Q. In answering this question, assume a heavy investment in the G Fund. If the nation’s debt ceiling is not raised and a debt crisis follows, can we assume that Thrift Savings Plan participants can move out of the G Fund and back to stocks without any restrictions? In other words, while recognizing that the G Fund will be made “whole” eventually, will there be an artificial time delay or other restriction before a TSP participant can move from G to a more balanced position? A. We’ll have to see what happens if and when the time comes.
Monthly Archives: October, 2013
Q. Isn’t the S Fund based on the Dow Jones U.S. Completion? According to the Thrift Savings Plan website, it mirrors the DJ U.S. Completion. Yet, on Sept. 30, the S Fund only decreased from 31.0512 to 31.0038. Why such a small drop in S Fund? The S Fund that mirrors the Dow Jones U.S. Completion was down -3.55 (-0.38 percent) on Sept. 30, the day before the government shutdown. A. You’re confused and comparing one index to another. On Sept. 27, the Dow Jones U.S. Completion Total Stock Market Index closed at 924.37. On Sept. 30, 2013, it closed at 922.99…
Q. I am a former employee that left employment with the federal government three years ago. I was under the old CSRS Offset system (23 years). I am 59 years old. It is my understanding that I can apply for my retirement at age 62. How do I go about doing that? Do I contact the Office of Personnel Management in Boyers, Pa.? Also, what forms do I need to complete? Is it possible to receive my retirement sooner than age 62? Do you have contact information for the OPM office? I also participated in FERS (Thrift Savings Plan only, no match).…
Q. I have 15 years of federal service and would like to do an early retirement with MRA+10. Would I have to take a reduction in my Thrift Savings Plan, or just my federal retirement only? A. Mike: I’m not sure what you mean by a reduction in your TSP, but there is no reduction to your TSP account balance due to retirement. Reg: If you retired under the MRA+10 provision, the only reduction would be in your annuity.
Q. I recently retired but will not be withdrawing any of my Thrift Savings Plan for a few years. I’ve considered rolling over my balance to USAA because of the possibility of a government default. Is that advisable? In the case of a government default, will my TSP balance be safe? A. I wouldn’t do it if I were in your shoes. I’m not sure how the debt ceiling uniquely threatens your TSP account.
Q. My husband happens to be one of the 800,000 who got furloughed. I have an IRA of $3,400. Would I be able to cash that in without a penalty to get us by for, say, a month or so, depending on how long the furlough lasts? A. There is no exception to the early withdrawal penalty for a government furlough. You will be subject to the penalty unless you are age 59½ or meet one of the other exceptions to the penalty described in Internal Revenue Service Publication 590.
Q. What would happen to the Thrift Savings Plan investments, specifically the G, F and I funds, if the government can’t raise the nation’s debt ceiling before the Oct. 17 deadline for default? Are we looking at another financial meltdown like we had in 2008? A. The G Fund will hold its value. The other funds are vulnerable to loss in value. So far, however, the stock markets aren’t predicting disaster. They’re in good shape as of today – still near their multiyear highs. You should accept that predicting future market behavior is a risky thing to do. If your financial…
Q. If the government doesn’t raise the debt ceiling, what does that mean in practical terms for the TSP G Fund, and for government bonds and securities, in general? The G Fund is backed by the good faith and credit of the government, but if the government doesn’t have the ability to pay its debts, even for a short time, does that mean that the G Fund could have a zero return for that period? A. Interest rates could rise and bond values could fall. Higher interest rates are generally bad for the F Fund and good for the G…
Q. I am 64 years old with 12 years of federal service. I plan to retire when I am 66. I have done well in the L funds except in 2008. I have 80 percent in the 2020 fund and 20 percent in the 2030 fund. Should I put all of this money in the G Fund until the current financial crisis is over? A. How you manage your account should depend upon your goals and circumstances, as well as a plan for future decision making. In general, market timing adds more risk to investment management than it avoids. It’s not part of my…
Q. I have two Thrift Savings Plan accounts — one with the military and one civilian. Because of my financial situation, I would like to take some money out for debt consolidation. I was weighing the option of borrowing from my civilian vs. closing my military account (which I am no longer contributing to) and using those funds. If I close my military account, can I roll a portion of it over to my civilian account, and use the rest? What/how much of a tax penalty am I looking at if I do either? Would it make sense to close my military…