TSP or Roth IRA?

[SlippingOnNoise]

Today while I was getting my taxes filed by an Armed Forces Benefit Nework Representative he told me about the Roth IRA program that they have. I have a TSP that I have been contributing to regularly to since joining the Marine Corps in 2004.

The TSP so far has not seen the growth that I would like to see (It hovers between 1-3%). The Roth IRA apparently is able to fetch 6% for the first year and a guaranteed 4% for the remainder of the life of the account.

My question is, would it be worth it to minimize contributions to the TSP and maximize contributions to the Roth IRA, or stay where I'm at?

I currently put 15% of every check into my TSP. Thanks for your time and advice!

[Jessie M.]

I would be very suspicious of anyone claiming to be able to guarantee a certain growth rate.

The biggest advantage that a Roth TSP has over a Roth IRA is that you can put up to $17,500 per year into the TSP and only $5,000 or so into an IRA. TSP also has very low cost.

[Jessie M.]

I did some research on this IRA and discovered some things: in order to contribute to their IRA you also have to pay into their life insurance policy. It's a very bad deal.

[Jessie M.]

Basically, you will pay them an ungodly amount ($150 per MONTH) for life insurance every year for ten years and only get the IRA without the ridiculous insurance after that, knowing that you'll probably get fed up with paying them $150 per month by year ten and that they're policy isn't worth that. It's all quite shady and apparently they try very hard to make sure you don't understand how much of you monthlY deposit is actually that ridiculous life insurance premium.

[ixolib96]

I agree with the comments above. No one should guarantee you a return on an investment. TSP has a Roth option. USAA also has Roth IRAs. A Roth is a type of investment vehicle. You still have to pick what investments go in it. My TSP has had a much higher average annual return than yours. Perhaps consider changing up which funds you're investing in.

[Jessie M.]

I have all of my. TSP in the most aggressive fund (L2050) and it's been getting pretty good returns. However, I only started investing in 2011, after the crash.

[Jessie M.]

The more I read about the AFBN the more I think that the free taxes are just a front to sell fake IRAs (actually whole life insurance policies).

[SlippingOnNoise]

Okay, thank you for your help. Would it be advisable to invest in another fund in TSP, such as the L2040, L2050 or one of the F, C, S or I funds? I'm looking for something with a long term, the only reason I'll touch the account is to put more money into it. Something with a moderate to aggressive approach is okay.

[Jessie M.]

If you're looking long term I think L2050 or L2040 are a good choice (they're more diversified than just I, S, C etc). It's all based on your expected retirement date. So if you think you'll retire between 2040 and 2050 you should get 2040.

[SlippingOnNoise]

Yes, currently my Military career will hit 20 years at 2024 and hopefully I'll be able to roll right into another DoD/Govt job and get my second retirement out of the way by 2044. The L2040 sounds pretty good. Thank you for your help. I'm off to do some more research!