Q. I’m 59 and retiring June 2, which is the first day of a new pay period. Will my Thrift Savings Plan election and catch-up contribution be deducted from my last paycheck? I will have earned no salary in that pay period, but I will have my lump-sum annual leave payout. A. TSP deferrals are not taken from annual leave payout checks.
Q. I read your article on how to be a good pension fund manager today and, in regard to moving your money from the Thrift Savings Plan after you retire, you left out the biggest obstacle to leaving it in: You cannot add another penny of contribution for the rest of your life. Also, in regard to better results outside of the TSP, would you say that if you can beat the market indexes, which TSP is based on, you can beat TSP. Join up with the American Association of Individual Investors, whose model portfolios have smoked the market averages…
If you own a Thrift Savings Plan account and plan to use it to fund your standard of living in retirement, you are a pension fund manager. As a pension fund manager, you are responsible for the standard of living your TSP account produces. This standard of living will depend heavily on the decisions you make in the course of managing your account. It is critical to recognize that a single stumble along the way — one bad outcome from one bad or overlooked decision — can cost you dearly later in life. The margin for error is razor thin,…
Q. As precaution for what I thought was going to be a market decline, in December, I moved $350,000 out of my Thrift Savings Plan accounts from the C, S, and I fund (60 percent, 20 percent, 20 percent) to the G Fund. The end of the year came and went with no crash. The government had several “doomsday” dates that kept me guessing on market reactions. All have come and gone and the market is still going strong. I didn’t change my paycheck allocations, so I’ve continued to put money into the above funds in the percentages shown, so at…
Q. I am facing furlough soon. I already have one Thrift Savings Plan loan. Can I withdraw money from my TSP on a hardship withdrawal basis because of the furlough? I realize, if I did, I would have to pay taxes on it, etc. A. The furlough alone does not qualify you for a hardship withdrawal. To qualify for a financial hardship withdrawal, you must have a financial need for at least one of the following reasons: * Negative monthly cash flow. * Medical expenses (including household improvements needed for medical care) that you have not paid and that are not…
Q. I have been a federal employee for 27 years, just long enough to have been one of the first forced into FERS. About seven years ago, I looked at my Thrift Savings Plan statement and learned that the prediction was that if I retired at age 62 and bought an annuity, I would have a pretty good monthly salary. Now, I notice that the prediction is that if I use my TSP savings, with about the same amount predicted for me at age 62, to buy a monthly annuity, that annuity will be about one-third of what was predicted seven…
Q. I borrowed $50,000 from my Thrift Savings Plan two years ago and have been paying it back biweekly. Will I be taxed on the money I borrowed? If so, when and how much? Also, I’m looking at retiring in three years. I will be 59 and have 33 years on the job. How much risk should I take in my TSP account? A. A loan is not taxable unless you fail to repay it on time. The amount of risk you take with your TSP assets should be matched to your specific financial goals and life circumstances. The right…
Q. I am a fully vested CSRS employee with the Environmental Protection Agency for 33 years at age 55. I have received my numbers, but I missed my first date to retire. How long does it take to receive my first full check? Should I take all of my Thrift Savings Plan out at once; leave about $10,000 in and roll it over to a Roth IRA; or leave it in the TSP? Is there a counselor at TSP to speak with about taxes and IRAs. A. You should leave your money in the TSP for as long as possible…
Q. I’m 25 years old, series 1811 and have been contributing 5 percent into the Thrift Savings Plan (FERS) for three years. Until last week, I was contributing 100 percent into the L2040 fund, but now I’m doing 65 percent into the S Fund and 35 percent into the I Fund. Since I still have about 32 years until mandatory retirement, do you think I am making the right TSP choices now, and do you have any recommendations? A. Your allocation is risk-inefficient. You could reconfigure it to deliver similar expected growth with much less volatility. If you don’t know…
Q. I will be retiring at the end of this year with 37 years and 10 months of service. I am a CSRS employee and will be 57 years old in September. My annual annuity would be $81,958. I will have a little over $200,000 in my Thrift Savings Plan account. Is it smartest to take the spousal annuity or take out a life insurance policy on myself to sustain my wife once I pass away? My annual annuity will be reduced by around $7,900 a year if I chose the spousal annuity. Which would be the wisest? A. This isn’t your choice…