Voluntary contribution program


Q. I have been contributing money to the voluntary contribution program throughout the year, and I plan to make a fairly large contribution before the end of year, at which time I plan to retire. I am 60 years old, with 41 years of service. I plan to roll the VCP contributions to a Roth IRA.

Will the Roth IRA account have to be held for 5 years before being able to withdraw without a penalty? Do I need to complete the VCP-to-Roth rollover before I retire? Do I need to complete the required forms for the rollover as part of my retirement application? I’ve read various articles on the VCP online; some of the information is a few years old. Where can I find the most current information on the VCP program?

A. The rules covering Roth IRA withdrawals and their taxation are complex, and you should engage a qualified tax adviser to guide you through the process before you take any action. While the Office of Personnel Management suggests that you file form RI 38-124 to request a rollover of your contributions at least 60 days before you retire, this is not mandatory. You may file the form at any time before, or after, you retire. Interest on your voluntary contributions account will stop accruing when you become eligible for a CSRS annuity, however. I suggest that you refer to the CSRS and FERS Handbook for Personnel and Payroll Offices or contact your agency’s human resource office for more information about the program.


About Author

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 fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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