Q: Assume that I am 67 years of age and have 42½ years creditable service under the Civil Service Retirement System. Assume that I have “maxed out” at the highest grade/step on the current GS pay schedule for my locality area. Assume that I plan to continue employment until at least December 2011. Assume that I am married and have no children. Assume that I have a current balance in the Thrift Savings Plan in excess of $375,000 and have completed my TSP contributions ($22,000) for 2011. Assume that I have no current monetary obligations of age greater than 30…
Author Mike Miles
Mike Miles
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.
Q: I will be retiring at the end of this year. I am saving my annual leave and will be paid for 448 hours in January. Can I have the leave check ( up to $22,500 of the $33,500 I expect to receive) deposited into my Thrift Savings Plan in 2012? A: No.
Q: I am a 51-year-old federal employee with 32 years of service under CSRS. I have all the Federal Employees Group Life Insurance benefits: basic life; Option A standard; Option B additional life insurance (5x); Option C family. My children are grown, ages 31, 29, 21 and 19. The 19-year-old is in college and still living at home. I’m trying to figure out what would be the best choices for me to adjust my FEGLI coverage to. My husband and I are trying to save for our retirement. It’s time to make a change as I believe I’m carry too…
Q: My wife wants to withdraw money from her TSP to pay off financial obligations. How much can we expect to pay in taxes if she withdraws $65,000? A: Her withdrawal may be subject to withholding. You can review the information in the document at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf. How much you wind up owing in tax will depend upon the specifics of your tax return for the year of the withdrawal.
Q: I am 27 and I’ve been in the federal service for five years. All my contributions to the TSP are in the L2040. Since I do not expect to retire before 2040, I think the smartest move should be investing in the new L2050 fund. But my question is, should I move all the money that I already have to that fund, or should I just start investing in the L2050 and leave whatever I have in the L2040? A: The TSP recommends that you invest all of your account assets in the L Fund that corresponds most closely…
Q: With it taking up to 12 months to start receiving a full retirement check once you retire, how long will it take to receive my TSP lump-sum payment after I retire? A: I can’t tell you, exactly, but based on my experience, it shouldn’t take more than a couple of weeks.
Q: Two of the biggest selling points of placing assets in a revocable living trust is that when you die your assets can be distributed privately and without the need for probate. But if everything is done privately and no probate court is involved, how would the IRS know whether or not the decedent’s estate was subject to estate taxes? A: The decedent’s estate is required to file tax returns, trusts or no trusts.
Q: My wife, a federal employee, has a traditional IRA. Some of the contribution made to the IRA was with money that was considered a deduction when it was contributed, thus no taxes were paid on those contributions. Some of the contributions over the years were made with after tax money. She could not deduct those contributions because of our combined income. My wife would like to know if she can transfer the money from her IRA to her TSP? Can all the increase in the value of the IRA be transferred to the TSP, even if the increase occurred…
I recently interviewed Kimberly Palmer, author of “Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.” Palmer recommends young professionals save at least 25 percent of their pretax income as they earn it. She adds that up-and-coming feds should take advantage of their retirement benefits, particularly the Thrift Savings Plan. I advocate the TSP as the best retirement investment vehicle available anywhere. Its low expenses, efficient design and simplicity make it better than any other defined contribution retirement plan I know of. I agree with Palmer’s advice to maximize your TSP contributions. Generally, I prefer to see…
Q: I will be rebalancing my portfolio biannually to the initial allocation until I reach an age that justifies a change to a more conservative approach. To complete this action, do I process both an interfund transfer and a contribution allocation? Is biannually OK? A: You’re asking for specific, individual investment advice, which I can’t provide through this forum. In general, I recommend that Thrift Savings Plan investors using this do-it-yourself strategy set the contribution allocation to 100 percent G Fund and then periodically rebalance the existing assets to their selected allocation. I recommend that you rebalance no more frequently…