As a Thrift Savings Plan investor, you have access to retirement investment funds that are about as inexpensive as you’ll find anywhere. In 2014, the total cost charged to participant’s accounts ranged from 0.029 percent to 0.049 percent of account assets, depending upon the fund. Even at the high end, 0.049 percent — or a little under 5 cents for every $100 invested — is extremely low. You can invest $1 million in the TSP, in a well-diversified portfolio, for $490 per year or less. I don’t think you can do that anywhere else. So, the TSP’s expenses are the…
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Q. Yesterday, I read your article dated May 20, 2013, “How to be a good pension fund manager.” I wish I had read it before I moved money from my TSP to an outside IRA last year. I wish I had taken some other steps as well. I now want to add back cash to my Thrift Savings Plan before I retire. I could retire at the end of November 2014. Can I do that with catch up contributions? My major disappointment is with the TSP staff and the absence of an onsite adviser in human resources. Does it benefit…
Q. I took my tax info to a professional to have them done this year. I’ve maxed out my Roth IRA with USAA. I’ve also contributed about $2500 to a traditional TSP as a uniformed service member. I’m being told I’ll be penalized for my contributions to my Roth account since I have an employer-based retirement plan. Is this accurate? Can I only contribute a total of $5500 for both accounts? I’ve always been told to contribute to both. A. The TSP contribution limit is fixed and not contingent on any other factor. Your eligibility to contribute to a Roth…
Q. I understand that it is possible to transfer Voluntary Contribution account deposits to a private Roth IRA (with any pre-tax interest earned going to TSP), but I’ve also been told there’s a five year ‘holding’ requirement for the Roth. I currently have a private Roth account that is more than five years old. Does the five year requirement mentioned in conjunction with the VC mean that the money should be placed into a new and distinct Roth account, so that an additional five years holding can be tracked, or can the VC contributions (without interest) be added to the…
Q. I am 24 years old and I have been contributing 15 to 20 percent of my pay to a traditional TSP for 3 years now. When I started my TSP, the option to invest in a Roth TSP was not available. I have a decent amount of money in my traditional TSP right now. I’m curious if it would be better to stop contributing to my traditional and let it grow and start contributing to a Roth TSP or continue to invest in my current plan and maintain my current compounding interest? I’m nervous that if I change my…
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 federal civilian under the FERS system with less than 10 years of civil service. I am also a military reservist with 25 years of military service. I am not yet 50 years old and I do not intend to retire or separate from federal service in the next few years. I want to cease contribution to and close my TSP account, withdraw the entire amount immediately by rolling it over into a tradional IRA not associated with the government. I am unconcerned about any penalty I may have to pay. I could not find in any…
Q. I am a FERS retiree from the federal government in March 2011. I received the VERA/VSIP in a lump sum of $25,000 ($18,000 after taxes). In July, I withdrew a lump sum from my TSP to pay off my mortgage, that amount was also taxed. Since the lump sums I received were taxed already, how is it that I have to claim them as income? I am preparing my 2011 taxes and those lump-sum payments make it appear that I earned more than $100,000 in 2011. It seems to me that I am paying taxes twice on the money.…
Q: When I am filing my simple taxes, do I need to include my 5 percent Thrift Savings Plan contributions as an investment anywhere in my return? I did not receive any IRS Form 1099s from the TSP, but want to ensure I do the right thing. A: Your TSP contributions do not need to be reported as an investment. The contributions are reported to you on your W-2.
Q: I am a Federal Employees Retirement System employee retiring on April 30, under the Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay at age 55. Can I take some or all of my Thrift Savings Plan balance and transfer it to a self-directed individual retirement account? What is the process for doing that? What are the estimated costs and penalties? A: You may roll over your TSP assets to an IRA following separation at at 55 with no penalty. Use Form TSP-77 to request a partial withdrawal or Form TSP-70 to request a full withdrawal of your account assets.