Ask The Experts: Money Matters

By Mike Miles

TSP maximum contribution or VCP?

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Q. I am retiring in June under CSRS at age 54 after 31 years of service (Air Traffic Provision).  I have been working outside of the country for the past three years as a loaned executive and have had to pay my CSRS benefits out of pocket to keep my CSRS entitlement while outside of the country. During this period, I have not been able to contribute money into the Thrift Savings Plan since my salary is paid by the out of country organization where I am assigned. I will only return to the Federal Aviation Association for one month before I retire. Should I contribute as much as possible to the TSP in that month, or put money into the CSRS Voluntary Contributions Plan prior to my retirement to maximize savings before I retire?

A. Use Form TSP-1 to elect to defer all of your net, pre-tax pay into your TSP account. Contributing money to the VCP account before you retire, and then rolling over the after-tax balance to an IRA and any earnings to your TSP account is an attractive move if you have the after-tax cash handy and can wait the required holding period before withdrawing from the Roth IRA.

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