Q: My wife and I are retiring from federal civil service effective Sept. 30 and want to continue adding money to individual retirement accounts we have had since before our civil service careers. We will not be employed after leaving the federal government. What is the contribution amount we can make to an IRA annually? A: If you have no earned income, you can’t make IRA contributions.
Browsing: retirement
Q: I read your May 3 piece regarding the G Fund. You said it should represent 10 percent or less of an investor’s Thrift Savings Plan assets. Maybe I’m not understanding correctly, because the suggested G Fund distribution in the L Funds has 32 percent in the L 2020, 64 percent in the L 2010 and 74 percent in the L Income. My opinion is that these are very high percentages, but I also think your 10 percent is rather low. I’m not currently in the L Funds and probably won’t be. I plan to retire in 2014 so I…
Q: I am an active-duty soldier participating in the Thrift Savings Plan. I do not get a matching contribution. My money is invested in the S and I Funds, and this week I have lost $4,000. My investment had been exclusively in the G Fund, and my account was slowly growing. When I switched money in February from the G Fund to the I Fund, I began to make more money. I want to switch back to the G Fund for stability but am afraid that since the share prices are lower, the value of my account will drop because…
Successful retirement investing depends more on avoiding serious mistakes than it does on realizing exceptional gains. Cash flows from your portfolio when investment values are depressed can cause damage that won’t be repaired later by better returns. If you withdraw $10,000 from a portfolio when it is worth $200,000, you’re withdrawal represents 5 percent of your portfolio. If, alternately, you withdraw that same $10,000 from your portfolio after its value has fallen to $100,000, you’ve now withdrawn 10 percent of your portfolio’s total value. A withdrawal rate of 5 percent might be sustainable over 20 or 30 years, but a…
Q: I am 69 and plan to continue working well into my 70s. Do I have to start my Thrift Savings Plan withdrawals at age 70 1/2 or can I wait until I retire? What are my options? A: You can wait until you retire to begin your withdrawals.
Q: I am currently in a Civil Service Retirement System 6C designated law enforcement officer position. Aside from my CSRS retirement benefits, of which I will reach the maximum annuity of 80 percent at the end of this year, I have also contributed to the Thrift Savings Plan. I am not planning on relying on my TSP funds to supplement my retirement. I know there are ways to avoid the 10 percent tax penalty for early withdrawals before turning 55 years old (taking the money in a monthly annuity, etc.). I would like to take all of my TSP out…
Q: I plan on taking a deferred retirement at age 54 with 32 years of federal service in May 2012. I have been in the Federal Employees Health Benefits program since 1985. My wife plans taking a job in the federal government prior to me taking the deferred retirement. When she is hired, the plan is for me to transfer to her FEHB. When I reach age 56 in May 2014, how will the deferred retirement impact the three parts of the Federal Employees Retirement System (basic retirement with high-3, etc.; supplement, which should be 32/40 x what I receive…
Q: During the Obama campaign, there was talk of allowing up to $10,000 penalty-free 401(k)/Thrift Savings Plan withdrawals for hardship purposes. Have you heard whether this has been passed into law yet? A: It is my understanding that penalty-free hardship withdrawals are permitted under certain circumstances. You should start with IRS Publication 590 or consult a qualified tax adviser for details. I recommend using someone who would be responsible for preparing your return for the year of the withdrawal.
Q: I will be retiring in couple of years. Will I be able to contribute to my Thrift Savings Plan after retirement? If so, is there any limit on contributing? If not, how will my TSP grow if I am not able to contribute? A: If you’re not receiving a federal paycheck, the only way you can contribute to the TSP is through a transfer from an eligible IRA or retirement plan account.
Q: I plan to retire next year at age 62 and my financial adviser suggests moving my Thrift Savings Plan money into American Funds or a similar funds manager because I will have very limited flexibility drawing money from TSP if I stay there. My problem is that the sales charge will take a good chunk of money to do that, and the TSP expenses are low. I have money in a 401K, which is currently invested in staggered CDs, and I thought I would move it into the TSP instead of transferring the money out of TSP. What are…