FEDLIFE Podcast (Ep. 91) Mastering Retirement Planning: Understanding The SECURE Act 2.0 and the Future of Roth TSP
Summary: Planning for retirement can be overwhelming, especially when dealing with legal changes. But fear not. In this riveting episode, Ed Zurndorfer and Dan Sipe delve into the SECURE Act 2.0 and its impact on Roth TSP participants. They explore the elimination of required minimum distributions (RMDs) for Roth IRAs and the unique challenges it poses for those with combined traditional and Roth TSP accounts. Get ready to navigate the benefits of rolling over Roth TSP accounts to Roth IRAs and gain a deep understanding of the reasoning behind the elimination of RMDs for Roth retirement plans.

Ed and Dan discuss:
• The SECURE Act 2.0 and the elimination of RMDs on Roth retirement plans –
• How TSP participants can choose to roll over their Roth TSP account to a Roth IRA tax-free account
• Why you should consider enrolling in Medicare Part B and its benefits
• The role of taxes and its liabilities
• And more!

Resources:
“No More Required Minimum Distributions for Roth TSP Participants” by Ed Zurndorfer –
Webinar: TSP Planning With Ed Zurndorfer –
“Medicare Part B Premiums Decreased in 2023: Is There a Catch?” by Ed Zurndorfer –
Webinar FEHB/Medicare –

Connect with Dan Sipe:
• Dan.sipe@stwserve.com
• LinkedIn: Serving Those Who Serve
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• Twitter: Serving Those Who Serve
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• Facebook: Serving Those Who Serve
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• Youtube: Serving Those Who Serve
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In December of 2019, the SECURE Act (Setting Every Community Up for Retirement Enhancement Act) was signed into law. This piece of legislation was meant to help Americans save more for retirement and make it easier for small businesses to offer retirement plans to their employees. Now, lawmakers are considering a follow-up bill, known as SECURE Act 2.0, which would further expand on some of the changes made in the first bill.

One of the key provisions of the original SECURE Act was the ability to convert traditional retirement accounts, such as a 401(k) or IRA, into Roth accounts. This means that instead of deferring taxes on your contributions and earnings until retirement, you would pay taxes up front and then enjoy tax-free withdrawals in retirement. This can be a valuable tool for those who expect to be in a higher tax bracket in retirement than they are now.

While the original SECURE Act allowed for Roth conversions, it did not address the Thrift Savings Plan (TSP) Roth option. The TSP is a retirement savings plan for federal employees and members of the military, and it offers both traditional and Roth options. However, many TSP participants have expressed frustration with the limited availability of the Roth option. As it stands, TSP participants can only contribute to the Roth option during their time in combat zones.

SECURE Act 2.0 seeks to change this. The bill would allow TSP participants to make Roth contributions at any time, with no restrictions based on duty station or combat zone status. This would give TSP participants more flexibility in their retirement planning and help them take advantage of the tax benefits of Roth contributions.

Of course, this change would also come with some potential downsides. Roth contributions are taxed up front, so they may not be as advantageous for those in lower tax brackets. Additionally, Roth contributions are subject to contribution limits just like traditional contributions. For 2021, the maximum contribution limit for the TSP is $19,500 for those under 50, or $26,000 for those over 50.

Overall, the expansion of the TSP Roth option is a welcome change for federal employees and members of the military who want more control over their retirement savings. If SECURE Act 2.0 passes into law, it will be important for TSP participants to carefully consider their options and consult with a financial advisor to determine the best strategy for their individual needs.