Q. I am covered under FERS. After I retire, may I: a). Continue to deposit funds into my Thrift Savings Plan? b). Move money among the various funds, e.g., from F to G, from C to L2040, etc.? A. After you retire, the only way to deposit funds to your TSP account is to transfer them in from an IRA or other qualified retirement plan. You may continue to manage your TSP investment, as in the past, for as long as you retain the account — potentially for life.
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Q. I am a federal law enforcement officer. I recently read an article that discussed the downside of the Roth TSP for federal law enforcement officers and firefighters. Is this true? ************* Many of you are probably unaware of the serious pitfalls you will encounter if you opt to contribute to the Roth TSP. For a federal law enforcement officer or firefighter, the Roth TSP is a poor choice. It wasn’t until this week that a reader posed a question to me that caused me to realize what a bad idea the Roth TSP is for many of us. The idea behind…
Q. I’m an active-duty Army officer who finally this July got around to transferring 100 percent of my funds (all in G) into the L2040 lifecycle funds given that they have a much better rate of return and reasonable amount of risk. The total value of my G Fund before transfer was $133,700, composed of $126,468 of contributions and only $7,232 of unrealized gain. After transfer, the total value of my account remained the same — approximately $133,700. However, it showed that only $91,368 had been used to buy shares in the L2040 fund. Presumably, the difference of $42,332 would be…
Q. I have a Vanguard 500 Traditional IRA and Roth IRA. Can I transfer these funds into my Thrift Savings Plan? If yes, what forms should I use to make this transfer? A. You may transfer your IRA money into your TSP account, if it is all pretax money, using Form TSP-60. You may not move your Roth IRA money into the TSP.
Q. I took out all of my money from my Thrift Savings Plan and put it in an IRA. Now I have lost a lot of money. I retire in January. Can I have the bank put my money back in my TSP account? If so what do I need to do to make this happen? A. You should be able to do this if your TSP account is still open. If you emptied it earlier, this is no longer an option for you. You could, however, move the money to a discount broker and use Exchange Traded Index Funds…
Q. If I withdraw my Thrift Savings Plan earlier than age 59, I will be penalized 20 percent at the time of withdrawal and have to pay 10 percent in taxes at the end of the year. What if I transfer the money into a traditional IRA and withdraw it a year later? Will I save on taxes? A. Your premise is incorrect. Rolling over the money to an IRA doesn’t help you avoid taxes or penalties on your withdrawals. It may work against you, depending upon when you retire.
Q. Thank you for your answer on my question of investing my 100 percent G Fund into an L Fund. You recommended choosing an L that corresponds to my life expectancy. I expect to retire in about a year, will have about $500,000 outside of the fund after I transfer my 401(k) into the fund. My FERS will be about $1,000 a month, and I will defer drawing Social Security until after 67, maybe wait until 70 (I am 64). The issue is life expectancy. Our family tends to live into its 90s. I am thinking that the L2020 may…
Q. My mother recently passed away and her teacher retirement account provided a lump-sum benefit to my sister and myself. As a surviving beneficiary other than a spouse, I can take the payment as a rollover to an inherited IRA. I would like to put this money into my Thrift Savings Plan account. Can I transfer the proceeds directly from the teacher retirement to my TSP? A. Inherited money can’t be transferred into your TSP account.
Q. All of my money is in the F fund and I’ve lost a few thousand dollars in the past couple of months. What fund transfer/allocations would you suggest to recover that money (quickly?) and what investment allocation would you recommend until I retire in eight years? A. Losing money is not a reason to change your investment strategy. All strategies/allocations are subject to loss – that’s the price you pay for the prospect of growth. If 100 percent F Fund was the right asset allocation for your account a couple of months ago, what makes you think it isn’t the…
Q. When I left federal service in 2001, I rolled over my Thrift Savings Plan savings to a private investment firm. Subsequently, I returned briefly to federal service and accrued enough money in my TSP account to permit me to return funds to the TSP from a private-sector financial manager. Should I do this? I am about to turn 65. A. The TSP is best retirement investment environment you’ll find. If it were me, I’d choose the TSP over a bank or broker any day.