Ask The Experts: Money Matters

By Mike Miles

Finding an advisor

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Q. My husband and I are 51. We will retire in about 10 years. How do we find the right financial advisor that will help us understand what we need for retirement, and  what we need to do if we won’t have enough to meet our needs? Read the rest of this entry »

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Girlfriend on annuity

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Q. I am 63 and will be retiring under FERS probably within the next two years. Am I allowed to have my long-term girlfriend on my TSP annuity?

A. Maybe:

“If you chose a TSP annuity that provides for a joint annuitant other than your spouse, the joint annuitant must be either a former spouse or someone with an insurable interest in you. This means that the person is financially dependent on you and could reasonably expect to derive financial benefit from your continued life.

Blood relatives or adopted relatives (but not relatives by marriage) who are closer than first cousins are presumed to have an insurable interest in you. If you name such a joint annuitant (i.e., a former spouse or someone with an insurable interest) who is more than 10 years younger than you, you must choose a joint life annuity with the 50% survivor benefit. The only exception is for a former spouse to whom all or a portion of your TSP account is payable pursuant to a retirement benefits court order.

If the person named as your joint annuitant is not presumed to have an insurable interest in you, you must submit an affidavit (i.e., a certification signed before a notary public) from someone with personal knowledge that the named person has an insurable interest in you.
The certifier must know the relationship between you and the joint annuitant and must state why he or she believes that the named joint annuitant might reasonably expect to benefit financially from your continued life.”

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TSP withdrawal

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Q. I am under the CSRS retirement system. I have 32 years of federal service. I am 56 and plan on retiring at 60. I contribute to the TSP, $17,500 per year and an additional $2,600 catch-up to the TSP per year. I am a GS-13/7. My high-3 would most likely be at this pay grade. How can I calculate how much my monthly annuity would be upon retirement so my financial adviser will have a better understanding of my situation upon retirement? I know about the ballpark estimates, but I would
like something a bit more concrete. When do I need to start withdrawing from my TSP fund upon retirement? At what age? Read the rest of this entry »

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Annuity eligibility

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Q. I was just hired by the VA (NTE only lasting 2 months, Excepted) at age 58. How long must I work before I am eligible for a monthly pension? How long must I work before I am eligible to keep retirement thrift plan? How long must I stay before I am eligible for retirement medical benefits?  I am assuming that I will find a permanent job but does this NTE time count toward something? Read the rest of this entry »

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TSP transfer

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Q. My husband and I are looking at investing into a new hotel being built. I have worked in the hotel industry for 15 years, and this is a great opportunity for us. He has been active duty in the Air Force since 2011 and has roughly $20,000 in his TSP. Can he transfer his TSP balance to a Self Direct IRA to invest the money into the hotel deal? Are there penalties involved? He would continue his normal contributions to the TSP account as we move forward, but we are interested in using the $20,000 to invest in the hotel.

A. He may if he’s aged 59-1/2 or older.

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Stock dividends

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Q. The stock funds (TSP) offered, Small Cap/Large Cap, invest in stocks. What happens to the dividends?

A. They are retained inside the funds and are reflected in the share prices.

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TSP withdrawal

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Q. I will be 70 in February 2016 and plan to retire and take all my money out of my TSP. I am a single divorced woman and do have monthly security for which I have been paying taxes. Can I take all my money out, as I have calculated that the $1,000 I am from Social Security is not enough for my expenses as I have calculated it.

A. Yes, you may take all of your money out. Use form TSP-70.

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Diversification strategy

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Q. I just started a federal career at age 31. I rolled over about $21,000 dollars into the S fund from prior retirement. Would it be better to use the L funds for growth which carry less risk, or seek the highest amount of returns in the S fund. I am huge risk-taker when it comes to investing, just trying to make informed decision before accepting all the risk of the S fund with no diversification.

A. Let’s see … I know that you’re 31, have about $21,000 in the S Fund, are a huge risk-taker and know little or nothing about managing a retirement investment portfolio. Sorry, but that’s not nearly enough information to figure out what’s best for you. It’s like you’ve told me that you’re driving a Ferrari somewhere in Iowa with 1/4 of a tank of gas and asking which way you should turn the wheel. I can tell you that your one-fund portfolio takes more risk than needed for the expected return it produces, and that it could be made more risk-efficient through diversification.

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TSP setup

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Q. I was recently hired at the the FDA. I have about $43,000 in student loans with a high interest rate. How much should I set up to be put into my TSP in order to take a loan from myself? Would this be a smart move? I believe that this way I’ll take out a loan from myself at a lower interest rate. Read the rest of this entry »

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TSP taxation

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Q. Are all TSP withdrawals subject to the 20 percent federal tax withholding? Including full withdrawal by way of monthly payments?  And is this done automatically when you set up your payout options with TSP or do you need to complete a form?

A. Not all TSP withdrawals are subject to mandatory withholding. See the table on Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for the rules. Mandatory and default withholding happens automatically. Anything else, you’ll have to request.

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