Ask The Experts: Money Matters

By Mike Miles

Maximum TSP + Roth IRA

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Q. My retirement time frame under FERS is about 2035. Prior to joining the feds, I had virtually no retirement planning. But when I joined the feds at age 33, I started making diligent contributions to the Thrift Savings Plan. Six years later, my TSP account has hit a $110,000 balance.

This year, I started a Roth IRA with a $5,000 contribution. I am married, and our income just slid slightly below the adjusted gross income ceiling for Roth IRA contributions, mostly because I contributed $17,000 into the traditional TSP.

As I look now to the Roth TSP, I am considering for the 2013 calendar year putting the maximum allowable contributions into it (I believe for 2013 it is $17,500).  However, once I do this, my taxable income goes up (my AGI goes up) and then I fear I may not be eligible to do Roth IRA contributions.

1. Am I eligible to make Roth IRA contributions dependent upon my most recent tax return figures (2011 tax return)? If yes, then is what I’m doing for the 2012 calendar year right?

2. If I contribute the maximum to my Roth TSP for calendar year 2013, does that mean, since I can assume my AGI will be above the Roth IRA limits for calendar year 2013, that I should not also make a $5,000 contribution to my Roth IRA for calendar year 2013?

A. Your eligibility to contribute to an IRA is dependent upon your tax return for the year of the contribution, not the previous year. Based on the circumstances you’ve described, I’d recommend making the maximum contribution to the traditional TSP and then making the Roth IRA contribution using money that would be considered taxable income, anyway.

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