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.