The TSP director stated that TSP is bracing for an anticipated increase in TSP loans and early TSP withdrawals as a result of administrative furloughs (sequestration).
Roth participation is on the rise. In the latest TSP participant report, Roth accounts are approaching the $1M mark in total assets, with the average Uniformed Services (Military) Roth TSP balance of $889 per member.
I’d hope that Active Duty Roth participation was a bit higher, but note that Roth TSP has only been available for a short while to Active Duty (4th qtr 2012).
Jeff Yeager has an interesting approach to preparing for retirement- he, like few brave others, purports that reducing spending is more powerful than the generic brokerage house and financial planner/pundit advice to save a $1-$2M retirement nest egg.
Jeff should know, he managed to retire at age 47 from his moderate-salary job running the books for a non-profit in DC. He is ‘selfishly employed’ (more on this) as an author/authority on frugality and maintains a personal network of hundreds of ‘miser advisers’.
Two riders in The American Taxpayer Relief Act of 2012 (the Fiscal Cliff Deal) apply directly to Federal Employee Benefits. They are:
1) Increasing the Transportation Incentive Program (TIP), a program to incentivize federal employees to use mass transport or vanpools, to a monthly stipend of $240. The language in the bill restores parity between commuter expenses for parking (currently $240/month) vs. mass transport (was $125). They are now both set at $240, retroactive to 01 January 2013.
2) Ability to convert money in your employer-sponsored 401k account to the employer-sponsored Roth 401k account (if offered by the employer).
Just like the creation of the Roth TSP, It will probably take the TSP 12-18 months to catch up with this provision, but my prediction is that it will happen. This provision in the Fiscal Cliff Deal was put there as revenue grab to get income taxes now (immediately upon 401k conversion to Roth 401k) vs in the future (eventual withdrawals from 401k). My take on the conversion is that it is probably a bad idea to convert a Traditional IRA/401k to a Roth IRA/401k right now unless you are absolutely certain you will be in a higher marginal bracket when you retire.
As an aside, “The American Taxpayer Relief Act of 2012”? If my recollection is correct, this was created and passed by both houses of congress on January 02, 2013…