Roths & Outside Investments: When & How Much?

Wednesday - 6/17/2009, 4:00am EDT

When will the just-approved Roth option be available to federal and postal investors in the Thrift Savings Plan?

Will members of the uniformed military services (as in Army, Navy, Air Force, Marine Corps, Coast Guard) be allowed to set up a Roth as part of their TSP investments?

What are the dollar limits on the new program?

Will people be able to convert the pre-tax investments in the TSP to an after-tax Roth plan? If so, is that a good idea?

Oh, and by the way, what exactly is a Roth IRA or a Roth 401(k) plan option?

By 9:30 a.m. yesterday we had received 77 e-mails from feds (and a couple of retirees) with questions about the upcoming Roth option. They came from Linda with the IRS in Montana, David at the SEC, Thelma with the IRS, Steven at the Pentagon, Rich at NARA and even one from Kuwait City. On the negative side, there was one e-mail (as of early a.m.) an e-mail from Linda at HUD. She politely but firmly said she has had it with columns about the Tobacco bill - what feds gained and lost - and could we move on to another subject.

Soon, Linda, soon.

But back to the Roth thing.

Today at 10 a.m., all will be revealed on our Your Turn with Mike Causey radio show. You can listen live (call in if you like) or listen later. The shows are archived on our show page. You can listen by clicking here or if you are on regular radio in the DC area, try us at WFED 1500 AM.

And you should listen because...?

Tom Trabucco, spokesman for the TSP, will talk about how the Roth program will likely work, who will be in it and when is the likely start date for contributing to it. He'll also give us information on how and when feds will be able to start investing via the TSP into outside mutual funds.

Also joining the show will be Certified Financial Planner Rebecca Schreiber who will look at the Roth option from a variety of angles. Who should have one? Why or why not?

How does an after-tax Roth differ from a pre-tax 401(k) plan?

Should (can) retirees in the TSP convert some or all of their account balances to a Roth?

How do you (or should you) make a Roth part of plans to buy a house or finance a college education?

At the end of May, the TSP was worth $213 billion. The super-safe, never-has-a-bad day (or a particularly exciting one) G-fund was worth almost $117 billion. The G-fund is invested in special U.S. Treasury securities that are not available to the general public.

We will have a follow-up on what we learn today. But listen if you can, call in or e-mail if you like. It's your money, your retirement future and, today and every Wednesday at 10 a.m., it is also Your Turn.

Nearly Useless Factoid
by Suzanne Kubota

The most common source of food poisoning tastes just like chicken. Because it is.

To reach me: mcausey@federalnewsradio.com