A FlexLife Plan and a TSP (Thrift Savings Plan)

A FlexLife plan and a TSP (Thrift Savings Plan) account serve different financial purposes, so determining which is "better" depends on your financial goals, risk tolerance, and retirement strategy. Here’s a breakdown of both:

Thrift Savings Plan (TSP)

• A retirement savings plan specifically for federal employees and military personnel.
• Offers tax-deferred (Traditional TSP) and tax-free (Roth TSP) growth options.
• Contributions are limited ($23,000 in 2024, with a $7,500 catch-up for those 50+).
• Employer matching for federal employees (up to 5% - it a match -the first $3 is a match and dollars $4 and $5 are a 50 cent match) If you put in $5 you can get $4 for the match.
• Investment choices are limited to index funds and lifecycle funds.
• Subject to market risks and required minimum distributions (RMDs) at age 73.

FlexLife Plan

• A permanent life insurance policy that builds cash value while providing a death benefit.
• Allows tax-free growth of cash value and tax-free withdrawals/loans (if structured properly - Danny Favreau been doing these plans for 17 years and they need to be custom build to fit needs).
• No contribution limits (but premiums must be funded regularly).
• The cash value earns interest based on an index (S&P 500, for example) but typically has a floor (0% or 1%) to prevent market losses.
• No required minimum distributions (RMDs).
• Death benefit for beneficiaries.

Which Is Better?

• If you’re a federal employee or military personnel, TSP is a great option due to the employer matching.
• If you want tax-free retirement income, protection from market losses, and a death benefit, Living Benefits a FlexLife plan could be beneficial.
• If you’re looking for higher liquidity, TSP is more restrictive, while FlexLife allows policy loans.
• If you need life insurance, FlexLife provides that benefit along with cash value growth.
• You can pull money out of your FlexLife plan at any age. TSP you have to wait until your 59.5 years old.

Best Strategy?

• Use both: Max out TSP contributions (especially to get the match), and supplement retirement with a FlexLife plan for tax-free income and additional benefits.

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Book an appointment with Danny to set-up your FlexLife Plan today.

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