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Ask Dave

Investing 12%, What About the Last 3%?

Dave explains the best method for Anne to utilize her match for her thrift savings plan and fund a Roth IRA.

QUESTION: Anne is a federal employee and contributes 12% into her thrift savings plan (TSP).  She wants to know what she should do with the remaining 3%.

ANSWER: Back down what you’re putting into the thrift savings plan.  Go with TSP up to 5% since they match that.  Put the remainder in a Roth IRA until it’s fully funded.  Since you’re married and filing jointly and make about $130,000 a year, you’ll want to put in $19,500 a year. 

That means you’re putting 5%, matching, into the TSP; $6,000 into two $3,000 Roth IRAs; and the remainder back into TSP unmatched.  Then, in the TSP, put 40% into the C plan, 40% into the S plan, and 20% into the I plan.  Do not put anything into the F or the G plan – they have terrible returns.