Much attention is focused on constructing cost- and risk-efficient investment portfolios. The Thrift Savings Plan does an excellent job of supporting this effort by offering only ultra-low cost index funds, and preconfigured asset allocation models, in the form of the L Funds, that are carefully engineered to provide the maximum expected rate of return for varying levels of investment risk. In fact, it offers everything you need to build a superior portfolio — one that can be expected to outperform anything else out there. A cost- and risk-efficient portfolio is essential to any plan that seeks to maximize the lifetime…
Yearly Archives: 2014
Q. I plan on retiring under MRA+ 10, at age 59, with 16 years service in December. I also plan on starting monthly withdrawals from my TSP account as soon as possible after retiring, which I heard is 6 weeks. If I do that and need a one-time lump sum in a year or two, is that possible? I’ve never taken any before and never had any loans either. A. I may not take a partial withdrawal after you have started monthly withdrawals. You may not take a loan after you have retired. Once monthly payments start, they may only…
Q. I have approximately 12 years before I retire. I have 5 percent of existing money located in the G Fund. Should I be placing this in a different fund that may give me a higher return versus this fund? Should I be carrying money in any of the L Funds? Right now, I use the G, C, S & I. A. I can’t possibly tell you what you should do based on these facts. No one can. If you don’t know what to do, I suggest that you invest your money in the L Fund that most closely matches your…
Q. I will retire in December. I have $300,000.00 in the G fund as of now. I want to have a monthly payment of $1,500 until my money runs out around 20 years or longer. What is a good strategy to put all my money in the 5 accounts that the TSP offers? A. You’re looking for a 6 percent initial withdrawal rate. If you want to ensure that your money lasts at least 20 years, you’ll either need to hire a good investment manager, or use the money to buy an immediate fixed annuity. You should also consider the…
Q. I currently make 5 percent contributions to my TSP per pay period. Is it possible for me to make a lump sum contribution at the end of the year equivalent to 10 percent to bring me up to the allowable 15 percent annual contribution? I would not exceed the maximum allowable annual contribution amount. A. There are only two ways you may contribute to your TSP account: 1. Through payroll deferral and 2. By transferring money in from an eligible retirement plan account. You may be able to increase your payroll deferral rate near the end of the year…
Q. I am 66 years old under CSRS, and plan to retire in 2018 with a total of 42 years of federal service. I currently am contributing to TSP and also have a private Roth IRA. A few years ago, I took money out of TSP when the tax rate was down and allowed one to do this. Thus, taxes were paid on the amount over two years. I am looking at taking out a much larger chunk and putting it into the private Roth IRA. Is this allowed without paying taxes on the much larger chunk? A. Maybe. Ask…
Q. I have been a federal employee since April 2008. I am only 31 years old and I am looking into purchasing my first home. I can request a residential loan of about $5,000 from my TSP account. I was wondering if I can use this money as part of my down payment? Thanks. A. This is a question your lender will have to answer. Borrowing your down payment is usually a no-no, but there may be an exception for money you borrow from yourself.
Q. I have been serving in the military for almost 11 years and have contributed 10 percent of my base pay ever since joining. Unfortunately, all of those contributions have been to the G Fund. I am looking to increase my earnings and do not plan to pull from this account until 65. I am currently 28. Should I move all of my allocations to an L 2050 fund to increase these earnings, or manage it myself in the different Fund options? Any expertise in this matter would be greatly appreciated. A. Assuming that you are early in your career…
Q. Yesterday, I read your article dated May 20, 2013, “How to be a good pension fund manager.” I wish I had read it before I moved money from my TSP to an outside IRA last year. I wish I had taken some other steps as well. I now want to add back cash to my Thrift Savings Plan before I retire. I could retire at the end of November 2014. Can I do that with catch up contributions? My major disappointment is with the TSP staff and the absence of an onsite adviser in human resources. Does it benefit…
Q. I took my tax info to a professional to have them done this year. I’ve maxed out my Roth IRA with USAA. I’ve also contributed about $2500 to a traditional TSP as a uniformed service member. I’m being told I’ll be penalized for my contributions to my Roth account since I have an employer-based retirement plan. Is this accurate? Can I only contribute a total of $5500 for both accounts? I’ve always been told to contribute to both. A. The TSP contribution limit is fixed and not contingent on any other factor. Your eligibility to contribute to a Roth…