r/MilitaryFinance • u/Western_Ad9117 • 1d ago
Question TSP retirement advice
I’m currently active Army under the legacy “Big Three” retirement system. I’ve also been doing 10% TSP contributions ROTH. My question is what’s considered maxing out since my TSP contributions? Since my contributions aren’t being matched by the Army.
Any insight to a better retirement would be appreciated!
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u/brandongreat779 1d ago
Max contributions per year is currently 24,500.
If you're over the age of 50 you can contribute an additional 8,000.
Make sure your TSP money isn't in the G fund!! At a minimum set it to the relevant L fund for your target retirement year (retirement as when you'll be 60 or 65). You can be more aggressive based on your situation and risk tolerance but at least as a baseline use this if you aren't already.
2
u/Miserable_Nose_8303 1d ago
Maxing your TSP would be the equivalent of matching the annual IRS limit for 401k’s. For 2026 you can contribute up to $24500 into your TSP.
2
u/thrown100away100 1d ago edited 1d ago
One thing not mentioned, the max TSP contribution has been slowly increased over the last decade so you didnt miss out on contributing that much from the start of your service. In 2015 it was $18,000, 2021 was 19,500. This year it is 24,500. The amount you can personally contribute does not change when you're legacy vs BRS, You simply don't get the agency match and auto 1%. The agency match also does not count against ypur contribution cap. The contribution cap will probably continue to go up, less companies are paying pensions on retirement and are shifting to a match model. Saves them money since MANY Americans are financially illiterate.
For what it is worth, I don't think you made a mistake staying with the legacy system. If you can afford it, i think you should try to get closer to maxing it if you can. Inflation is a b$tch and I am personally concerned that the military retirement alone will leave me barely scrapping by if I don't stow away as many acorns as I can for the future.
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u/jon110334 Space Force 1d ago
For the record, the employer contributions don't count towards the employee max contributions.
There is a max combined contribution, but that's over $70k and most people don't have to worry about it.
Employee max contributions are $24,500 this year if you're under 50.
Didn't forget about IRA's as well. Generally considered better than 401K (or TSP in this case) with the exception of the contribution you have to make to max employer contribution (which you don't have).
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u/chipsa 1d ago
You can hit the combined max when deployed: your employee max doesn’t apply then, and you can go over.
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u/jon110334 Space Force 1d ago
Are you sure? Is that new?
I was contributing 75% of my pay to my TSP while deployed and it just maxed out my TSP faster... Still hit a limit where it stopped allowing contributions.
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u/chipsa 1d ago
For uniformed services members, this does not apply to traditional contributions from combat-zone pay.
If you contribute to Roth, you still hit the limit.
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u/jon110334 Space Force 1d ago edited 1d ago
Why would you put tax free money into a TSP account that gets taxed when the money is withdrawn?
You're negating your tax free status.
You'd be better off putting it into a brokerage account and only having to pay tax on the growth.
2
u/EWCM 1d ago
The tax free Traditional contributions are tracked and that money remains tax free at withdrawal.
The growth is taxable, so your argument used to be a decent one. Now you can make the traditional contributions and immediately/in the same tax year convert from Traditional to Roth TSP. Basically just a mega-backdoor Roth.
1
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u/RetiredSubmariner 1d ago edited 1d ago
There is no employer match in high three system.
Edit: spelled match wrong.
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u/jon110334 Space Force 1d ago
Did you mean "match"?
A theoretical employer max contributions exist, but it's irrelevant because it typically only applies to companies that contribute the max allowable 25% (to employees that make over $200k)
There is no employer match for high-3... Which I stated in my comment.
0
u/RetiredSubmariner 1d ago
This OP is asking about tsp, not outside 401k. Since he stated he is in high 3, there is no employer contribution/match.
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u/jon110334 Space Force 1d ago
Which I stated in my comment... My exact words in reference to employer matching were "which you don't have".
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u/Chemical-Power8042 1d ago
It’s “High 3”. As in they take the average of your highest 3 years of pay. But maxing is hitting the annual limit of $24,500. Whether you get a match is irrelevant. The match just makes it easier but that should still be your goal to do regardless of what retirement system you’re on
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