Q. I am a FERS employee with the Postal Service. I am 60 years old with 26 years employment. If I decided to retire this year, can I then withdraw monthly allotments from my TSP until I am 62 and then stop and roll it over into an investment plan? A. Yes, but it’s hard to imagine a better investment plan than the TSP.
Q. Do you know when the TSP will offer a Roth IRA? As someone over 50 years of age, I am able to contribute $22,000 annually to the TSP. Will I be able to contribute $6,000 annually to a Roth IRA, in addition to continuing to contribute the $22,000 to my TSP? A. The TSP will not be offering a Roth IRA. It is scheduled to offer a Roth account option in 2012, although the official rollout date has not been announced. The contribution limit will likely apply to whatever contributions you make to the TSP, combined. You may already…
Q. I believe one of your previous columns indicated that the management fee of the TSP is far less than private sector investment firms. Could you provide scenarios comparing TSP vs. other well-known funds: Please include USAA on the list. For planning purposes, assume $200,000 in the account. A. There are thousands of funds out there, so I’m not about to spend hours doing your homework for you. I will give you an example, however. According to the TSP’s website, in 2010, the TSP’s funds cost their investors 0.025 percent to operate. So if you invest your TSP assets in…
Q. Will the Thrift Savings Plan’s Roth 401(k) feature allow for a precious metals IRA option? A. Don’t count on it.
Q. My TSP question is based on an earlier answer you gave someone else: “A life annuity means that payments continue, on an accrual basis, until the annuitant’s death, unless a survivor benefit option is elected at the time of purchase.” When I die, are the funds remaining in my TSP inheritable by my adult child? If not, why should I leave it in the TSP not knowing when I will die? If yes, can the funds remaining in my TSP be rolled into an IRA or TSP that my adult child owns? A. If you use the funds in…
Q. I have been retired from the Postal Service for about 10 years. I made a poor choice when I withdrew all my funds from the TSP. I have about $13,000 of it left in an IRA that is only earning about 1 percent. Is there a similar savings plan that one can invest in, in the private sector. That is a plan that has the various investment options, without the equal employer investment? A. Yes; an IRA at a discount broker using index funds similar to those available in the TSP. Simply transfer the assets from your current IRA…
Q. Excellent article by Mr. Miles on reducing risk by diversification of your TSP portfolio. The missing factor though is, what is a good diversification of the five funds in regards to time until retirement or time until the money is needed? Comments would be appreciated although they are simply comments with no inherent liability. A. While shorter time horizons tend to benefit from more conservative (bond and cash heavy) allocations, there is no allocation rule of thumb that is safe for every investor. This is because allocation selection should be dependent upon cash flow and terminal value needs, as…
Q. I was divorced in 2010 and my ex-wife got my whole TSP awarded to her, almost $50,000. Can I get any tax credit on my return for this? A.I’m not sure, but I doubt it since you never paid tax on the TSP funds in the first place. You should consult a CPA for specific guidance.
Q. I am planning retirement, as a FERS law enforcement officer, at age 56, with 26 years of service. If I take a specified dollar monthly amount from my TSP at the time of separation, which is not based on life expectancy, it is my understanding that it will not be subject to the early withdrawal penalty of 10 percent. However, must I continue to take this same payment as a specifically equal periodic payment (SEPP) until I turn 59 1/2, or may I change the monthly amount that is being withdrawn at the end of the year, without causing…
Q. In the March 7 issue of Federal Times, on page 20, there appears the PersonalAdvisor. Part of the feature shows a TSP Snapshot, which has the following entry: Individual funds C Fund March 3 $16.15 Year-to-date 6.18% Last 12 months 21.34% Question: Am I really receiving a 21.34 percent return for funds in the C Fund” for the last 12 months? I am able to get only 1 percent to 2 percent return on a CD for a year. The 21.34 percent just seems too good to be true! Am I misinterpreting what I see? A. The calculated rate…