Thrift Savings Plan (TSP)

Capt MJ said:
After commissioning. They should get briefs on it leading up to graduation/commissioning.
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It's too bad they can't open an account while at a SA. Time Value of Money really makes a difference - even when investing a small amount. The TSP really has some great investment funds. Why? 1. By combining the right amounts of different funds-you can achieve any risk profile desired, 2. Low cost-most investment professionals do not tell people how much cost matters-its a big deal, 3. You can keep the investments simple. It's better than many "professionals" will "sell". My three money rules: a. Money doesn't grow on fees. b. Money in motion-costs money, and c. Don't trust - do your homework. A close alternative is for a MIDN or Cadet to open a Roth IRA with Vanguard. They can...because they have "earned" income. The IRS rules do not say that their actual money has to fund the Roth...just that they have earned income. So, a parent or anyone else can put up the $.
 
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For prior service personnel entering an SA, I would think that their TSP account would still remain open?
 
Don't Give Up the Ship said:
It's too bad they can't open an account while at a SA. Time Value of Money really makes a difference - even when investing a small amount. The TSP really has some great investment funds. Why? 1. By combining the right amounts of different funds-you can achieve any risk profile desired, 2. Low cost-most investment professionals do not tell people how much cost matters-its a big deal, 3. You can keep the investments simple. It's better than many "professionals" will "sell". My three money rules: a. Money doesn't grow on fees. b. Money in motion-costs money, and c. Don't trust - do your homework. A close alternative is for a MIDN or Cadet to open a Roth IRA with Vanguard. They can...because they have "earned" income. The IRS rules do not say that their actual money has to fund the Roth...just that they have earned income. So, a parent or anyone else can put up the $.
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When I was still Ser 7 registered, my favorite quesion was, "What is the most important thing when it comes to investing?" My answer was always, "Time." The younger you start, the better off you will be.

My Mid (and my non-Mid) both invest in Roths. Right now it is the perfect vehicle with their low tax-bracket. I think my Mid put in about $1000 initially, and $100/month. S&P Index fund. That's all that's needed for now. Low cost. I tell them don't even look at the markets. Just set-it-and-forget-it when you are 20 years old, and let dollar cost averaging be your friend.
 
Don't Give Up the Ship said:
A close alternative is for a MIDN or Cadet to open a Roth IRA with Vanguard. They can...because they have "earned" income. The IRS rules do not say that their actual money has to fund the Roth...just that they have earned income. So, a parent or anyone else can put up the $.
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I don't usually want to do a "me too" post, but the advice above is great. We did exactly this for my USMA plebe, by withdrawing money from his 529 (gains are taxable, but without penalty), and using the funds for a new Roth IRA at Vanguard. We have him the same advice that @brewmeist mentioned not even looking at the markets. Choose a fund you like. For us it was VTSAX (total stock market fund with a 0.04% expense ratio). There might be something better, but don't let perfect be the enemy of the good. Time is the critical asset that your Cadet or Mid needs to use. Start that Roth now.
 
Same. DD had a Vanguard IRA she opened up with her enlistment bonus money rather than buying a nice junior enlisted car. When she went to West Point we gave her the 529 and she rolled it into her Vanguard IRA. She is well ahead of the game.
 
UHBlackhawk said:
Same. DD had a Vanguard IRA she opened up with her enlistment bonus money rather than buying a nice junior enlisted car. When she went to West Point we gave her the 529 and she rolled it into her Vanguard IRA. She is well ahead of the game.
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Outstanding! So important. Bravo Zulu from a Navy guy. Myself and DW did the same.
 
SADad said:
I don't usually want to do a "me too" post, but the advice above is great. We did exactly this for my USMA plebe, by withdrawing money from his 529 (gains are taxable, but without penalty), and using the funds for a new Roth IRA at Vanguard. We have him the same advice that @brewmeist mentioned not even looking at the markets. Choose a fund you like. For us it was VTSAX (total stock market fund with a 0.04% expense ratio). There might be something better, but don't let perfect be the enemy of the good. Time is the critical asset that your Cadet or Mid needs to use. Start that Roth now.
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Are you able to withdraw the 'equivalent' college costs of an academy from the 529, without the penalties?
 
ThunderLizard said:
Are you able to withdraw the 'equivalent' college costs of an academy from the 529, without the penalties?
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Yes. It's been covered well on this forum. The USAFA issued a letter explaining it, which you can find on this forum. When I did my taxes this year, using Turbotax, the software asked if DS was attending a service academy. Answer = yes and the funds are still taxable-but no penalty is applied.
 
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