Which is Better? A Roth IRA or Roth TSP?

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Which is Better? A Roth IRA or Roth TSP?

By Carol Schmidlin

Both are tax free, however there are some differences.

How much can you put in a Roth IRA? In 2024 you can contribute $7,000 and if you are turning 50 in 2024 you can contribute $8,000. However, a Roth IRA has phase out limits based on your modified adjusted gross income (MAGI). If you are married filing jointly, they are $230,000 – $240,000. If filing single the phase out limits are $146,000 – $161,000.

You can convert $23,000 and if you are turning 50m in 2024 you can contribute a total of $30,500.

If your income is over the limit to contribute to a Roth IRA, you may be eligible for a Back-door Roth IRA. Anyone that has earned income can contribute to an IRA, then convert it to a Roth IRA. The caveat is if you have an IRA already, the new contribution will be prorated, and you will have to pay taxes. However, you can roll your IRA into TSP, then make your contribution to a traditional IRA and convert to a Roth IRA.

Here is an example of prorating:

Natalie has an IRA of $5,000 in after tax contributions.  She earns too much to contribute to a Roth IRA, so she decides she will do a Backdoor Roth IRA. Her non-Roth IRA balance is $80,000. That means 6.25% of her contributions are not taxable ($5,000 non-deductible amount/$80,000 (total non-Roth IRA balance). Follow link to read Carol’s full article. https://fedsavvy.com/wp-content/uploads/2024/04/What-is-Better-a-Roth-RSP-or-a-Roth-IRA-Revised.pdf

Survey Finds Not All Agencies Comply with Personal Assistance Services Requirements

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Survey Finds Not All Agencies Comply with Personal Assistance Services Requirements

A survey by the EEOC has found that a tenth of federal agencies are not in compliance with requirements to provide personal assistance services to employees who qualify for such services under the Rehabilitation Act. Follow link to find out more. https://bit.ly/4as8Ein

 

OPM: Workforce of the Future Initiative

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OPM: Workforce of the Future Initiative 

As our world changes, so do the jobs, skills, and technology federal agencies need to achieve their missions and serve the public.

OPM’s Federal Workforce of the Future initiative lays the foundation for the Federal government to be recognized as a model employer that empowers our workforce to solve our nation’s toughest challenges. OPM strives to be a key strategic partner to agencies, adopting new or modifying existing policies, bringing a government-wide perspective, working with employers inside and outside of government, identifying and elevating best practices, and providing technical and operational support to drive mission delivery now and in the future.

The Workforce of the Future Playbook supports a federal workforce that is inclusive, agile, and engaged, and equipped with the right skills to deliver for the American people. The Playbook provides concrete actions that agencies can take to build and equip the workforce of the future, incorporating new strategies and sharing best practices across government. See our latest trainings.

              

 

Federal Retirees Especially Have To Pay Attention To Their Debt Profiles

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Federal Retirees Especially Have To Pay Attention To Their Debt Profiles

Not all debt is evil if you manage it correctly. Retired federal manager Abe Grungold of AG Financial Services offers advice.

What’s the old saying? Never a lender nor debtor be? For most of us, no problem not being a lender. But for buying a house or a car — that entails taking on debt for the average working stiff. Not all debt is evil if you manage it correctly. Retired federal manager Abe Grungold of AG Financial Services joined the Federal Drive with Tom Temin with some advice. Follow link to read more. https://bit.ly/4ajr6tt

 

Election Years and The TSP

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Election Years and The TSP

Investing during election years is an exercise in not letting your emotions drive your decisions, says one financial advisor.

Election years can be many things. Optimistically, they’re an exciting opportunity to participate in our country’s democratic process and select new leaders. On the other end of the spectrum, they can be a time of heightened divisiveness and fear. Follow link to read more. https://bit.ly/3VjP3g8