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|Subject: Re: Roth IRA vs. TSP (Thrift Savings Plan0||Date: 5/19/2001 11:26 PM|
|Author: JAllen2||Number: 29789 of 74759|
I have to tell you if you can only fund one DO NOT FUND THE TSP!!!
I to am a fellow military member and have been worried about some of the briefings I have received from various people about the tremendous opportunities TSP will provide. Without a doubt it is a great thing that the government is allowing us to do now. However, the problem with the TSP program is there is a very limited amount of investments you are allowed to do in it. I believe there is going to be a total of five different investment choices (S&P 500, International, Gov. Bonds, 2 others). A Roth IRA will allow you to invest in virtually anything. At first this is not an issue since most people put money into a nice Mutual Fund or Index fund and forget about it, but as most people will tell you in fooldom you can do much better.
The benefits of the TSP program are as follows:
1) The military is allowed to match your funds you place into the TSP program, but at this time no branch is planning on doing so...if this changes this can be a MAJOR advantage.
2) The money is pre-tax money so when you place 2K in the TSP you are only losing about 1.4K from your paycheck (assuming 30% tax bracket).
Disadvantages of the TSP program:
1) The money is taxed when you take it out (unlike the Roth IRA)
2) Limited investments you can place your money into
3) A fairly high yearly charge rate
I do not want to come out completely negative about the TSP...the program is much better (for retirement investments) then investing it yourself, because of the pre-tax advantage.
Please contact me to talk more about this program if you wish...as usual my post is more babbel then coherent thoughts.
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