By Mike Miles
TSP contribution
February 29th, 2012 | Uncategorized
Q. I’m in FERS with about 15 years until I’m eligible for retirement. When I increase my TSP contribution, my taxable income is reduced and the amount of federal tax withheld is obviously reduced as well.
How would I go about calculating the “sweet spot” in my TSP contribution amount to get the most benefit in reference to the amount of taxes being withheld. Is there a law of diminishing returns here or is more always going to be better?
A. Sorry, but I’m not at all sure what you mean by “most benefit in reference to the amount of taxes being withheld.” If you mean to learn what TSP contribution amount will minimize the tax withholding from your paycheck, then, if all other factors are held constant, more is better.
Tags: contributions, TSP
Comments
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Al R Says:
May 25th, 2012 at 3:46 amYou’re looking at investing the wrong way. You want to retire with as much money as possibel which means you should invest money now as your income and budget allows. Endeavor to max our TSP account every year and your IRA too.
In answer to your question, look at your salary and marginal tax rate and do a little math (subtration) to see what’s the lowest (google) tax rate you can get to.
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