Tax Shelters Overview

Tax shelters reduce tax liability, but watch out for a 10% withdrawal penalty before 59 1/2. Consult an accountant about the 72T tax code.

Qualified Tax Shelters:

• IRAs, TSPs, 401Ks, 403Bs, Keoghs: Tax-advantaged deposits; taxable upon withdrawal.
• RMD: Must withdraw by 70 1/2 or face a 50% tax.

Roth IRA: Invest tax-deferred; withdraw tax-free post 59 1/2. Annual limits: $6,000 (<50 years) or $6,500 (50+).

Thrift Savings Plan (TSP): Government’s 401K/403B; pre-tax contributions. Max: $17,000/year with $5,500 extra if over 50.

TSP Funds:

• G Fund: 3.61% 10-year return, government-backed.
• F Fund: 5.25% return, non-government bonds.
• C Fund: 7.12% return, S&P 500.
• S & I Funds: Returns from small cap and international stocks.

L Fund Lifestyle: Quarterly re-allocations for safer retirement investments.

TSP Withdrawal:

• Financial Hardship: Taxed withdrawals for approved reasons.
• TSP Loans: Borrow based on G Fund rate with a min. $1,000 balance.

Note: Rates change daily

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