Browsing: contributions

Q. I am 39. I contribute 12 percent of my salary to the Thrift Savings Plan. I have 50 percent in the L Fund and 10 percent each in G, I, S, C and F. I plan to retire around 62. Is this a reasonable contribution distribution? A. On its own, it’s not risk-efficient. If you don’t have a good reason to use this allocation, then it’s not reasonable.

Q. I am 26 years old and I contribute 15 percent into my Thrift Savings Plan account. I have been reading suggestions on personal finance websites that I should consider placing a portion of my contribution into the Roth TSP to anticipate the possibility that I will be in a higher tax bracket around retirement. I was wondering what your opinion on this issue is and if it would be a good idea to place a portion of my TSP contributions in the Roth TSP. A. I’m indifferent without any evidence that it will further your interests. It’s impossible to…

Q. If the lump-sum payment is considered earned income for tax purposes but is not eligible to Thrift Savings Plan deferral nor does it serve as the base for automatic agency contributions, wouldn’t it make better sense not to cash in the leave? Rather, wouldn’t it be more lucrative to continue working, take the earned vacation over the year, collect matching funds for TSP, matching funds for health insurance, and on top of that, continue to accrue more annual leave, more sick leave, and enjoy the vacation time off?  I understand no supervisor/manager would approve a single vacation of 5+…

Q. I separated from federal service in 2007 after 19 years in FERS. At the time of separation, I withdrew my Thrift Savings Plan contributions. I am considering returning to federal service. I was born in 1961. If I return to federal service, what will be my minimum retirement age? Are there special service requirements for reinstated federal employees? Am I required to return funds I withdrew from the TSP? If not required, is it still possible to return TSP funds that were withdrawn and deposited in another 401(k)? How will my FERS retirement annuity be calculated? Where can I…

Q. I joined federal service in September 1984 and left at the end of August 1986. The FERS retirement program had not really been implemented and the Thrift Savings Plan did not exist. I declined to participate in CSRS since I was compelled to pay into Social Security and felt the additional retirement payments under CSRS were too much for me. In the summer of 1988, I returned to federal service and was told I had to wait a year before being eligible to participate in TSP. I heard from some employees that when TSP was first created, there was a “catch-up”…

Q. I’m a 28-year-old FERS employee contributing 10 percent of my salary plus my agency’s 5 percent match to a traditional Thrift Savings Plan. I’m planning to increase my contribution by 1 percent each time I approach a step increase or other pay increase until I eventually max out my contributions. My decision now is to determine whether to put these additional contributions into a traditional or a Roth TSP. My understanding of the trade-off analysis is that it essentially comes down to an assessment of my current effective tax rate compared with what I project my effective tax rate will…

Q. A client of mine retired from federal government after 16 years and took her employee contributions out of the retirement plan upon retirement. She is working for the federal government again and wants to buy back in to the pension plan for the employer portion of the 16 years she previously worked. Does she have to use after-tax dollars, or can she do a rollover from an IRA or other retirement plan? A. She must use after-tax dollars for the buyback.

Q. I have between 10 and 15 years to work until retirement (I am 52 yrs old). Right now, my contribution allocation is: S: 25 percent C: 25 percent L: 20 percent G: 30 percent The distribution is more diversified. What do you think? I don’t know what I am doing; therefore, I am just guessing. A. Your allocation is basically: 50 percent stocks, 20 percent bonds and 30 percent cash. This would generally be considered a moderately conservative allocation. Whether, or not, it’s right for you is impossible to say without more information and analysis, but it doesn’t appear to…

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