Q. I’m a FERS retiree, age 64, with a $36,000 annual pension. My spouse has a $40,000 annual salary. We have a rental property that brings us $24,000 a year. And we have a home mortgage balance of $500,000. Our living expenses so far do not require me to withdraw my $600,000 Thrift Savings Plan fund. I plan to live until age 85. As I approach age 70½ with minimum distribution, what is the best tax strategy for transferring the $600,000 from the TSP into a private investment account? A lump-sum rollover into a Roth account after paying the taxes? A calculated…
Browsing: I Fund
Q. Effective Feb. 29, 2012, I am a CSRS retiree from federal service; I participated in both the Thrift Savings Program ($201,000), and the Voluntary Contributions Program. I must make an election soon of the funds now in the VCP: $87,637 (nontaxable); $34,682 (taxable). I am married, and I will be 66 years old in October. I (we) do not foresee needing the money from these two sources in the near term. I will likely convert everything to a traditional IRA then Roth IRA in April of the year after I turn 70½, to be left to my son after I…
Q. I retired the end of July 2011. Since then, companies are coming out of the woodwork requesting that I invest my Thrift Savings Plan funds with them because “keeping it in the TSP will not allow growth due to the fact that I am no longer contributing.” But I am hesitating to do anything with it because once I hear their fees, it scares me. I don’t expect to need the money and would like it to grow into a nice inheritance for my daughter. I have about 90 percent in the G Fund and the remaining 10 percent divided…
Q. I’m 27 and contribute 5 percent of my income to the Thrift Savings Plan, which I have in the C and I funds. I’m considering opening a Roth IRA, as well as investing in an aggressive growth mutual fund. Would I be better off just increasing my TSP contributions? A. If you insist on long-shot betting — making bets that are more likely to lose than to win — you’ll have to go outside TSP. If you want an aggressive investment that maximizes your risk-adjusted expected returns, try the TSP’s S Fund.
Q. Can you recommend some funds where a retiree could put his money if he is not a federal worker? A. Except for the G Fund, which is a cash equivalent that can’t be matched outside the Thrift Savings Plan (use a money market fund or equivalent interest bearing security with no risk of loss), the other four TSP funds are based on widely available indices. The C Fund is based on the S&P 500 Index, the S Fund on the Dow Jones U.S. Completion Total Stock Market Index, The I Fund on the Morgan Stanley Capital Europe, Australasia, Far…
Q. TSP explains in its brochure that dividends are already incorporated into the share price. This seems illogical to me, as I believe the definition of a dividend is a cash payout of a certain stock share price at a certain time of the year. Does the Thrift Savings Plan definition mean that the share price of the S, C or I Fund is artificially inflated? A. No, it means the dividends that are paid by the stocks owned by the funds are retained by the fund and increase the net asset value of the fund. The share price reflects…
Q: I truly do not know what I’m doing with my Thrift Savings Plan funds. I’ve been told to divesify them; what exactly does that mean? If you were to look at this breakdown (figures rounded slightly) and know that I won’t retire for 21 years, what recommendation(s) would you make? L 2040 Lifecycle Fund: 74.72 percent of total funds, $21,423; F Fund: 5.33 percent, $1,529; G Fund: 5.28 percent, $1,515; C Fund: 4.91 percent, $1,408; I Fund: 4,88 percent, $1,400; S Fund: 4.88 percent, $1,398. A: Consider the following growth allocation: 55 percent C Fund, 26 percent S Fund,…
Q: I know the C Fund tracks the S&P 500, but what do the S Fund and I Fund fall under? A: The S Fund tracks the Dow Jones U.S. Completion Total Stock Market Index, which covers all actively traded U.S. common stocks not included in the S&P 500 index. The I Fund tracks the Morgan Stanley Capital International EAFE Stock Index, which covers certain large company stocks from certain developed nations outside of the U.S. Simply, you can consider the S Fund to represent medium and small U.S. company stocks, and the I Fund to represent the stock of…