Q. I’ve been putting about $2,500 a year into the G and F funds. Should I continue to do that, or switch to an L Fund or perhaps a Roth? I’m 25 with four years of service in? A. Sorry, but we don’t give individual investment advice through this forum. Your asset allocation seems very conservative for your age, however.
Browsing: Roth IRA
Q. Will retirees be able to roll over funds from the Roth TSP option into a Roth IRA, even if we exceed the income limits for a Roth IRA? A. Yes, you will.
Q. I am thinking about starting to put my TSP contributions into the new Roth TSP. I already have an adequate amount in the regular TSP, and I am thinking the amount going into the Roth will go to my kids after my wife and I are gone. I understand the inherited Roth TSP will be tax-free to them — is that right? I am disappointed I cannot transfer my Roth IRAs into the new Roth TSP — why is that? A. This is basically correct, if you’re talking about federal income tax. There are rules that must be obeyed,…
Q. I will have 40 years with the IRS in 2012 and plan to retire either this year or in 2013. I have been contributing to both the TSP and the Voluntary Contributions Program. I plan to leave the TSP contributions to the G Fund alone and just let it grow. The VCP is another matter. I have a Roth IRA with Vanguard and would like to transfer all of the VCP to the Vanguard Roth IRA.I know I am required to pay tax on the interest the VCP has earned in the year received. The question is how do…
Q. I am civil service, with more than 17 years of federal service, in FERS, and approaching 59½ and would like to withdraw 50-75 percent of my TSP and roll the full amount over into my Roth IRA account. I would leave 25 percent in my TSP and let it continue to grow for my remaining time in federal service. How do I go about doing this, if I can? Does this make financial sense to do this? I plan on retiring at age 62; Dec. 31, 2014. A. You may take an age-based in service withdrawal once you reach…
Q. I am a FERS employee, with 27 years of service, making $126,000. My wife focuses on raising our son, but does some substitute teaching making about $2,000 per year. Can I max out my TSP at $22,000 and max out a Roth IRA for myself at $6,000 and put an additional $6,000 into my wife’s Roth IRA? I do not understand IRS Pub 590. A. The answer will depend upon your Modified Adjusted Gross Income for the year of the contribution. If you don’t understand the tax rules and how they apply to you, you should hire a trustworthy…
Q. I am a CSRS employee with more than 36 years of service. I have also been contributing to a TSP account. I plan to retire in June 2013. Should I start contributing to a Roth IRA or continue contributing to my TSP? A. “Should I…” is not a question that I can answer through this forum. Whoever is responsible for managing your investment portfolio and delivering the results you expect should be the one to decide.
Q: I have a question concerning the following paragraph from your Feb. 20 column in Federal Times: I find it disappointing that it appears that you will not be able to manage, or withdraw, money selectively between the two options. Your contribution allocation and any interfund transfers you direct will apply to both options. Any withdrawals will be taken, pro rata, from both options. You may, however, split a rollover distribution between traditional and Roth IRA accounts. Specifically, I am puzzled by the statement in the second sentence. As I understand the general concept with “tax deferred” individual retirement accounts…
Q: I have two Roth questions. First, I max out my TSP contributions and would contribute more if allowed. Am I right to view Roth contributions as a good means of essentially increasing my retirement contributions by pre-paying the taxes I’ll pay in retirement? Second, after I retire, will I be allowed to transfer the Roth balance of my TSP account to an existing Roth IRA and leave my non-Roth balance in the TSP? A: “Yes” to the first question and “It appears so” to the second.
Q: I’m curious as to why you are unconvinced that paying tax on Roth TSP contributions now and then withdrawing your balance tax-free is not necessarily a better option than deferring tax payments on traditional TSP contributions and then withdrawing the balance at a lower tax rate. I used the following assumptions: Annual contributions – $17,000 Tax rate – working 18 percent Tax rate – retirement 14 percent Interest rate (all years) 6 percent Compounding periods 26 Years of service 25 I show identical balances after 25 years. I then assume 35 years of equal monthly withdrawals (6 percent annual…