Q. What is the annual withdrawal strategy that would allow me to avoid selling stock shares (C,S,I) during years that the market is down? I’m sure I read in “Money Matters” a strategy where a person could avoid a sequence of withdrawals disaster early in retirement by moving to the F and G Funds just prior to the annual withdrawal then back to stock shares immediately after the withdrawal. If there is such a strategy, could you explain it more specifically? A. Here’s the article I wrote for the Federal Times in 2016: How to Take a Selective Withdrawal Your…
Q. My wife and I are both long-time feds with 35-plus years and significant TSP accounts (more than $1 million). We both are inclined not to elect a survivor benefit because it seems we will have ample funds in retirement if either of us passes. Are we being short-sighted or is this a practical approach? A. Each of you, as the potential survivor, should carefully consider the worst-case scenario you might face in the various factors you can’t control, like how long each of you will live, how your investments will perform, inflation rates, spending needs, etc., before you decide…
Q. I will be retiring in approximately three years. I want to have some TSP funds, say 3-5 years worth of expenses (less FERS pension and Annuity Supplement) in a safe investment. Given today’s interest and bond climates, is it better to use the G or F fund (or a split between the two) for that allocation? A. The G Fund is the only TSP fund that is guaranteed against loss of principal.
Q. Can a deceased spouse’s TSP account be rolled into the survivors existing TSP account? A. From the brochure “Your TSP Account”: If you have an existing TSP account from your own employment with the federal government or the uniformed services, you can move your beneficiary participant account into your existing TSP account. The money that you move will be treated as an employee contribution, but it will not be subject to the Internal Revenue Code (IRC) annual elective deferral limit, which limits the amount of regular tax-deferred and Roth contributions you can make to the TSP in a calendar…
Q. I am a CSRS Offset retiree who is now 62 and eligible for Social Security. I am currently employed as a contractor working in a government agency. The Office of Personnel Management is reducing my annuity by the amount SS reported to them that I am eligible to receive. I don’t dispute the amount and understand that this would happen. However, SS told me that I earn too much money and they will not make up the difference. I was told during the retirement seminar that regardless of the amount I earned, I would get the SS portion because…
Q. I recently took a VERA retirement from federal service at age 55. My understanding is that the 10 percent withdrawal penalty does not apply to subsequent TSP withdrawals. Originally, I chose a monthly fixed dollar amount of a full withdrawal that could be changed during open season, but with the TSP Modernization Act I can start and stop installments, as well as change withholding. Originally, I had planned to withdraw the full amount of my TSP over 5 years, but last month I chose a lesser amount to take out and TSP sent me a letter that my TSP…
Q. Can you explain what impact (if any) your TSP savings have on your Social Security payments when you retire? Can it result in receiving a smaller check? A. Neither the size of your TSP account, nor distributions you receive from it, will affect your Social Security benefit amount.
Q. I am divorced and my ex received a lump sum payment from my TSP account. When can she begin receiving benefits? She is 62 years old now. Are her benefits in anyway tied to my age and retirement? A. Once her share has been removed from your TSP account and distributed to her, it is hers to do with as she chooses. Her options are no longer connected with your age.
Q. I am happy that under the TSP Modernization Act governing TSP withdrawals that I have the options to withdraw my funds monthly, quarterly or annually. If I depended on my TSP for one of my retirement income streams, are there any advantages or disadvantages when I choose how to withdraw my money given the choices now available? A. You should start with monthly distributions since that will enable you to most closely match your withdrawals to your spending.
Q. My brother, and only sibling, died recently. I am the executor and beneficiary of his estate. He never married, nor did he have children. I am inheriting: $770,000 from an employer 401(k) managed by Vanguard; $73,000 from a past 403(b) pension; and $320,000 in life insurance proceeds. I am 59, receive a military pension ($60,000/year), and am employed full time by the federal government. I have $500,000 in the TSP. Can any of the inherited funds be rolled into my TSP? Can any or all of the inherited funds be combined into a single fund? What would you do? A. The TSP…