. The I Fund, meanwhile, invests in international stocks in nearly two dozen countries that make up the developed markets of Europe, Asia, and the Far East.

Source: TSP. The L Fund makes up the other set of funds and is analogous to target-retirement mutual funds, allowing you to pick one of five different time frames and having the fund manager gradually change your investment mix to reflect reduced risk as your time horizon gets shorter.

Currently, there are L Fund options for , , , and , as well as a current-income fund for those already taking withdrawals. You can elect either traditional or Roth TSP contributions, either earning upfront tax benefits or getting tax-free treatment when you withdraw funds in retirement.

TSPs also offer flexibility by allowing in-service loans, charging the same loan rate at which the G Fund pays interest. No argument. Yes, sir. It may not be. They can help you evaluate your TSP choices within the context of a holistic, tailored retirement plan. How much will you need to have saved for a comfortable retirement?

Will your TSP fund choices, and your contribution percentage, get you to that goal? He has been helping Chicago-area families with their finances since and is an Investment Adviser Representative. Appearances on Kiplinger.

The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger. Kiplinger was not compensated in any way.

Skip to header Skip to main content Skip to footer. Home retirement retirement planning. When the Thrift Savings Plan was created, there was only one tax treatment option available for your contributions: traditional. But in , the Thrift Savings Plan started accepting Roth contributions as well. With a traditional tax treatment option, your contributions are made with pre-tax dollars taken out of your gross earnings , but you have to pay taxes on your withdrawals in retirement based on your tax bracket at that time.

Roth contributions are made after taxes have been taken out of your paycheck. We always recommend going with a Roth option when you have the chance. The second benefit is an emotional one. And then the nest egg you worked so hard to build is all yours in retirement. Getting a match on your contributions is free money! Keep in mind that the match your agency or service puts in your account will be taxed in retirement, even if you make Roth contributions. You also leave enough margin in your budget to make progress on other financial goals like saving for college and paying off your house.

They can help you open a Roth IRA and choose the funds that best suit your needs. The TSP offers five different individual fund options, each one invested in either short-term U.

Treasury securities or U.