VCP investment


Q. I’m a CSRS employee with 34 years of service. I’m 53 years old and plan to work until I’m 58 years old. I have $15,000 that I want to invest. Would you recommend putting it into the Voluntary Contributions Program? I have a balance in TSP also.

A. Since you are free to make the contribution up until you separate from service, the question at hand is whether this is the best investment option for the money between now and then. The VCP is effectively a cash equivalent investment with a variable interest rate. The recent interest rate history for the VCP looks a lot like that for the G Fund. In 2013, the VCP paid 1.625 percent while the G Fund earned 1.89 percent. The VCP rate is set in advance for the year, however, while the G Fund rate is not. I think that, given the lack of flexibility of an investment in the VCP, I’d prefer to carry the money in the G Fund until I was near retirement, and then decide whether I wanted to contribute the money to the VCP for an additional annuity or a Roth IRA conversion at separation. If you can’t contribute the money to the TSP over a reasonable period of time, then you can invest it in a taxable account and increase your allocation to the G Fund accordingly.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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