Q. I am looking for some feedback on information received from a financial adviser. I have been in the L2020 fund. The financial adviser is primarily for military and federal employees. He indicated that the L2020 fund currently has 60 percent in stocks (C, S and I funds) and 40 percent in fixed income (G and F funds). He had suggested conducting an interfund transfer to allocate 65 percent to stocks and 35 percent to fixed income. The formula would be 25 percent C, 20 percent S and 20 percent I funds, equaling 65 percent. The second equation would be to put…
Browsing: retirement
Q. I plan to retire in nine years (at 63). I have $176,000 in the Thrift Savings Plan. I add the maximum to the TSP every year ($22,500) and will continue that until I retire. Then, my strategy, once retired, is to withdraw a monthly income from my TSP, and I will then start adding that money to a Roth IRA (e.g., a Vanguard fund) until I max out the Roth for both my husband and me. My thought is that I am getting a tax break by adding the max to the TSP during my high-income years as a…
Q. I am a CSRS employee who plans on retiring in 2013. I want to open a Voluntary Contribution Program account and deposit after-tax money in that account, and then, at retirement, transfer the deposit into Roth TSP, and any earnings into traditional TSP. Is that allowed? A. No. You’ll have to use a Roth IRA for the after-tax portion of the VCP account.
Q. My understanding is if I withdraw using a loan from my Thrift Savings Plan (say a residential loan) shortly before I retire and under 59½ years old, and then I retire or turn 59½, I get a 10 percent tax penalty because the loan was taken when I wasn’t eligible for a withdrawal without penalty. It seems a little contradictory because I could pay off the outstanding amount and then take an unpenalized withdrawal after retirement or 59½. Am I reading this rule correctly? A. No. If your unrepaid loan balance is declared a taxable distribution, it is counted as…
Q. I’m looking to retire in 18 months and don’t know who to trust when making a decision to keep money in the Thrift Savings Plan, do a mix with a traditional IRA, or take it all out and put 100 percent in a traditional IRA? A. I can give you one recommendation that may solve your problem: Leave your money in the TSP and manage it there for as long as possible. In fact, if you have eligible retirement plan accounts outside of the TSP, you should move them into the TSP. Anyone who tells you otherwise is either…
Q. I’m active-duty military, maxing out one Roth IRA. I was interested in opening a Roth TSP, as well, but a financial adviser at my bank recommended opening a second Roth IRA in my wife’s name and maxing it out first before contributing anything to a Thrift Savings Plan. This struck me as odd because it would leave my retirement money spread over three separate accounts. I couldn’t max out the TSP but could probably contribute more than $5,000. Is my financial adviser (free service from the bank) right or just trying to get me to open another IRA at…
Q. My wife recently retired from a state position. She was informed by her human resources/benefits office that she could roll over the balance of her 401(k) into my Thrift Savings Plan. Is this accurate? A. Wrong! One spouse can’t combine their retirement plan assets with those of the other.
Q. My wife has 12 years of FERS service at the age of 62. She is eligible to retire. Can she withdraw the full amount from her Thrift Savings Plan without penalty? A. Yes.
Q. I recently retired from the military. I had $30,000 in the Thrift Savings Plan. I have no plans on returning to federal service. I have Roth IRAs with two other private companies, each with less than what I had in the TSP. I want to remove these from TSP and place into either a new Roth or one of my existing accounts, which makes more sense as a larger pot of money will earn me more since I can continue to contribute. This opens a new concern as the limitations of combined income and contributing to a Roth. I…
Q. I am 63 years old, in FERS, have 25 years of service, and have worked for the same agency my entire government career. Because of medical conditions, I need to retire within the next two months. I have an outstanding $20,000 loan and will not be able to repay it before retirement. I have read a lot of what might happen: 10 percent penalty, etc. But could you explain what would be the best course of action and how the outstanding loan will be treated. I would like to use part of my Thrift Savings Plan for medical bills. A. If…