Q. I have 10½ years of combined federal and military service and roughly $15,000 in my Thrift Savings Plan, 100 percent allocated to G Fund. I am 33 years old and nowhere near retirement. I plan on working another 22 years for the federal government and do not plan to start using my TSP until I am in my 60s. What would be the best way to allocate my contributions? I’ve had a few friends tell me to shift over to L funds. A. If you’re not sure what to do, then I recommend that you use the L Fund that most…
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Q. My husband (retired FERS) turned 70 in March and has more than $200,000 in the Thrift Savings Plan. Our understanding is that he must begin withdrawal by April 2013. We owe $100,000 on our home. Is it better to take out enough to pay off the house or schedule the minimum monthly withdrawal? A. The smart move will depend upon your mortgage terms and how you manage the TSP money. If I were responsible for the outcome, I’d prefer to see you continue the mortgage, if it’s at a market fixed rate, and take the required minimum distribution from the TSP account.
Q. With the looks of it, the economy has been doing better. The “fiscal cliff” is concerning me. My wife and I both have about seven years and both put 10 percent into the L2040 Fund. I was thinking of moving both to a safer fund (G or F) for a while until a deal is in place and the economy is safe and stable. I was thinking of doing this to potentially avoid another year like 2008, or something like that if a deal is not made with the president and Congress. What are your thoughts of doing something like this…
Q. I will be taking the early-out offered by the Postal Service. I am a 54-year-old CSRS employee of 35 years. I have a Thrift Savings Plan account. Please give your opinion on the best option such as taking the MetLife annuity, joint with spouse, level or increasing, cash refund compared with simply leaving the money in TSP and getting monthly payments either by specific amounts or increasing by life expectancy. I don’t quite understand the difference in the two options. A. There is no “best” choice. Using your money buy an immediate annuity guarantees income for life. You give…
Q. I’ve been retired from the post office for a couple of years now and have left all of what’s in my Thrift Savings Plan account in the G Fund. I won’t be forced to take the required minimum distribution until about six years from now. Since I’m not an expert at investing in all of the different funds, I was wondering: Would it be a good idea to transfer my money into one of the L Funds until I have to start taking withdrawals? A. Yes.
Q. I am CSRS and eligible to retire now with 30 years at age 56. My salary excludes my wife and I from funding a Roth with more than $6,000 each year (except $22,500 allowable into new Roth TSP). Let’s say I put $25,000 into the Voluntary Contributions Program with the intention of making a one-time, lump-sum withdrawal as soon as possible and roll the original $25,000 into a private Roth IRA. I am told that doing so is a way to immediately fund a Roth that is not limited to my current $6,000 amount mentioned above. Do I understand this correctly,…
Q. Are the Thrift Savings Plan and non-TSP Roth contribution limits exclusive? In other words, can I contribute the maximum to my TSP ($17,000 for 2012) and maximum ($5,000) to my non-TSP Roth IRA, so long as my adjusted gross income is below the limit imposed for the Roth? Or is the $17,000 limit imposed for both retirement vehicles combined? A. The two limits are separate.
Q. I am a CSRS employee with 38 years of government service. So far, I have my funds spread over all of the funds: 45 percent in G and 30 percent in F. Is this wise considering I intend to retire in fiscal year 2013? Also, is it wise to take funds from my Thrift Savings Plan and just pay off one of my two mortgages? The mortgage rates are 4.5 percent and 5 percent. I’d like to pay off the 5 percent mortgage, which is about $150,000. Is this wise? If not, why not? A. Your asset allocation makes no sense.…
Q. What Thrift Savings Plan options are available upon retirement other than purchase of an annuity? What rules govern TSP rollovers to an IRA? A. You may leave your money in the TSP and manage it there for life; you may take one partial withdrawal; you may take a full withdrawal as a lump sum or a series of monthly payments, or some combination of these. Internal Revenue Service rules govern rollovers to an IRA. Visit www.tsp.gov for more information.
Q. Can I select the date my TSP monthly withdrawal is deposited to my bank account, or is it the same date for everyone? A. You can’t specify the date.