Thank you for the general guidance and information. Not sure I totally agree except the long term capital gains part. While traditional tsp or Ira are taxed as ordinary income when you take it out, you aren’t accounting for all the years of deferred taxes. For me, investing max in tsp reduced my ordinary tax rate while working. And being conservative with my money in tsp-I don’t think so . And while it’s true that you don’t pay taxes on Roth earnings, you do pay ordinary income tax on the initial contributions.
@@aaront936 perhaps if that works for you. For me from 1993 to 2018 (I retired then), I invested in the traditional TSP and deferred taxes to an avg of 18% a year over 25 years. I took those savings and put them (along with my husband) in a Roth IRA from 1998 to 2018 (using retirement as the stop as an illustration). In itself earning 18% a year over 25 years is pretty great. Add to it my Roth investment gains of 16% annually over the last 10 years and you have a net gain of 34% annually. Worked for me to defer the taxes. And now paying taxes on my Roth conversions is 6% less than when I was working (doing a bit at a time).
He’s not saying necessarily to be conservative in your TSP. He’s saying that once you have determined your asset allocation, the most aggressive stuff (stocks in general) should go in your Roth IRA if you have one, and your slower-growing stuff (bonds in general, so G and F funds) should be in the TSP or regular IRA, on which you will eventually have to pay income taxes. If you are a long way from retirement, you might want to be entirely invested in stocks, in which case your TSP would be all in the C, S and I funds. But if you are going to hold some bonds, put them in a tax-deferred account like the TSP rather than in a Roth IRA. Personally, I am retired and over 59 1/2, and I recently transferred the Roth portion of my TSP into my Roth IRA. That way I can differentiate between tax-deferred and Roth holdings, and do just what he suggests. Previously the Roth portion of my TSP account had to be invested the same as the non-Roth portion; the TSP does not allow you to invest the 2 sides of your account separately. Now that I have transferred the Roth portion, I can keep it entirely in stocks while keeping my G and F funds entirely In my pre-tax TSP account (in addition to some C, S and I fund investments).
Class is in session. Professor Dallen Hawes presiding. Dallen, that is by far your best video to date. You just took everyone to school teaching us about taxes and investing 101. Long-term capital gains taxes = good. Regular income taxes = bad. Love you buddy!
Hi Dallen. As always, thank you for the video. Question though. You said that you pay taxes each year on dividends. I thought that you only pay taxes on dividends only when you actually realize the money when it is taken. If the dividends are rolled back into the stock then you aren't taxed on that growth until you pull that money out. Is this correct?
Ummmm...wait can you say that again? The 1st and 2nd investment accounts have me so confused. Seems like I'm already doomed for the highest ordinary tax rates since the bulk of my TSP is this. Love your videos!
Please cover TSP estate planning for non us citizen spouse beneficiary. What best options to avoid gift/estate tax where tax agreements exist between US and non resident spouse home country like Japan.
I have yet to find a DIY calculator that lets you game out asset location scenarios. I'm trying to find answers to key questions: 1. Assuming the 22% tax bracket, does it cost less (today's taxes/take home pay vs tomorrow's lump sum taxes) to max out Pre-tax TSP or go with 100% Roth TSP? Also what if going 100% pretax allows you to contribute directly to Roth IRA, is that less costly than all Roth TSP? 2. Is a split of Pre-Tax TSP/Roth TSP contributions that still allows you to max a Roth IRA a better deal than the options listed above?
To know for sure we'd have to know what the future would hold but what is pretty clear is that Roth money is very beneficial. You'll have to figure out for you how far it make sense to push it.
@@PlanYourFederalBenefits Sounds like "some of this (Pre-Tax) and some of that (Roth) is prudent given that we don't have a crystal ball. I don't want to be like those who had a "plan" (i.e. stretch IRA) and then get knee-capped by a change in policy (i.e. SECURE Act).
I was CCS for 3 years and switched to FERS 1985. retired VER dec 2008. getting my USPS annuity but how will not paying social security for those 3 years affect my social security? ty
So if my money is into my regular TSP, and i now have an outside Roth IRA from my bank, should I take regular saving and put additional funds into my ROTH IRA? I'm 58 and about to retire.
Yes, you can put money into a Roth IRA as long as you are still working. You can't contribute though once you don't have "earned" income (aka, once you are retired).
Do you have an email or social media profile to contact directly and inquire about a couple TSP questions before registering for the $250 consultation appointment? I just want to ensure a few things before paying that amount and will be vague in nature to avoid wasting too much of your time. Appreciate your time
Hey Tim, you can email us at info@hawsfinancialplanning.com and we do our best to answer email questions but we certainly can answer all the questions we receive. Have a great day!
Thank you for the general guidance and information. Not sure I totally agree except the long term capital gains part. While traditional tsp or Ira are taxed as ordinary income when you take it out, you aren’t accounting for all the years of deferred taxes. For me, investing max in tsp reduced my ordinary tax rate while working. And being conservative with my money in tsp-I don’t think so . And while it’s true that you don’t pay taxes on Roth earnings, you do pay ordinary income tax on the initial contributions.
I'd rather pay taxes on the seeds than on the harvest.
Yeah this video is way more confusing than it's worth. I watch and appreciate his content, but this one not at all clear
It was clear as mud. What don't you understand?
@@aaront936 perhaps if that works for you. For me from 1993 to 2018 (I retired then), I invested in the traditional TSP and deferred taxes to an avg of 18% a year over 25 years. I took those savings and put them (along with my husband) in a Roth IRA from 1998 to 2018 (using retirement as the stop as an illustration). In itself earning 18% a year over 25 years is pretty great. Add to it my Roth investment gains of 16% annually over the last 10 years and you have a net gain of 34% annually. Worked for me to defer the taxes. And now paying taxes on my Roth conversions is 6% less than when I was working (doing a bit at a time).
He’s not saying necessarily to be conservative in your TSP. He’s saying that once you have determined your asset allocation, the most aggressive stuff (stocks in general) should go in your Roth IRA if you have one, and your slower-growing stuff (bonds in general, so G and F funds) should be in the TSP or regular IRA, on which you will eventually have to pay income taxes. If you are a long way from retirement, you might want to be entirely invested in stocks, in which case your TSP would be all in the C, S and I funds. But if you are going to hold some bonds, put them in a tax-deferred account like the TSP rather than in a Roth IRA.
Personally, I am retired and over 59 1/2, and I recently transferred the Roth portion of my TSP into my Roth IRA. That way I can differentiate between tax-deferred and Roth holdings, and do just what he suggests. Previously the Roth portion of my TSP account had to be invested the same as the non-Roth portion; the TSP does not allow you to invest the 2 sides of your account separately. Now that I have transferred the Roth portion, I can keep it entirely in stocks while keeping my G and F funds entirely In my pre-tax TSP account (in addition to some C, S and I fund investments).
Class is in session. Professor Dallen Hawes presiding. Dallen, that is by far your best video to date. You just took everyone to school teaching us about taxes and investing 101. Long-term capital gains taxes = good. Regular income taxes = bad. Love you buddy!
Thanks Adam!
Hi Dallen.
As always, thank you for the video.
Question though. You said that you pay taxes each year on dividends. I thought that you only pay taxes on dividends only when you actually realize the money when it is taken. If the dividends are rolled back into the stock then you aren't taxed on that growth until you pull that money out. Is this correct?
This is great! Thank you!
Ummmm...wait can you say that again? The 1st and 2nd investment accounts have me so confused. Seems like I'm already doomed for the highest ordinary tax rates since the bulk of my TSP is this. Love your videos!
Please cover TSP estate planning for non us citizen spouse beneficiary. What best options to avoid gift/estate tax where tax agreements exist between US and non resident spouse home country like Japan.
I'm not a drinker, but a shot for every "Ok" would put me in a very good mood. Maybe a bite of a chocolate candy bar instead?
10 after 10, right twice a day
good stuff. keep up the good work!!!
Glad it is helpful!
You need to put a battery in the clock.
I don't like the ticking :)
Sounds good but where do we put value stocks that may pay a bigger dividend than growth stocks?
Very informative video. Thank you so much.
Glad it was helpful!
Qualified dividends are also taxed at lower rate.
Good point!
I have yet to find a DIY calculator that lets you game out asset location scenarios. I'm trying to find answers to key questions:
1. Assuming the 22% tax bracket, does it cost less (today's taxes/take home pay vs tomorrow's lump sum taxes) to max out Pre-tax TSP or go with 100% Roth TSP? Also what if going 100% pretax allows you to contribute directly to Roth IRA, is that less costly than all Roth TSP?
2. Is a split of Pre-Tax TSP/Roth TSP contributions that still allows you to max a Roth IRA a better deal than the options listed above?
To know for sure we'd have to know what the future would hold but what is pretty clear is that Roth money is very beneficial. You'll have to figure out for you how far it make sense to push it.
@@PlanYourFederalBenefits Sounds like "some of this (Pre-Tax) and some of that (Roth) is prudent given that we don't have a crystal ball. I don't want to be like those who had a "plan" (i.e. stretch IRA) and then get knee-capped by a change in policy (i.e. SECURE Act).
I was CCS for 3 years and switched to FERS 1985. retired VER dec 2008. getting my USPS annuity but how will not paying social security for those 3 years affect my social security? ty
Roth TSP and traditional TSP cannot be separated for funds allocations can they? They both move when I move them.
Correct, they both move.
Does long term capital gains count towards your agi and in turn how much of your social security is taxed?
Go Haws Go
Thanks for being part of the community!
So if my money is into my regular TSP, and i now have an outside Roth IRA from my bank, should I take regular saving and put additional funds into my ROTH IRA? I'm 58 and about to retire.
Yes, you can put money into a Roth IRA as long as you are still working. You can't contribute though once you don't have "earned" income (aka, once you are retired).
Do you have an email or social media profile to contact directly and inquire about a couple TSP questions before registering for the $250 consultation appointment? I just want to ensure a few things before paying that amount and will be vague in nature to avoid wasting too much of your time. Appreciate your time
Hey Tim, you can email us at info@hawsfinancialplanning.com and we do our best to answer email questions but we certainly can answer all the questions we receive. Have a great day!
The 1st Trillion Dollar company pays a dividend and the 1st Two Trillion dollar company pays a dividend.