Q. Upon retirement I want to transfer my Roth TSP out so I have more flexibility with taxes. Currently, I have all of my TSP money invested into the Roth TSP. Once retired, I want to transfer all but $1 to another firm into both a regular IRA rollover and Roth IRA rollover so that the two types of TSP accounts are no longer co-mingled. I then want to transfer my regular IRA back into the TSP in order to keep the two types of accounts separate (regular TSP at the TSP and Roth TSP with outside brokerage firm in…
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Q. The stock funds (TSP) offered, Small Cap/Large Cap, invest in stocks. What happens to the dividends? A. They are retained inside the funds and are reflected in the share prices.
Q. I just started a federal career at age 31. I rolled over about $21,000 dollars into the S fund from prior retirement. Would it be better to use the L funds for growth which carry less risk, or seek the highest amount of returns in the S fund. I am huge risk-taker when it comes to investing, just trying to make informed decision before accepting all the risk of the S fund with no diversification. A. Let’s see … I know that you’re 31, have about $21,000 in the S Fund, are a huge risk-taker and know little or…
Q. I heard someone mention the 2020 fund and that they also invest normally. All I can figure is that she invests in the L2020 fund. Is that possible, and how does that work? I did not think you could have a regular investment like the G and C fund, for example, and still have and L fund. A. You may allocate all or a portion of your account to one or more of the L Funds, just like any of the basic TSP funds.
Q. I am federal employee who transferred from CSRS to FERS in October 1998, and I have 37 years of federal service at age 66. Planning retirement within the next year, and I would like to ask your opinion about my TSP allocation which is G Fund at 35 percent, F Fund at 10 percent, C Fund at 35 percent, S Fund at 8 percent and I Fund at 12 percent. Is this an allocation to keep when I retire?
Q. Can you please provide a citation to your assertion that an annual leave payout is not considered earned income and cannot serve as the basis for IRA contributions? A. See the sections on what is, and what is not, compensation on Page 8 of IRS Publication 590. I believe it is considered deferred compensation, but in the end, how you should proceed is a question for your tax preparer.
Q. I’ll retire under FERS at the end of this year. Will the lump-sum payment for annual leave that I’ll receive early in 2015 would be considered earned income for the purposes of being able to contribute to my non-TSP Roth IRA? A. No.
Q. I understand I am allowed to roll or transfer other 401’s or Roth IRA’s into TSP, but can I just invest money saved in traditional savings accounts into my TSP? A. While you may transfer certain qualified tax-deferred retirement assets into the TSP, Roth IRA and taxable savings are not eligible.
If you had just enough money to pay your electric bill next month, would you gamble with it just for fun? Hold it in cash, and you’ll enjoy another month of electrified living. Lose even part of it, and you’ll be living in the dark for a while. If the sole purpose for that money is to pay for the electricity you’ll need to live the life you want, why would you risk losing it to have a chance to win money you don’t need? Many investors don’t understand the principles and techniques necessary to manage a retirement investment portfolio…
Q. I have three IRA accounts and I turned 70 in March. Do I combine the three to figure the required withdrawal? What would the tax be if I do a lump-sum withdrawal from all three? A. You must obey the aggregations rules for calculating your IRA RMD spelled out in IRS Publication 590. The taxable portion of each withdrawal will be added to your tax return as ordinary income for the year, where the tax you owe on the withdrawal will be calculated. Whoever prepares your tax return for the year of the withdrawal is responsible for making sure…