Monthly Archives: November, 2010

It's about how much you save, not where you save it

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When it comes to funding a retirement income stream, it generally doesn’t matter as much where you save your money — Thrift Savings Plan, IRA, Roth IRA, 401(k), etc. — as it does that you actually save your money. Unfortunately, sometimes, more attention is paid to whether money should go to this or that type of account than to whether enough is being saved to safely support the desired retirement income stream, or even how the money will be invested once it is saved to a particular kind of account. I’ve seen this confusion over priorities in the attention to…

TSP, bonds

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Q: I have never really understood bonds, and why yields and prices move opposite each other. But what I really need to know is if now is a good time to scale back on my TSP F-account purchases? Interest rates and inflation are very low now, and more likely to go up than down in the future. Am I buying bonds at a bad time now? The F-fund only makes up about 20 percent of my TSP portfolio, so I shouldn’t get creamed if inflation starts to kick in, but I’d just as soon not get hit even on this…

BCBS basic vs. standard plan

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Q: How can I find out the difference between the two health insurance plans? I understand the basic plan is cheaper than the standard for which I am paying $400.97/month for the family plan as a retired DoD employee. A: Use the plan comparison tool available through www.opm.gov. This is the direct link to the plan comparison wizard: http://www.opm.gov/insure/health/search/plansearch.aspx

Withdrawing funds from TSP

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Q: If you have a TSP account and you have been gone from working for the federal government since 2006, can you withdraw your funds without any early withdrawal penalty fees? A: Only if you separated from federal service during or after the year in which you reached age 55, have reached age 59 1/2, withdraw funds using a series of Substantially Equal Periodic Payments, use the money to buy a life annuity, or meet one of the specific exemptions to the penalty, which include disability and certain medical expenses. See the notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf for more information.

Bear Fund

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Q: Does TSP have a “bear” fund, or are they planning to introduce that type of fund soon? If not, then how can I take advantages of a “bear” fund? Also, what is the allocation of instruments in the G fund? A: There is no “bear” fund in the TSP — that is a fund that moves inversely to a particular market. Visit www.tsp.gov for a description of each of the available TSP funds and their contents.

Roth TSP

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Q: Once the Roth option becomes available through the Thrift Savings Plan (supposedly the first pay period in 2012), is there any IRS preclusion to making substantially equal periodic payment (SEPP) distributions in 10 years or less from our current TSP into our upcoming Roth TSPs?  SEPP distributions in 10 years or less are currently permitted in regular Roth IRA’s and regular Roth 401K’s;  I see no reason the IRS regulations would prohibit similar SEPP distributions in TSP, would love to be able to do so, and would like to be able to plan accordingly. A: I’m not sure I…

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