December 27, 2013 at 9:34 pm #8916
I left my TSP account in the L2030 fund until I started reading your site, so I thank you for that and for helping motivate me to think about retirement. Recently, I thought of an alternative TSP contribution plan rather than dividing the maximum yearly contribution (17,500) by number of pay periods (26). Since I have some money in the bank to cover my expenses, I wondered if it would make more sense to “front load” TSP contributions while making sure to contribute enough in later pay periods to take advantage of agency matching. My plan is to commit $9,500 to TSP during the first 6 pay periods and to split the remaining $8,000 over the final 20 pay periods ($400). I guess my question is: would my aggressive plan to purchase more shares sooner lead to actual profit?
Thanks for your time, consideration and knowledge.December 29, 2013 at 8:33 pm #8988
That’s a very interesting idea. I think I recall something about folks who are planning to retire part way through the year maxing out their TSP contributions early in the year, even to the extent of putting 100% of their pay into the TSP, so that they take advantage of the pre-tax nature of those contributions. They obviously have to be in a financial position which allows them to live on savings or other income while doing that.
I have not heard of anyone doing what you are suggesting, but I don’t see a downside to it besides the hassle of having to change your contribution level a couple of times and the risk of messing that up if you aren’t careful.
There is certainly an upside if the market does well because you have more money in your TSP to take advantage of those gains, but tough to estimate what those might be. If the market has a strong first half, I suppose that could certainly be worth at least a few hundred dollars in additional gains.
Please do let us know if you go through with it and how it works out. And if anyone reading this has any thoughts or experience, please share.
The TSP Allocation Guide www.TSPallocation.com
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