If you have a Thrift Savings Plan account, you’re an investment manager. If you’re counting on that TSP account to provide income for your use in retirement, you’re a particular kind of investment manager: a pension fund manager. As a pension fund manager, it’s your job to do whatever you can to coax the fund — your TSP account — into supporting the benefits you’ve promised yourself. If you are, or will ever be, entitled to a Civil Service Retirement System or Federal Employees Retirement System annuity, you probably, and rightfully, expect that the providers of that annuity make good…
Monthly Archives: June, 2010
Q: I am an employee under the Federal Employees Retirement System. I will retire in five years at age 56 with 37 years of federal service. I plan to continue working in the private sector and not make any Thrift Savings Plan withdrawals until I turn 62. I currently contribute 20 percent of my TSP money to each of the five funds. What is your opinion on this investment allocation? If it’s not favorable, could you provide an allocation that you feel would be in my best interest? Also, if I decide to delay my federal retirement until age 62,…
Q: I have all of my Thrift Savings Plan money in the G Fund, but I am worried about inflation. Is there any way to buy I Bonds or other inflation-indexed securities through the TSP? A: Not yet.
Q: My position was eliminated when I was 51 years old. I retired with more than 30 years of service. I would like to withdraw all of my funds from the Thrift Savings Plan; will I be required to pay the 10 percent federal penalty if money is taken out prior to age 59 1/2? A: Unless you meet one of the special exceptions to the early withdrawal penalty, you will have to pay it. For details, see the tax notice regarding distributions from your TSP account at the TSP website.
Q: My wife and I will soon need money to pay for our son’s college expenses. We would either have to refinance our home using the equity that we have built up or take a loan from my Thrift Savings Plan account. The refinance would be at 4.25 percent over 20 years with approximately $2,000 in closing costs. The TSP loan would be at 2.875 percent for anywhere from one to five years for a $50 fee. What do you feel is the best option? Is the interest on the TSP loan deductible on my taxes? A: It’s impossible to…
Q: I truly do not know what I’m doing with my Thrift Savings Plan funds. I’ve been told to divesify them; what exactly does that mean? If you were to look at this breakdown (figures rounded slightly) and know that I won’t retire for 21 years, what recommendation(s) would you make? L 2040 Lifecycle Fund: 74.72 percent of total funds, $21,423; F Fund: 5.33 percent, $1,529; G Fund: 5.28 percent, $1,515; C Fund: 4.91 percent, $1,408; I Fund: 4,88 percent, $1,400; S Fund: 4.88 percent, $1,398. A: Consider the following growth allocation: 55 percent C Fund, 26 percent S Fund,…
Q: I joined the federal government more than three years ago. Can I roll over money from my Individual Retirement Account into my Thrift Savings Plan account? A: Yes, as long as long as your IRA doesn’t contain basis — that is, money that’s already been taxed.
Q: I am retiring next month and am not interested in assuming risk in my retirement funds at this time. Would be best to roll over Thrift Savings Plan funds into an Individual Retirement Account, or should I leave the money in the TSP? I currently have 50 percent of my money in the G Fund and 25 percent in the C and S Funds. A: Your interests will be best served by leaving your money in the TSP as long as possible.
Q: Can a new federal employee roll over a pre-tax 401(k) from a private-sector job into the Thrift Savings Plan? A: Yes.
Q: I am just about to retire from the FBI, where I’ve worked for 30 years. My parents left me a stock portfolio which dates back several decades. I would like, after retiring, to find and purchase a home using the stock portfolio, which is held in a trust my parents set up for me. I have never purchased a house, and I am wondering if there is any way to get around the capital gains taxes that probably would eat up huge chunks of the value of the stock portfolio once I liquidate most of the stocks to purchase…