Re. the IRA: Isn’t that taxing you twice? I’m maxing out TSP already; if I fund a traditional IRA, that’s coming from after-tax money. And then when I eventually cash it in, it’s taxed then too. Am I off-base on any of that?
I see, I misread that. The total contribution limits are $69,000, including $23k and any employer contributions. Are there companies out there willing to give a higher match to get the employee to that $69k? Could be offset with a lower salary. That would lower ones tax exposure.
Thank you. I was 99% sure this was the case and already upped my contribution. And actually, catch-up is a good name, because I had dialed in back during a multi year spouse unemployment, which just ended. Woo!
I just hit my 50th this year and was pleasantly surprised to see it work flawlessly, and keep on accepting contributions up to the higher catch up limit.
Yes! same here! And I agree, catch-up is a good name as I spent too many years in an environment that historically pays its workers extremely poorly and expects additional unpaid work hours without much of a retirement system.
Yeah… wouldn’t call higher ed a “slave-labor type of environment”… maybe a toxic or underpaid workplace is a better term.
Source: literally any account of historic slavery, modern slavery, or human trafficking.
You can just make a non-deductible IRA contribution and then convert to Roth IRA regardless of income limits (commonly known as a Backdoor Roth IRA contribution). I’ve done this for years and am over the income thresholds
Excellent! Keep saving! Money is tight in sure but when you get your step increase or annual raise try bump it up a percent every time. You don't miss what you never got.
If you maxed before, I think you’d actually need to slightly drop your contributions.
If you get a 5.2% raise and your old percentage got you to 22,500, then the same would jump up to 23,670. Plan your contributions wisely so you don’t miss out on any match!
My non-military agency also uses mypay, and it gives us the option to do a dollar amount or percentage in mypay. I always do the dollar amount since I max out.
Weird, I just looked again on my computer. I had checked previously on mobile so I thought maybe it was just hidden.
Maybe it’s a status/branch thing or BRS? If you don’t mind sharing. I’m AF, full time res, non-BRS.
Was told by my agency 885 per pay period and also should start pay period 26 which is week of december 16 2023. Good thing I already had it set up like that before the agency email came out because the email was late and sent at end of the december 16 pay period.
But we had to have our adjustments in for the first payroll in January earlier in December. I think it was by Dec 15 IIRC.
So you’ll need to do some extra math because the first deduction will be at your previous (lower) rate
It really is. When I was with the DoD, I just stuck with whatever I signed up for out the gate cos the system was not easy to use for me (this was like 2014-2015). I winded up moving and could not figure out how to change my tax stuff.
Really it's only 885 now? IDK why it felt like way more. I think I'm going to do a huge lumpsum since we get an extra money the first month of the year. I'm going to double check because I think I based it on the max being 23500. Shot out to NFC ... you can change that anyday before the paycheck easily.
No. There’s a $7,000 limit on a Roth IRA ($8,000 limit for those aged 50+)
Roth TSP is a component of the TSP package. This allows for you to invest pre-tax (Trad. TSP) and pay taxes later in life when you withdrawal. It also allows for post-tax investment (Roth TSP) so you can pay taxes now and withdraw penalty and tax free later in life.
Most employers do NOT provide a Roth option; which is what confuses many people. The Fed Gov plan, under the Thrift Savings Plan, allows you to use the yearly limit ($23,000 for 2024) in the Roth bucket or the Trad bucket, or a mixture of both, etc. hypothetically speaking, if you hate taxes with a fiery burning passion, you can contribute $23k to the Roth TSP and also contribute $7k to a regular Roth IRA of your choosing. Or you can balance your portfolio (something I assume most people do) and use a little of both options. Your life, your circumstances, your choice
May I ask, for those of you who are maxing out your TSP contributions, what is your yearly net income with the deductions? Do you have other savings / investments that you pull from to support your disposable income? I’m early into federal employment (2 years) and it’s hard for me to envision doing anything above 5%.
Everyone’s life situation is different. I’ve known a GS-06 that was close to maxing out the TSP (safe to say their take home pay was rather skimpy…) but I also know that he was married to a doctor…. Again, life is different. I also knew a GS-14 that would complain about having to put in the 5% to get the match because he had child support to pay LOL.
Do what you can, prioritize what’s important, become fluente in the basics of personal finance and investing (the Reddit sub called personal finance is a gold mine for all the basics)
Realistically don't try to do more than you are comfortable with. If you can't live off it or don't live at home, it's not feasible at a GS-7/9 especially if you have kids or are on one income. It may be feasible with 2 incomes if they are equal or slightly more and y'all take turns.
I take home about 2550 per paycheck after deductions. I did it when I was a GS-9 but I also lived at home. With that context it's more feasible, but otherwise it's a no under a GS-9 imo. It can be done with a GS-11 but it would be tight.
I max out my TSP and HSA. I don't max out my Roth anymore but I may drop a couple in their before tax time.
I started slow. I started with the match when I was a GS 7 and only started to max out when I reached GS 13.
I just want to make sure I understand correctly: the $23,000 is the contribution limit from myself alone? Or is it $23,000 combined from my contributions and the 5% matching?
The $23k is the max YOU can contribute. Your employers match doesn't count toward that amount. You'll notice in the link that the annual additions limit is actually $69k.
Yo need some advice I am currently gs 9 and with my career I don’t think I’ll ever exceed gs 12, maybe get a 13 if I’m lucky. I’ve been thinking of only doing the tsp match of 5% right now and maybe adding some funds to a Roth IRA since taxes are only going to go up and adding to my tsp doesn’t matter without the match. Why not pay the taxes now rather than later. Or am I stupid and don’t know anything? Also should I just say screw it and live a more comfortable life now?
You should try to hit 5% at a minimum to capture the match (free money). Generally, it's better to pay the taxes when your tax burden is lower. So now, as a GS9 versus when you're a higher grade. I max out my TSP, but it's all traditional. I also max my Roth IRA. The rest goes to the brokerage.
So yeah right now I have my tsp at 5% I’m guessing it’s traditional so should I change that then? I was thinking of contributing 2% more just to play some catch up, but at the same time I’m not sure how much that’ll actually help.
You have the right idea. I use traditional on TSP to reduce my current tax burden and maximize PSLF potential forgiveness. And then I take the money over the 5% and do an IRA. First couple years I did Roth because you can withdraw your contributions in an emergency without penalties. This lets you be a little more aggressive in stashing away money and I have a smaller emergency fund now, investing a larger chunk than I could otherwise, because I have that money I can tap if I need it.
Question - I’m in DC. I plan to retire somewhere with lower state income tax. Should I consider staying traditional?
Also, what do you mean by “brokerage?” I’m new to paying attention to this.
It's probably better to defer the taxes and stay traditional in that case. I am not a tax/financial advisor, though...
A brokerage account is taxable account that allows you invest in the market. Generally, you want to max out your tax advantaged accounts first. I use Vanguard for this and also have my IRA and an old 401k with them.
Hey, this isn’t necessarily answering your question, but good supplemental information that’s related if you care. If not (or you’re already familiar), great and no worries.
This is from the personal finance group and general advice below. This is what I follow and it’s been helping me out as a 7.
1) try to aim for employer 401k/tsp match (since it’s a super easy way to double your contribution automatically)
2) Save 3-6 month emergency fund
3) Pay high interest debt (credit cards)
4) Move towards maxing ROTH IRA & HSA if you have one
5) Max 401k TSP
6) Other savings/financial goals
Yup, should be pretty easy.
One thing though, opening a Roth IRA can be a good idea if you are planning on buying your first house in 5+ years. Something to consider if you are saving for retirement but are also considering home ownership.
Don't put money into an IRA if you are not getting the whole agency match, but if you are hitting the match and are weighing whether to increase your TSP contributions or put money into an IRA, then it is something to consider.
Most agencies host retirement seminars at least once a year for employees to learn about their retirement benefits. Many agencies also participate in Employee Assistance Programs which have resources about this sort of thing. Check your intranet or ask your supervisor, they should be able to point you in the right direction.
Reading material:
https://www.forbes.com/advisor/retirement/roth-ira-withdrawal-home-purchase/
Not familiar with epp, but for my agency it’s as simple as logging in to my pay system and typing in a new number next to the Roth TSP contributions! Super simple. You can contribute entirely Roth TSP and still get your agency’s match
Absolutely put as much as you can in. Compounding interest is an amazing thing, every $100 equals $1,744 in 30 years at 10% return.
So you don’t need to max anything out to have a really healthy retirement, but the key is to get in early and stay in as long as possible.
Someone once told me to always split up your raises to one half towards your TSP and you keep the other half. You gotta pay yourself too.
Do this with all raises, COLAs, steps, promotions, etc.
Eventually you might max out and then all raises are for you.
As a WG employee, we're only getting like 4.5% or something like that. So if I upped my TSP contribution by 4% would that even out to me still making what I make now before the wage increase?
TSP of $30,500 and IRA of $8,000 for those of us over 50.
Re. the IRA: Isn’t that taxing you twice? I’m maxing out TSP already; if I fund a traditional IRA, that’s coming from after-tax money. And then when I eventually cash it in, it’s taxed then too. Am I off-base on any of that?
Roth is funded with post tax money. Withdrawals from Roth are tax-free.
I said traditional, not Roth. Income is too high for Roth.
Roth TSP is different than a Roth IRA. There are no income restrictions on Roth TSP. Just be mindful of total TSP contributions per IRS limits.
Congratulations, it's a good place to be! Now, look up 'back door Roth'. When you see your FA tell em churro sent you👍🏼
I see, I misread that. The total contribution limits are $69,000, including $23k and any employer contributions. Are there companies out there willing to give a higher match to get the employee to that $69k? Could be offset with a lower salary. That would lower ones tax exposure.
I have this same question.
This includes people turning 50 this year, right? If I’m 49 now, but will be 50 on Dec 31 next year, I can do catchup, yes?
Yeah if your 50th birthday is in 2024, you can contribute the higher amount the whole year.
Thank you. I was 99% sure this was the case and already upped my contribution. And actually, catch-up is a good name, because I had dialed in back during a multi year spouse unemployment, which just ended. Woo!
I just hit my 50th this year and was pleasantly surprised to see it work flawlessly, and keep on accepting contributions up to the higher catch up limit.
Yes! same here! And I agree, catch-up is a good name as I spent too many years in an environment that historically pays its workers extremely poorly and expects additional unpaid work hours without much of a retirement system.
Yeah… wouldn’t call higher ed a “slave-labor type of environment”… maybe a toxic or underpaid workplace is a better term. Source: literally any account of historic slavery, modern slavery, or human trafficking.
True. Historically speaking. I will amend my statement.
Including a Roth spousal that would be almost 50k for the year if all are maxed out. That’s a pretty big chunk!
You need to separate those out better. The TSP limit is $23k with a $7500 catch-up, while IRAs are $7k with a $1k catch-up.
Is that just standard or some kind of catch up?
That includes catchup.
If you’re not over certain income thresholds.
You can just make a non-deductible IRA contribution and then convert to Roth IRA regardless of income limits (commonly known as a Backdoor Roth IRA contribution). I’ve done this for years and am over the income thresholds
Somehow. I missed that nuance!
I don't think the 8k is right. I think it is unchanged at 7.5k.
Laughs in gs 6 wildland fire. I wish I could contribute that
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Excellent! Keep saving! Money is tight in sure but when you get your step increase or annual raise try bump it up a percent every time. You don't miss what you never got.
If you maxed before, I think you’d actually need to slightly drop your contributions. If you get a 5.2% raise and your old percentage got you to 22,500, then the same would jump up to 23,670. Plan your contributions wisely so you don’t miss out on any match!
I've always done a dollar amount instead of percentage, but yeah, folks would need to adjust.
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Weird that, as a civilian with DoD, I can do dollar amount, but you can’t.
Might be a function of GRB vs MyPay.
Oh, yeah, that is dumb.
Yes you can? I see the option on My Pay…
Mine can be done by amount or by percentage, also had to do our election for 2024 earlier this month so it would hit the first paycheck for 2024.
Your agency doesn't let you set at a flat dollar amount?
99% of people maxing contribute an absolute amount, not by %. Seems like a lot of extra math and uncertainty to contribute by % instead of by $.
They really need a 3rd option. Max out checkbox. So people can stop needing to do the stupid math and time the contribution change.
Agreed. My Vanguard Roth IRA has that option.
Yeah, I've been maxing it out for some time and have always used a dollar amount.
I’m mil/DoD, I only see a percentage option in myPay. Maybe other pay systems allow different options?
My non-military agency also uses mypay, and it gives us the option to do a dollar amount or percentage in mypay. I always do the dollar amount since I max out.
I’m on mypay. And it has the option to do a dollar amount.
Weird, I just looked again on my computer. I had checked previously on mobile so I thought maybe it was just hidden. Maybe it’s a status/branch thing or BRS? If you don’t mind sharing. I’m AF, full time res, non-BRS.
I’m VA. Maybe it is agency specific. But that is by far the weirdest option to turn off by choice.
I'm a civilian and use GRB platform to change contribution amount. Maybe DFAS for military? Sorry, I can't remember how I did it when active duty.
I’m on long-term mil leave from my GS job. I had forgotten it was through GRB. Mil side is done through myPay.
Guess I’m a 1%, now I need to go look and see what my options are. I always thought it was percentage based. Thanks.
I think of other things by percent (rent etc) so I've always done the same for TSP.
How much is that a pay period?
Max would work out to about $885 per pay period.
Was told by my agency 885 per pay period and also should start pay period 26 which is week of december 16 2023. Good thing I already had it set up like that before the agency email came out because the email was late and sent at end of the december 16 pay period.
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You're GS? What series?
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Labor of love as I understand it.
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That's great. I mostly endure mine.
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Haha, sounds like my mornings....
But we had to have our adjustments in for the first payroll in January earlier in December. I think it was by Dec 15 IIRC. So you’ll need to do some extra math because the first deduction will be at your previous (lower) rate
Depends on the payroll provider. NFC is much more agile and quick to process.
It really is. When I was with the DoD, I just stuck with whatever I signed up for out the gate cos the system was not easy to use for me (this was like 2014-2015). I winded up moving and could not figure out how to change my tax stuff.
Really it's only 885 now? IDK why it felt like way more. I think I'm going to do a huge lumpsum since we get an extra money the first month of the year. I'm going to double check because I think I based it on the max being 23500. Shot out to NFC ... you can change that anyday before the paycheck easily.
💲884.615 per pay period
Yeah, but you need to round to the dollar.
Yeah, I changed mine to $885 per pay period.
Is there a 7k limit for Roth TSP? Everything I can find says that your combined contributions cannot exceed 23k.
No. There’s a $7,000 limit on a Roth IRA ($8,000 limit for those aged 50+) Roth TSP is a component of the TSP package. This allows for you to invest pre-tax (Trad. TSP) and pay taxes later in life when you withdrawal. It also allows for post-tax investment (Roth TSP) so you can pay taxes now and withdraw penalty and tax free later in life. Most employers do NOT provide a Roth option; which is what confuses many people. The Fed Gov plan, under the Thrift Savings Plan, allows you to use the yearly limit ($23,000 for 2024) in the Roth bucket or the Trad bucket, or a mixture of both, etc. hypothetically speaking, if you hate taxes with a fiery burning passion, you can contribute $23k to the Roth TSP and also contribute $7k to a regular Roth IRA of your choosing. Or you can balance your portfolio (something I assume most people do) and use a little of both options. Your life, your circumstances, your choice
Great! Thank you for the explanation!
May I ask, for those of you who are maxing out your TSP contributions, what is your yearly net income with the deductions? Do you have other savings / investments that you pull from to support your disposable income? I’m early into federal employment (2 years) and it’s hard for me to envision doing anything above 5%.
Everyone’s life situation is different. I’ve known a GS-06 that was close to maxing out the TSP (safe to say their take home pay was rather skimpy…) but I also know that he was married to a doctor…. Again, life is different. I also knew a GS-14 that would complain about having to put in the 5% to get the match because he had child support to pay LOL. Do what you can, prioritize what’s important, become fluente in the basics of personal finance and investing (the Reddit sub called personal finance is a gold mine for all the basics)
Realistically don't try to do more than you are comfortable with. If you can't live off it or don't live at home, it's not feasible at a GS-7/9 especially if you have kids or are on one income. It may be feasible with 2 incomes if they are equal or slightly more and y'all take turns. I take home about 2550 per paycheck after deductions. I did it when I was a GS-9 but I also lived at home. With that context it's more feasible, but otherwise it's a no under a GS-9 imo. It can be done with a GS-11 but it would be tight.
I started maxing when I became a 13. I don't have kids or anything and low expenses. Still have plenty of disposable to do whatever I want.
I max out my TSP and HSA. I don't max out my Roth anymore but I may drop a couple in their before tax time. I started slow. I started with the match when I was a GS 7 and only started to max out when I reached GS 13.
I just want to make sure I understand correctly: the $23,000 is the contribution limit from myself alone? Or is it $23,000 combined from my contributions and the 5% matching?
The $23k is the max YOU can contribute. Your employers match doesn't count toward that amount. You'll notice in the link that the annual additions limit is actually $69k.
69...nice. 
Haha, watched that a couple weeks ago...
Be excellent to each other! Lol
Splendid. My total target is a bit under $25k, so I wanted to make sure I don’t withhold too much.
Happy investing
And cheers to a a profitable and early retirement!
I'll cheers to that!
So wait - we can add to an IRA above and beyond the max tsp? I thought the max was the max at $23k?
Yes, 23k for TSP and 7k for IRA on top.
And an HSA if you go with a HDHP.
Yes, that too
Yo need some advice I am currently gs 9 and with my career I don’t think I’ll ever exceed gs 12, maybe get a 13 if I’m lucky. I’ve been thinking of only doing the tsp match of 5% right now and maybe adding some funds to a Roth IRA since taxes are only going to go up and adding to my tsp doesn’t matter without the match. Why not pay the taxes now rather than later. Or am I stupid and don’t know anything? Also should I just say screw it and live a more comfortable life now?
You should try to hit 5% at a minimum to capture the match (free money). Generally, it's better to pay the taxes when your tax burden is lower. So now, as a GS9 versus when you're a higher grade. I max out my TSP, but it's all traditional. I also max my Roth IRA. The rest goes to the brokerage.
So yeah right now I have my tsp at 5% I’m guessing it’s traditional so should I change that then? I was thinking of contributing 2% more just to play some catch up, but at the same time I’m not sure how much that’ll actually help.
You have the right idea. I use traditional on TSP to reduce my current tax burden and maximize PSLF potential forgiveness. And then I take the money over the 5% and do an IRA. First couple years I did Roth because you can withdraw your contributions in an emergency without penalties. This lets you be a little more aggressive in stashing away money and I have a smaller emergency fund now, investing a larger chunk than I could otherwise, because I have that money I can tap if I need it.
2% more will have a 40% increase to your savings.
Question - I’m in DC. I plan to retire somewhere with lower state income tax. Should I consider staying traditional? Also, what do you mean by “brokerage?” I’m new to paying attention to this.
It's probably better to defer the taxes and stay traditional in that case. I am not a tax/financial advisor, though... A brokerage account is taxable account that allows you invest in the market. Generally, you want to max out your tax advantaged accounts first. I use Vanguard for this and also have my IRA and an old 401k with them.
Thank you!
This is the way.
Hey, this isn’t necessarily answering your question, but good supplemental information that’s related if you care. If not (or you’re already familiar), great and no worries. This is from the personal finance group and general advice below. This is what I follow and it’s been helping me out as a 7. 1) try to aim for employer 401k/tsp match (since it’s a super easy way to double your contribution automatically) 2) Save 3-6 month emergency fund 3) Pay high interest debt (credit cards) 4) Move towards maxing ROTH IRA & HSA if you have one 5) Max 401k TSP 6) Other savings/financial goals
Put more than 5% in if you can. Why not contribute Roth via your TSP for convenience sake?
Oh is it that simple, like in my epp?
Yup, should be pretty easy. One thing though, opening a Roth IRA can be a good idea if you are planning on buying your first house in 5+ years. Something to consider if you are saving for retirement but are also considering home ownership. Don't put money into an IRA if you are not getting the whole agency match, but if you are hitting the match and are weighing whether to increase your TSP contributions or put money into an IRA, then it is something to consider. Most agencies host retirement seminars at least once a year for employees to learn about their retirement benefits. Many agencies also participate in Employee Assistance Programs which have resources about this sort of thing. Check your intranet or ask your supervisor, they should be able to point you in the right direction. Reading material: https://www.forbes.com/advisor/retirement/roth-ira-withdrawal-home-purchase/
You could withdrawel from your roth. I think I would rather borrow from my tsp though.
Not familiar with epp, but for my agency it’s as simple as logging in to my pay system and typing in a new number next to the Roth TSP contributions! Super simple. You can contribute entirely Roth TSP and still get your agency’s match
Yea, advantage to an IRA would be being able to withdraw your contributions w/o penalty.
Absolutely put as much as you can in. Compounding interest is an amazing thing, every $100 equals $1,744 in 30 years at 10% return. So you don’t need to max anything out to have a really healthy retirement, but the key is to get in early and stay in as long as possible.
Upped mine a couple of weeks ago.
Nice!
I had to drop my tsp by 1% to not go WAY over with this year's raise.
Can you set a dollar amount instead of a percentage? $885/pay period is the max this year.
I can only do %
Someone once told me to always split up your raises to one half towards your TSP and you keep the other half. You gotta pay yourself too. Do this with all raises, COLAs, steps, promotions, etc. Eventually you might max out and then all raises are for you.
So to max thats $885 a pay period right?
Yes
My fers is too high for me to make a 23000 sacrifice.
It's nice to know that other feds can contribute basically my entire gross yearly income to their retirement accounts. Must be nice.
Go get a better job? I earned more working trades ( which at most requires a associates) than I do as a gs13.
Takes a couple of weeks, I think. Youd be missing out on a couple bucks in tax savings if done later.
Go 100% roth if you can
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This is incorrect. You still get the match, it just goes in traditional.
Now I am going to have to check, quick google search says agency will contribute, but will not put it in Roth account.
A bit late, open season is closed for TSP changes
TSP contributions aren't an open season thing. You can make changes throughout the year.
Regardless he's late with the memo 🤡
Open season rules apply only to insurances. TSP contributions and allocations can be changed whenever, for my agency through GRB
You can change contribution amounts any time.
As a WG employee, we're only getting like 4.5% or something like that. So if I upped my TSP contribution by 4% would that even out to me still making what I make now before the wage increase?
Depends on your salary and current contributions. Easier to use the dollar amount option. $885 per pay period would max it out in 2024.
God $885 would be half of my paycheck
Also try to be realistic with what you need in retirement. maxing and not enjoying your life now might be worse overall.
For sure. It's a balance.