I honestly don’t know either. I just put a good bunch more to my tsp rather than opening a whole other account. Plus with the IRA I don’t get any type of match so I don’t see how that outweighs the tsp when it’s still investing in all the same funds anyways.
I guess to so they don’t max out their tsp and they still want to invest more I suppose
mr_snips on
You can do either but the IRA has more freedom with funds and withdrawals. Same concept but lower limit.
newbasaurus on
You have more investment options in a Roth IRA. You can also pump more money in. There’s a yearly 401k contribution limit ($23k) and you could put an additional $7k in your IRA.
MedBoss on
I would actually prioritize an IRA before maxing the TSP if you can’t max both. For sure make sure to contribute enough to get your TSP match, but the IRA is nice because you can withdraw your contributions penalty free in the event of an emergency etc, not that you should view your IRA as an emergency fund – it’s at least a nice safety net. You do have a penalty on any gains in the IRA, but the contributions themselves may be withdrawn w/o issue.
Troy884 on
Another reason could be the bigger menu….you could invest in anything the market offers in an IRA. Although the C, G, I, S, F funds in the TSP are all the average investor really needs.
ajdiddy on
Max both
Ironically_Suicidal on
I saw a post a while back saying that back then there was only a traditional option for TSP which is why people would open a Roth IRA on the side.
forzion_no_mouse on
Cuz you can have both?
GummyTummyPenguins on
Historically, the fees for the TSP were so much lower than anything else that you could argue having both wasn’t super necessary until you were maxing the TSP. That’s not the case now. There are many mutual funds and ETFs with equally low or cheaper fees than the TSP. So people will also use an IRA to have a better selection of investment options and different rules for withdrawals in retirement.
ZoWnX on
Hey guys, why would people save more tax advantaged money for retirement?
11 Comments
One reason is that you can max both.
I honestly don’t know either. I just put a good bunch more to my tsp rather than opening a whole other account. Plus with the IRA I don’t get any type of match so I don’t see how that outweighs the tsp when it’s still investing in all the same funds anyways.
I guess to so they don’t max out their tsp and they still want to invest more I suppose
You can do either but the IRA has more freedom with funds and withdrawals. Same concept but lower limit.
You have more investment options in a Roth IRA. You can also pump more money in. There’s a yearly 401k contribution limit ($23k) and you could put an additional $7k in your IRA.
I would actually prioritize an IRA before maxing the TSP if you can’t max both. For sure make sure to contribute enough to get your TSP match, but the IRA is nice because you can withdraw your contributions penalty free in the event of an emergency etc, not that you should view your IRA as an emergency fund – it’s at least a nice safety net. You do have a penalty on any gains in the IRA, but the contributions themselves may be withdrawn w/o issue.
Another reason could be the bigger menu….you could invest in anything the market offers in an IRA. Although the C, G, I, S, F funds in the TSP are all the average investor really needs.
Max both
I saw a post a while back saying that back then there was only a traditional option for TSP which is why people would open a Roth IRA on the side.
Cuz you can have both?
Historically, the fees for the TSP were so much lower than anything else that you could argue having both wasn’t super necessary until you were maxing the TSP. That’s not the case now. There are many mutual funds and ETFs with equally low or cheaper fees than the TSP. So people will also use an IRA to have a better selection of investment options and different rules for withdrawals in retirement.
Hey guys, why would people save more tax advantaged money for retirement?