For the TSP, does DFAS match our contribution?

PO2 Private RallyPoint Member — Fri, 29 Mar 2019 10:02:23 -0400

My situation: Active duty, navy, 2.5 years in, option to go traditional or blended

TSP - does DFAS match our contribution?

Does it depend on if we are in the traditional or blended?

Do they only match if we make contributions for every month?

The more information the better. Where can i go for the detailed information on how this all works? Thanks

Response by CPT David Gowel made Mar 29 at 2019 10:10 AM

CPT David Gowel — Fri, 29 Mar 2019 10:10:48 -0400

LTC Steve Mannell and AAFMAA may be able to help

Response by SFC(P) Private RallyPoint Member made Mar 29 at 2019 10:12 AM

SFC(P) Private RallyPoint Member — Fri, 29 Mar 2019 10:12:03 -0400

hmm I'm surprised they have not forced you to do a mandatory class yet on this. Do you have JKO? If not I would suggest you go to JKO and register and take the online class for the new blended retirement system it will tell you everything about it.

Response by LTC Private RallyPoint Member made Mar 29 at 2019 12:06 PM

LTC Private RallyPoint Member — Fri, 29 Mar 2019 12:06:52 -0400

Good for you investing in your future. Max out your TSP contribution. If you invest and have discipline you will be a millionaire in 20 years.

Response by CW4 Craig Urban made Mar 29 at 2019 12:27 PM

CW4 Craig Urban — Fri, 29 Mar 2019 12:27:34 -0400

Response by MAJ Ken Landgren made Mar 29 at 2019 1:46 PM

MAJ Ken Landgren — Fri, 29 Mar 2019 13:46:36 -0400

You are doing the right thing. Invest early like an E-8 I knew did. He retired in the late 90s with a quarter million. Let me give you an example of the time value of money:

$100 per month invested for 30 years at 10% return = $226,048.79
$100 per month invested for 10 years at 10% = $20,484.50

This does not include the matching so the values will be higher.

Response by MAJ Ken Landgren made Mar 29 at 2019 7:50 PM

MAJ Ken Landgren — Fri, 29 Mar 2019 19:50:52 -0400

OK here is the analysis between a Traditional and Roth TSP.
Given:
-Base income of $30000/year.
-Your contribution is 5% of base income.
-Matching funds is 5% of your base income.
-Marginal tax rate of 10% now and at the time to withdraw.
-Years of investing is 20.
-Your rate of return is 12% a year.

Caveats:
-I know the income will go up, but to integrate income growth into the analysis is infinitely difficult.
-I am using a timeline of 20 years, but you can't withdraw until 59 1/2 of age.
-12% rate of return for the stock market.

Traditional TSP:
-$125/mo your funds and $125 matching
-Total future value of $247,313.84
-Your annual contribution lowers your taxable income by $3000 which means you save $300/year for taxes at a marginal tax rate of 10%
-If you add back in the tax savings of $300/year it will be worth $272,045.23.

Roth TSP:
-$125/mo your funds and $125 matching
-Total future value is $247,313.84.

Conclusion:
-The Traditional TSP gives you an extra $300 a year in your pocket but incurs taxes upon withdrawal.
-Roth TSP does not give you tax savings up front but will at the back end.

Response by SSG Private RallyPoint Member made Mar 31 at 2019 3:46 PM

SSG Private RallyPoint Member — Sun, 31 Mar 2019 15:46:43 -0400

If you still have questions, I have a slide deck I can email you. Send me a message with your military email and I’ll send it next week.