Q: I am close to retirement in the Civil Service Retirement System and will transfer my Thrift Savings Plan investments from the C and S Funds to the G Fund to be safe. My question is in the transfer of funds: Is it the amount of shares that is transferred from one fund to another, or is the value of the fund used to purchase shares in another fund? For example: the S Fund with 2,000 shares at $19 a share is worth $38,000. The G Fund is worth $13.50 a share. Will the 2,000 shares transferred to the G…
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 plan on taking a deferred retirement at age 54 with 32 years of federal service in May 2012. I have been in the Federal Employees Health Benefits program since 1985. My wife plans taking a job in the federal government prior to me taking the deferred retirement. When she is hired, the plan is for me to transfer to her FEHB. When I reach age 56 in May 2014, how will the deferred retirement impact the three parts of the Federal Employees Retirement System (basic retirement with high-3, etc.; supplement, which should be 32/40 x what I receive…
Q: I am a 44-year-old Federal Employees Retirement System employee. I have a financial planner who wants to explore withdrawing part of my Thrift Savings Plan and rolling it into a Roth individual retirement account to take advantage of the two-year payout of taxes. I told the financial planner we only have two options for TSP withdrawals: One is for hardship, and the other applies if you are more than 59 1/2 years old. Because I do not meet either requirement, it appears to me that I cannot make an in-service withdrawal. Are there other options for in-service withdrawals? The…
Q: During the Obama campaign, there was talk of allowing up to $10,000 penalty-free 401(k)/Thrift Savings Plan withdrawals for hardship purposes. Have you heard whether this has been passed into law yet? A: It is my understanding that penalty-free hardship withdrawals are permitted under certain circumstances. You should start with IRS Publication 590 or consult a qualified tax adviser for details. I recommend using someone who would be responsible for preparing your return for the year of the withdrawal.
Q: How does one go about determining the most advantageous proportions of all five funds to achieve one’s expected level of return? And after knowing that secret, how does one know when is the right time to to adjust these proportions? A: I can tell you how I do it in my practice. I know of no better way to do it: We use long-term historical data and some practical knowledge to make assumptions about the expected rate of return, standard deviation of those returns and correlation coefficients for each of the asset types underlying the asset types you’ll be…
Q: Can you comment on Thrift Savings Plan Pilot? I am five years from retirement and took a big hit from the last dip in the market. I need to maximize my TSP; how am I to know what the proper percentages are to allocate to the five funds? A: I don’t believe that market timing services are a reliable way to manage a portfolio for retirement income. Like anything else, your assets should be managed to acheive your goals, not to beat this or that arbitrary benchmark. Asking how to determine the proper asset allocation to support your goals…
Q: I am a Federal Employees Retirement System employee with the Postal Service who plans to retire at the age of 60 with 27.5 years of service. I plan to take monthly withdrawals from my Thrift Savings Plan account to apply to my mortgage for ten years until I am 70 1/2 years old, rather than paying off my mortgage when I retire. My mortgage is a 30-year fixed at 4.75 percent. By leaving my money in the TSP and earning an estimated 8 percent while taking monthly withdrawals to make my mortgage payments, won’t I be ahead money at…
Q: I’m trying to procure a Thrift Savings Plan residential loan, with a general purpose loan outstanding. I’ve read the TSP loan book and made a copy of the pertinent pages, spoken to the TSP folks on several occasions and perused the IRS Web site. Do you know someone I can talk to who might provide me a definitive answer to my questions? At this point, I have a house purchase contract in my hands, and have been told that the amount available for a residential loan is far lower than I anticipated. A: The limits on TSP loans are…
Q: I’m a postmaster ready to retire at the end of the year. I’m considering withdrawing from my Thrift Savings Plan account. I have a question about withdrawing funds. One of the options states a specific dollar amount on a monthly basis. Would I be allowed to withdraw a specific percentage of my account each month? A: No.
Q: After reading your April 5 column, I was a bit confused if you were suggesting in his example that an investor in the L2020 fund should switch to, say, an L2010 or L Income fund when C, S and I share prices increase to reduce exposure to higher risk funds. I thought the point of the L funds was to leave them be until retirement? I have two Thrift Savings Plan accounts — one from the military (to which I no longer contribute) and one from my federal government service. This time last year, I swapped everything in my…