Q. I’m in FERS with about 15 years until I’m eligible for retirement. When I increase my TSP contribution, my taxable income is reduced and the amount of federal tax withheld is obviously reduced as well. How would I go about calculating the “sweet spot” in my TSP contribution amount to get the most benefit in reference to the amount of taxes being withheld. Is there a law of diminishing returns here or is more always going to be better? A. Sorry, but I’m not at all sure what you mean by “most benefit in reference to the amount of…
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Q. I retired in 2007 and am in the Civil Service Retirement System. Am I permitted to continue to contribute monthly to my Thrift Savings Program? May I roll over the entire contents of my Individual Retirement Account into TSP? Can I then make monthly contributions into TSP from my checking account? A. You may not contribute to the TSP after you retire, but you may transfer eligible IRA balances into the TSP at any time. To be eligible, the IRA must contain only pretax money.
Q. At age 56, I would have 30 years and five months of service and could retire. I am currently 51 and have 25 years and seven months of service. If I left the federal government to go into a different field of work today, can I continue to add to my TSP account? A. You may not contribute directly to your TSP account after you are separated from federal service, but you may contribute to another retirement plan and then transfer that balance into your TSP account later.
Q. I’ll be receiving a check this week or next from an inheritance. I’m not maxed out on my TSP and haven’t sent any catch-up money in this year either. I was wondering if I could send 100 percent of my pay for the last couple of pay periods this year to TSP to get as much in there before the end of the year as possible? Then next year I’ll start putting in the maximum along with catch-up. A. Your TSP contributions must come from payroll deferral or, you may transfer eligible money into your TSP account from an…
Q. I read that the IRS changed the 2012 maximum contribution to 401(k)s to$17,000 from $16,500. However, I haven’t found any update on the TSP website or the Federal Times saying whether this will also apply to TSP contributions. Have you heard any news on this? A. Not yet, but I expect the TSP to follow suit.
Q: I plan to retire in January at age 68. Can I leave TSP contrbutions in TSP and get monthly payments for the remainder of my life? A: Yes. File form TSP 70 and request monthly payments based on your life expectancy.
Q. I contribute the maximum amount to my Thrift Savings Plan each year. Can I also contribute the maximum amount to a traditional IRA? Are there any prohibitions to me doing this? Is there a limit to tax deferring compensation? What I am considering doing, if possible, is to contribute to a traditional IRA for a number of years, then roll it over into my TSP if that could possibly provide a better benefit, such as when it comes time to purchase an annuity. A. If only it were that easy! There are limits, and the amount you can contribute…
Q: I am 51 years old and will not be able to retire from federal service until I am 65. I have 100 percent of my TSP account invested in the C Fund. I would like to diversify my account to include slightly more risk, such as the International (I) fund. Are you able to provide me general stock market guidelines in which it is best to complete this action? A: As always, I recommend that you select the asset allocation scheme that meets your needs with the minimum of risk and then implement that allocation in your account as…
Q: My wife, a federal employee, has a traditional IRA. Some of the contribution made to the IRA was with money that was considered a deduction when it was contributed, thus no taxes were paid on those contributions. Some of the contributions over the years were made with after tax money. She could not deduct those contributions because of our combined income. My wife would like to know if she can transfer the money from her IRA to her TSP? Can all the increase in the value of the IRA be transferred to the TSP, even if the increase occurred…
As a retirement investment adviser, I find the Thrift Savings Plan’s five basic funds to be the best examples of their kinds anywhere: • The C Fund is invested in the diversified group of stocks included in the Standard & Poor’s 500 Index and represents a diversified investment in the stock of large U.S. companies. • The S Fund provides investors with exposure to the performance of medium and small U.S. company stock. • The I Fund invests in the stock of companies in Europe, Asia and the Far East, the most developed foreign markets. • The G Fund is…