Q. I’m preparing to retire and trying to learn about TSP options and the outside world with investing my life savings. I have most of the outside world telling me to pull it out now — I’m 61 — because the G Fund is not even keeping up with inflation. I also have looked into investing some of it in a program called Diversified Stock Income Plan with Wells Fargo. Under $200,000 will cost me 1.5 percent every year if I invest in this program. What do the experts say about the advice I am getting? A. This expert says:…
Q. I am considering a Thrift Savings Plan loan of $40,000 to fully fund a Roth TSP for the next few years. I am in the Air Force and plan on staying in the service for at least six more years until retirement. I’m just not sure that the benefits of a fully funded Roth TSP will outweigh the tax I will pay on the loan payments, not to mention the tax I will pay on the interest from the $40,000 as it sits in the bank waiting to be deposited into my Roth TSP, and the gains that $40,000…
Q. I invest the maximum in my Thrift Savings Plan L2030 account. What other monies can I move into my TSP account — e.g., mature CDs, ITF money from a deceased parent, bond dividends, etc.? A. You may transfer previously untaxed retirement account (IRA, 401(k), 403(b), etc.) balances into the TSP.
Q. I am planning to retire in December 2013 with 41 years of government service. I am covered by CSRS and have been participating in the Thrift Savings Plan. I have several small IRAs for which I am charged $40 a year. I was going to switch this money over to a building and loan association that advertises it does not charge an annual fee. Would I be better to put these funds in my TSP? Would that result in a taxable event? A. Generally, the TSP should be your first choice for retirement investment. Transferring your IRA accounts to your…
Q. I recently received my “FERS Your Personal Benefits Statement Based on your Account as of January 01, 2012.” It states, “As of December 31, 2011, your TSP account balance was $130,841.13. It goes on to say, “Assuming you continue TSP contributions [$877 per pay period] at the same rate and earnings on your account average 7% [Wow. How unrealistic is this!], your estimated TSP balance when you are first eligible to retire would be $158,107.” My current TSP balance is $137,000. It gives estimated Thrift Savings Plan monthly annuities as follows: If you retire at age 64, your single life annuity…
Q. Our 22-year-old son is in the Navy. He is an E-5, so his earnings are fairly good. He is not married and has very few bills besides an apartment, vehicle and cellphone. He is contributing to the Thrift Savings Plan, but soon he will have option to contribute to the Roth TSP. I would like to know what your investment advice would be for him. A. He shouldn’t be as concerned about where he saves his money, as he is about how much he saves. The TSP, traditional or Roth, should be his first choice for retirement savings. If…
Q. I recently retired as a federal law enforcement officer at age 50 after 25 years of service. I am able to presently withdraw a monthly set amount from my Thrift Savings Plan without the 10 percent penalty, correct? May I also reduce the 20 percent tax withholding TSP imposes on me? A. Based on the information you’ve provided, you will be subject to the early withdrawal penalty unless you take your payments as a series of Substantially Equal Periodic Payments under Internal Revenue Service Rule 72t. There is no exception to the early withdrawal penalty for LEOs. The usual…
Q. I retired as a CSRS employee after 31 years of service. I will be 70½ in June and, as I understand, I will have to begin taking out from my Thrift Savings Plan account then. If I am reading the information correctly, I have until April 2013 to do this. If so, when is the deadline for me to send in my request for withdrawals? Also, I have checked the TSP forms on the website but could not determine the appropriate one to use. I am planning to take out my TSP savings in monthly withdrawals. A. Your first required…
Q. I will have 25 years of service soon but will only be 48. If the government offers early-outs, what will I be eligible for? Pension at one-quarter of my salary for the last three years? Health insurance? What if I get a part-time job? Will this affect my pension or annuity? Also, if I do an annuity on my Thrift Savings Plan, can I start that now? Will there be a penalty? Do I get this same amount for the rest of my life, or does it stop after a certain number of years? A. Reg Jones: Because you…
Investing for retirement income is different from investing purely for growth. Once you retire and begin withdrawing from your investments to support your standard of living, a single mistake can mean a significant compromise to your standard of living — if not today, maybe 10 or 20 years down the road when it’s too late to recover. Because of this fact, investing for retirement income is much more an exercise in avoiding mistakes, than an exercise in maximizing the potential for gains. Avoid the following common mistakes and you’ll be well on your way to maximizing the standard of living you’ll enjoy throughout…