Here’s an interesting retirement case study for you.

Let’s take a former active duty veteran who resigns after 7 years of service and  enters the civilian workforce in the year 2000.  This purely hypothetical employee in turn contributes to a Defined Contribution plan (401k or TSP)  during his years as a working stiff.  He or she contributes to the maximum ‘match’ amount of the employer’s plan-  That is, when the employer matches up to 50% of contributions on up to 10% of salary, he contributes 10%.  When he is a Federal Employee, he contributes 5% to get the most of the TSP automatic and matching contributions (5% of salary).  (Stop me if you’ve figured out who the hypothetical employee is by now).

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If you recall from last year, I resolved to roll all my IRA assets BACK in the the TSP, based on the following facts and theories:

  1. (Fact) TSP will soon allow much more withdrawal flexibility,
  2. (Fact) I’m not smarter than the market,
  3. (Fact) TSP Lifecycle funds have the lowest fees of any target-date fund, and
  4. (Theory) TSP Lifecycle funds are the best target-date funds available based on their cash-equivalent fund (the G Fund).

… so how about #4?  Any way to prove this theory in to fact?

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Maxing your 401(k) or TSP will help you get to this Happy Place faster…

There’s a lot of debate about how much you should put in to your TSP or 401(k) plan every year, and whether you should ‘front-end’ load your 401(k) at the beginning of the year, dollar cost average during the year, or back-end load your 401(k) at the end of the year for tax planning.

Here’s a 401(k) hack that works for me at the end of every calendar year.

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