A friend of mine in the military asked my opinion about TSP the other day. TSP is the retirement savings program for Military and Civilian government employee's. It's similar to 401K's offered by most American businesses, but it is lacking in several area.
Some good things about it.
+It's a tax deffered savings account
+You can contribute up to 100% of your base pay and special pays up to $15500
+It's easy to access your accounts online and change asset allocations.
+You can change your contribution percent easily through MyPay
+If only offers index and lifecyle funds
+You can take out loans from your savings
Some things TSP lacks
-Matching contributions(civilian TSP participants do get matching contributions, but not military)
-It's pretty much a traditional IRA with a higher contribution limit
-The default fund is the G fund, which is low return(but gauranteed). You really need to be in the C fund or one of the life time funds.
-You can't pick funds from major mutual fund companies to invest in. (Granted, the funds they offer are pretty good)
Overall, I think a Roth IRA setup with vanguard is a better option for most service members. If you have maxed out your IRA contributions, then go with TSP. A roth IRA will allow more of your money to be tax free at the time of withdrawal. Plus, if you contribute from a combat zone, that money is tax free all around. To find out me see the website www.tsp.gov
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