I joined in 2022 and do not currently have any contributions to TSP set up. I will be promoting in Dec and am planning on using the pay boost to contribute to the TSP. However, I do not plan on doing a full 20 and am wondering what the benefits and drawbacks would be? I understand you can no longer contribute once leaving federal service. I already have a roth IRA that I had starter before I joined, is it even worth contributing to TSP? I am young and single for context, so I can certainly afford to chip in to another investment. Thanks!
TSP if planning to get out?
byu/CoolWhipOfficial inMilitaryFinance
Posted by CoolWhipOfficial
4 Comments
Don’t wait until you promote, contribute at least 5% for the match free money.
You are missing out on free money by not contributing at least 5%. Contributing to the TSP is especially important if you are getting out as its military version of a 401k. When you get out, you can either keep it and let it compound or roll into a future 401k.
This question is similar to asking “Should I add money to a savings account at a local credit union if I’m going to move and change banks in a few years?” Contributing to the TSP is a good idea for anyone at any age who plans to retire someday. How much to contribute varies based on personal circumstances. Since you’re BRS, you should absolutely contribute at least 5% to get your full match. If you can afford to contribute more without sacrificing other required expenses and a bit of fun money, your future self will thank you for doing so.
Once you get out, you’ll have the option to leave your funds in the TSP or roll it over into IRAs. There are pros and cons to both; if you search this forum, I’m sure you’ll find threads that address these.
15% of your gross civilian equivalent salary per the regular military compensation calculator should be going into Roth TSP.
When you get out you can roll it into your Roth IRA.
You’re missing out on money.