Q. I recently decided to shift the corporate bond portion of my overall portfolio into my retirement accounts (i.e., shift my retirement account holdings largely into corporate bonds, and shift my taxable account holdings away from them) since the income from bonds is taxed at a higher rate than income from equities. Since the Thrift Savings Plan is about one-third of my retirement account money, I took a closer look at the F Fund and I was shocked to see that the majority of the Barclays Capital U.S. Aggregate Bond Index that the F Fund tracks is treasuries. I think…
Monthly Archives: January, 2014
Q. Does the Thrift Savings Plan allow one to shift all of his C Fund balance to the F Fund to wait out an expected downturn in the S&P 500? I know one generally should not try to guess the market, but if one could stay ahead of downturns and upturns (in theory), would it be more profitable over the long term (10 to 20 years) to shift out of C to F temporarily rather than suffering through market downturns (as in 2001-02 and 2008)? I guess it’s like selling high and buying back in low, assuming one’s timing was…
Q. I’m 33 years old and have been in the federal government since 2004. I own a house and max out my Thrift Savings Plan every year into the L2040 fund. Can I be more aggressive with my allocations? I won’t be able to retire until at least 2034. A. You can be more aggressive, but I can’t tell you if you should without the benefit of more information and some solid planning and analysis. The allocation you use should depend entirely on your unique resources, goals and circumstances.
Q. If, during the course of my federal career, my income (filed either individually or jointly with my spouse) exceeds the maximum allowed under the Roth IRA rules, do I have to convert my Roth to a traditional IRA? Can you maintain an existing Roth regardless of your income? A. This limit only applies to new money contributions. It does not affect your ability to maintain an existing account.
Q. I retired from active duty two years ago and have worked in civil service for one year. I am contributing 10 percent of my civil service base pay and have a fairly good amount in my active-duty military Thrift Savings Plan. I am entertaining the idea of consolidating my TSP plans for a couple of reasons. First, simplicity of managing one account. Secondly I believe, from what I have read on numerous sites, I will have greater control of current and future funds using the civil service side of TSP versus the active-duty military side. By this, I mean in-service withdrawals,…
Q. I own both a Thrift Savings Plan account and several non-TSP IRAs with other institutions and am approaching the age at which I must begin to withdraw the required minimum distribution from both the TSP and the non-TSP IRAs. I am withdrawing enough money from the TSP to cover the required distribution from all of my accounts combined. Must I withdraw any additional monies from my non-TSP IRAs to comply with the tax laws? The answer may depend upon whether the TSP is considered a “traditional IRA” for tax purposes. I can’t find any information on this point. A.…
Q. I am age 59½, retired from the Postal Service through a Voluntary Early Retirement Authority. I am looking at rolling over my Thrift Savings Plan to a certified financial planner. Could this affect my health benefits or my spouse’s health benefits? A. It will not affect your Federal Employees Health Benefits eligibility, but I question the wisdom of this move. Why would anyone with your best interests in mind recommend this move? For your benefit or his/hers? The certified financial planner label does guarantee that this person is trustworthy.
Q. I understand there is a way to roll over a Thrift Savings Plan account to a Roth IRA so the funds transferred are not taxed. Can you point me to guidelines on how to do that? I am preparing to retire as a CSRS annuitant. A. This is only possible with a Roth TSP balance.
Q. I remember reading an article on ways to retire at eligibility of 56 years old and being able to draw my tsp before age 59½ without a penalty. Is there a way to do this? There is no disability involved in my retirement. A. Yes. If you retire from federal employment at age 56, you will be exempt from the early withdrawal penalty.
Q. I am a civilian FERS employee who will retire this summer at age 59 with 35 years of civil service. After retiring, I intend to start monthly withdrawals from my Thrift Savings Plan account ($2,000 per month). Even though I will have begun making monthly withdrawals from my TSP account, can the remainder of my money in the TSP continue to be invested in the various funds (G, C, F, S, I) and continue to grow via earnings within these funds? A. Yes.