Browsing: TSP

Q. My understanding is that the TSP lifecycle funds do not change allocation percentages based on projected market trends and changes in risk. For example, a lifecycle fund would not increase the percent in G funds if they thought a bear market was nearing. So, if Forbes is right and a bear market looms, what is the best way to minimize loss in one’s TSP lifecycle fund? Should we drop back from lifetime expectancy L fund selection to actual expected retirement timeframe for our L fund? When is the recommended time to do this? A. Market timing is pretty simple,…

Q. In your May 7, 2018, “Money Matters” blog you provided information concerning the rollover of CSRS Voluntary Contribution Program (VCP) funds into a Roth IRA. Can the contribution portion of such funds (non-interest, after tax portion) be rolled over into the Roth TSP? Form RI 38-124, referenced in your earlier column, suggests not, but the most current version of that form predates the creation of the Roth TSP. Such a rollover would be particularly attractive in light of the ability to designate TSP withdrawals as traditional, Roth or a proportional amount of each, with the new withdrawal flexibilities coming to…

Q. I retired from my dual-status job on Dec. 31, 2018, at the age of 53 in Mississippi, which is below my minimum retirement age. Am I able to collect from my TSP plan without paying a penalty since I am under my MRA? What are the laws that govern this for my CPA to use at tax time? A. If you receive a TSP distribution before you reach age 59 ½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of any taxable portion of the distribution not…

Q. I currently make the maximum and catch-up contributions to my TSP account and plan on retiring after 20 years of service as a law enforcement officer. I have a traditional IRA and also make the maximum yearly contribution with the idea of rolling this into my TSP post-retirement. Can I continue contributing to the IRA after I separate from government service, if I continue to earn income, then roll it into my TSP anytime post-retirement? A. Yes, although transfers of post-tax IRA money (from non-deductible contributions, usually) into the TSP is not allowed.

Q. I am 47 years old with 23 years in federal law enforcement. I will be eligible for retirement in two years at 49 years old, in the year I turn 50, so I will be eligible to draw from my TSP without penalty immediately. I have over $500,000 in my TSP. My decision to draw will be based on possible employment opportunities and income post-retirement. But if possible, I would like to minimize my impact on the balance. I know you have previously advised placing money in the L Fund closest to your life expectancy if you are unsure…

Q. I am 52 years old and I am currently a government employee. I have approximately $38,000 in my TPS, all in the G Fund and I plan to retire in 10 years. I also have money coming in from an active-duty military retirement. I was thinking of transferring the entire balance to the L2030 to try and maximize growth over time. Is this a good decision? A. It’s impossible to say from the information you’ve provided here. If you don’t know what to do, I think you allocate your TSP money into the L Fund that most closely corresponds to your…

Q. I was speaking with a Thrift Savings Plan representative recently and they said that not all of my years working with the federal government were vested. I started my career with the Federal Deposit Insurance Corporation (FDIC), then went to DoD, and now I’m with the Department of Veterans Affairs. I have 25 years served all together with just one break in service of two years. Do I need to speak with each agency to see if I’m vested? A. From the TSP Bulletin 15-1: Thrift Savings Plan Vesting Requirements and the TSP Service Computation Date: The TSP Vesting…

Q. I have often read you stating to put your TSP in the L Fund most closely matching your expected life expectancy if you are not able to analyze the market (which I am not able nor willing to hire someone to do that). I am a former FERS employee, retired at age 56. I am now 59 and I only have $120,000 in my TSP and hope to wait until age 70 (or just leave it alone for my sons), if possible. I wondered if the L Fund most matching your life expectancy is suggested for a current employee…

Q. I am wondering how Lifecycle Funds value are determined. For instance, the L2050 Fund is less expensive than the L2020 Fund and the L2050 is the more aggressive fund meaning it has a higher percentage of C, I and S. I don’t understand how this works. Additionally, I tabulated each of the L funds by taking the percent allocation multiplied by the cost of the fund and it is less expensive for me to allocate the same percentages of any of the L funds (outside of L2050) directly versus the subsequent L fund. For example, as of this [April…

Q. I work for the U.S. Postal Service and would like to resign at 58 with 24 years of service. I will postpone my annuity date till I am 60 years of age, but I need to tap into my Thrift Savings Plan to tide me over for the two years I am waiting for my pension. Will I face the 10 percent penalty since I am not 59 1/2? I am retiring, but delaying the pension to avoid the 5 percent per year under 62. Would I need to use the lifetime average or could I set the amount I want to…

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