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).
I’m going all in on the TSP this year, and here’s why. Continue reading
Note: This post was updated in 2021 with guidance from IRS Factsheet 2020-16
Are you looking to Retire Early, but don’t want to pay a penalty to access the money you saved before you turn age 59.5?
Got a ton of retirement money stashed in the TSP, an IRA, former employer’s 401k, or other Qualified Retirement Plan?
Are you also looking to implement a withdrawal strategy that does not force you in to a 5-year waiting period like the ‘Roth Conversion Ladder’ does?
There’s a perfectly legal method to get to your Retirement Plan money at age 55 without paying a penalty, and it’s called the Solo 401k.
Recently the WSJ posted an article about all the bookkeeping, tax filing, legal, and administrative fees necessary to operate a company’s 401(k) program
on behalf of its employees. This, by the way, is on TOP of the expense ratios charged within the mutual fund investments available inside the Plan.
If you work for a small company, these administrivia fees add up (and NOT in your favor). Vanguard – the low cost provider of all things investing- estimates these charges as totaling 0.25% in a very large company plan, and 0.58% for a smaller company plan.