By Mike Miles
December 3rd, 2013 | Uncategorized
Q. I am really confused over the Roth IRA and Roth TSP. I have an individual Roth IRA through Vanguard. I have a Thrift Savings Plan account that I max every year, and because I’m over 50, I also max my TSP catch-up contribution. I’m thinking of changing the catch-up contribution from the regular TSP to the Roth TSP. If I contribute the max to a Roth TSP, can I still contribute the max to my Vanguard Roth IRA ($6,500 to Vanguard and $6,500 to Roth TSP for a total of $13,000). Or do I need to choose just one Roth to contribute to — either Roth TSP or Vanguard Roth IRA?
A. You don’t have to choose. Your Roth TSP contributions don’t reduce your eligibility for contributing to a Roth IRA.
December 2nd, 2013 | Uncategorized
Q. I have reverted back to a more conservative Thrift Savings Plan allocation: 67 percent G Fund/33 percent C Fund. I put in the maximum, including the maximum catch-up and, with match, it’s nearly $30,000 per year. My balance at 60 when I retire in five years should be between $500,000 and $600,000 depending on the return. I am estimating a 4 percent return.
I am wondering about keeping this asset allocation and taking monthly payments starting near 4 percent or slightly higher at age 60. Is a distribution with 70/30 as indicated above a bad idea? I like the conservative allocation and feel fairly comfortable with it. But some people say taking monthly payments out of TSP is a bad idea. Any suggestions?
A. It’s impossible to judge what’s best for you from the information you’ve provided. I can tell you that your asset allocation model is risk-inefficient. That is, you could achieve a higher rate of return for the risk you’re taking.
Adjusting your allocation to 20 percent C Fund, 8 percent S Fund, 2 percent I Fund, 30 percent F Fund and 40 percent G Fund will stay within your preferred 70 percent debt/30 percent equity constraint while increasing sustainable TSP lifetime withdrawal rate by about 20 percent.
Greater increases could be achieved by shifting toward more equity-heavy allocation models.
October 28th, 2013 | Uncategorized
Q. Has the maximum contribution allowed for Thrift Savings Plan election and catch-up changed from 2013 to 2014?
A. Not yet.
August 19th, 2013 | Uncategorized
Q. I plan to retire Jan. 11, 2014. I would like to maximize my Thrift Savings Plan contribution. If my calendar is correct, Pay Period 1 of 2014 starts Dec. 16 and Pay Period 2 on Dec. 30. How much can I contribute in pay periods 1 and 2? My entire paycheck? More? How do I do that?
A. You may contribute your entire paycheck until you reach the annual contribution limit. Submit forms TSP-1 and/or TSP-1-C to make your request.
August 1st, 2013 | Uncategorized
Q. How much of my Thrift Savings Plan maximum contribution of $23,000 can be put into the Roth TSP?
A. All of it.
June 3rd, 2013 | Uncategorized
Q. I understand that to make Thrift Savings Plan catch-up contributions, you are supposed to be making sufficient regular TSP contributions so that the maximum annual amount (currently $17,500) of regular TSP contributions will be reached by the end of the year. What happens if you begin contributing an amount per pay period at the beginning of the year that would result in the maximum regular and catch-up contributions by the end of the year assuming 26 pay periods? However, you retire in the middle of the year. This would result in making TSP catch-up contributions during the year without actually reaching the maximum regular TSP contributions. Is this acceptable? Are there any consequences to doing this?
A. It is acceptable and, as far as I know, there are no material consequences of doing this as long as your total contributions for the year fit within the total contribution limit.
May 30th, 2013 | Uncategorized
Q. Can I maximize my Roth TSP contribution ($17,000) and also contribute to a regular Roth mutual fund up to the $5,500 limit?
A. Depends upon your marital status and income. Check IRS Publication 590 or ask your tax accountant for the answer.
May 28th, 2013 | Uncategorized
Q. I plan to take a $50,000 residential loan from my Thrift Savings Plan account. Am I limited to repaying $17,000 a year (the contribution amount), or could I pay back $25,000 a year from my salary?
A. You may repay the loan as quickly as you like.
March 11th, 2013 | Uncategorized
Q. My husband will be retiring in June 2014. He will turn 50 in March 2014. Can we still contribute the full $17,500 plus $5,500 catch-up (I realize next year contribution limits may increase) even if he is only in for half a year?
A. Yes, as long as his pay will support the deferrals. The limits are not adjusted for partial years.
February 27th, 2013 | Uncategorized
Q. I am over 50, my wife (unemployed) is under 49. In 2013, if I contribute the maximum amount (including catch-up) of $23,000 to my Roth TSP and traditional Thrift Savings Plan, can I also contribute the maximum of $6,000 to a Roth IRA or traditional IRA for a total contribution of $29,000? Can I also contribute the maximum of $5,000 for my wife into a Roth IRA or traditional IRA for a total contribution of $34,000, assuming that I fall within the adjusted gross income limits as addressed by the Internal Revenue Service? If there are limitations on contributing to a Roth IRA or traditional IRA when active in the TSP, what are they?
A. Subject to the income limits outlined in IRS Publication 590, you may contribute to the TSP and an IRA or Roth IRA.