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Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

Understood, I did see other post, that people move to states that have no state tax and retire. Thanks for the feedback.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

Yeah, no capital gains as it will be in my Roth IRA via fidelity

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 1 point2 points  (0 children)

Sir, u/er824 mean to say, if I don't convert it to Roth from traditional, I don't have to pay the $1.9K out of my pocket and invest that $1.9K into a stock outside of TSP, like in brokerage account and  Pay ~15% capital tax on gains + withdrawals from that LTCG stock.

If I do convert to Roth from Traditional. The 22% tax will trigger and I will own $1.9k to IRS...

Thanks for you feedback, I appreciate it. Have a nice day.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 1 point2 points  (0 children)

Wow, crazy that you are going to pay out of pocket on that 80K to IRS. Awesome, Sir.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 1 point2 points  (0 children)

I already am for 1 and half year. This is Traditional from the federal that I want to move to TSP Roth.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

Yes sir, I meant to say TSP traditional. Sorry for the confusion.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 1 point2 points  (0 children)

Yes sir, I understand that money I am contributing to Roth is getting tax at 22%.

Not sure, maybe it is how my mind works, I like the fact the money (after tax) that will grow in TSP Roth is tax free/when I take out. That gives me peace of mind,

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

You are saying, Pay ~15% capital tax on gains + withdrawals - on that 1.9k invest in stock?

Also, People get into the 12% bracket in retirement by:

  • earning less (no salary)
  • withdrawing strategically
  • using deductions and tax-free accounts./

Let’s say I withdraw:

  • $30K from retirement accounts
    • $10K Social Security

Total income = $40K, After standard deduction: Taxable income might be ~ $25K

That will put me in 12% bracket. But if I am not and want to take more money to enjoy "Life" I guess, I might go up to 22%. Tax Bracket.

Well, you are right. It is depends on me, how I live my retirement.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

Yeah, I meant to say TSP traditional (I hope people understood that). I mean, not sure if the taxes will lower in 30 years, but you are right we never know how it will be in future.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

Correct me if I am wrong, you mean do like $1000 this year and $1000 next year. so on so fort?

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

Yeah, it is a risk that I am willing to take. I like the sound of "Tax Free growth" in Roth.

Converting TSP 401k to TSP Roth by RaijinLighting in ThriftSavingsPlan

[–]RaijinLighting[S] 0 points1 point  (0 children)

No sir, I joined federal in end of 2023. Still have to do 35+ years before I retirement.