Today, I saw an advertisement on the side of a bus shelter that said “Move your old TSP or 401k account to [Major investment firm]“. I’m not sure what an “old” TSP account is, but the advertised move is almost guaranteed to move your money into someone else’s pocket. Why is this?
Many people are eligible for the Roth IRA, which is a retirement account that you fund with after-tax money and whose earnings and payouts are entirely tax free. In comparison, the Thrift Savings Plan, a 401k, 403b or a regular IRA are funded with before-tax money, earnings are tax free, but payouts are taxed as income. Which is better?
I was talking to a friend who was eligible to enroll in the Thrift Saving Plan (TSP) which is the federal equivalent to a 401(k) retirement savings plans many companies provide. To my shock, he wasn’t enrolled. When I told him he was leaving free money on the table, it got his attention. So if you are one of the roughly 10% of federal employees that don’t contribute or the additional 20% who don’t contribute at least 5% of your salary, read on.
Planning for retirement is one of the toughest financial tasks anyone can attempt. Nobody has a magic crystal ball that sees 10, 20, 30, or more years in the future. A trusted financial adviser can help for a fee. Fortunately, there are retirement calculators on the web that you can use for free, some very good:
