By Mike Miles
Transferring funds after retirement
June 10th, 2013 | Uncategorized
Q. I retired in 2011 because of a base closing. Before leaving, I put everything in the G Fund. Can I take money out of the G Fund and put it into another fund now that I’ve retired?
A. Yes.
Tags: G fund, retirement, transfer, TSP
Combining TSP for married couples
June 10th, 2013 | Uncategorized
Q. My wife and I plan on retiring in seven years. We are covered by FERS and will each retire at the minimum age (56) with over 37 years of service for both. Can we combine our Thrift Savings Plan accounts at retirement?
A. No.
Tags: spouse benefits, TSP
Finding an adviser
June 10th, 2013 | Uncategorized
Q. I’m no money expert and, in line with your advice, would like to do better than take the safe or easy route by contributing to the L Fund that most closely matches my life expectancy. How do I go about finding a financial adviser who is familiar with the Thrift Savings Plan and government employees? What sort of questions should I be asking them, and can you ballpark the cost of such an adviser?
A. Your adviser should be:
1. Free from conflict on interest
2. Competent in the kind of work that needs to be done
3. Concerned with your success
4. Affordable. This means a Fee-Only, Registered Investment Advisor with experience in financial analysis for federal employees who charges no more than about 0.75 percent of your savings and investment assets per year.
Tags: financial advisers, L Fund, TSP
TSP allocation Part II
June 5th, 2013 | Uncategorized
Q. I have between 10 and 15 years to work until retirement (I am 52 yrs old). Right now, my contribution allocation is:
S: 25 percent
C: 25 percent
L: 20 percent
G: 30 percent
The distribution is more diversified. What do you think? I don’t know what I am doing; therefore, I am just guessing.
A. Your allocation is basically: 50 percent stocks, 20 percent bonds and 30 percent cash. This would generally be considered a moderately conservative allocation. Whether, or not, it’s right for you is impossible to say without more information and analysis, but it doesn’t appear to be grossly inefficient to me.
Tags: allocation, C Fund, contributions, distribution, G fund, L Fund, S Fund, TSP
TSP allocation
June 5th, 2013 | Uncategorized
Q. I am coming up on 10 years in the federal government and have not done a good job with my Thrift Savings Plan. I have left it at 100 percent in the G Fund, contributing 5 percent of my salary to TSP. I am now looking to maximize my TSP contribution (although perhaps not right away; I am considering increasing it to 8 percent this year and the upping it again next year until I’ve maxed it out). I was planning to put the additional contribution this year into the L Fund. I am almost 35, will soon have two kids and am married. Thoughts on how to better allocate my contributions?
A. If you want to do it yourself and don’t know what to do, I suggest that you put it all into the L Fund that most closely matches your life expectancy. To use my usual airplane analogy, this is like advising you to fly straight and level at 20,000 feet. I have no idea if it will get you where you want to go, but it’s the safest alternative without more information.
Tags: allocation, contributions, G fund, L Fund, life expectancy, TSP
TSP withdrawal Part II
June 5th, 2013 | Uncategorized
Q. I have $300,000 in my Thrift Savings Plan and am retiring soon. I plan on taking $40,000 out to put into my checking and then roll the remaining $260,000 into an account that I can make monthly withdrawals for the rest of my life. I am 60 years old. What percentage of this should I take out monthly (I’ve heard anywhere between 4 percent and 6 percent) … to make it last? What is your recommendation?
A. First, you should take out enough to create a spending fund and then take the monthly withdrawals from your TSP account. No need to give up the TSP’s exceptional advantages. There is no generally safe maximum withdrawal rate for everyone. That rule of thumb you’ve heard of is useless and dangerous. The maximum safe withdrawal rate depends entirely upon your circumstances, including how the money is managed. Without the proper analysis and management, you’re flying blind.
Tags: monthly, retirement, transfer, TSP, withdrawal
TSP withdrawal
June 5th, 2013 | Uncategorized
Q. I started taking 4 percent of my Thrift Savings Plan when I retired. When I reach 70½, will I have to make a total withdrawal or will I be able to take life expectancy payments? I am CSRS Offset if that makes a difference.
A. You may change the amount of fixed monthly payments once each year or you may switch from TSP calculated payments to fixed payments, but not the other way around. See the publication at https://www.tsp.gov/PDF/formspubs/tspbk02.pdf for info.
Tags: 70 1/2, life expectancy, monthly, retirement, TSP, withdrawal
TSP allocation
June 3rd, 2013 | Uncategorized
Q. I’ve participated in the Thrift Savings Plan since its inception as a CSRS employee and plan to retire next year. My current contribution allocation is 100 percent to the L2020 Fund and has been since that fund was created in 2005. Prior to the creation of the L funds, I had allocated my contributions equally to the C and G funds, which I have left untouched in the account. The account’s present holdings are approximately 50 percent L2020, with the remainder being 25 percent C and 25 percent G Fund. What should I now be doing, if anything, with those pre-L2020 account assets?
A. You should be competently and diligently monitoring and managing them to serve your financial goals with a minimum of risk. Is your current asset allocation arbitrary? If so, you should rethink it.
Tags: allocation, C Fund, contributions, CSRS, G fund, L Fund, retirement, TSP
Catch-up contributions and retiring mid-year
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.
Tags: catch-up contributions, maximum contribution, retirement, TSP
TSP withdrawals and required minimum distribution
June 3rd, 2013 | Uncategorized
Q. I have been taking monthly withdrawals from my Thrift Savings Plan account for several years. I will turn 70½ this year. Do my prior withdrawals affect the amount of the required withdrawals?
A. The required withdrawal each year is based entirely on the closing balance in your account at the end of the calendar year preceding the year for the withdrawal.
Tags: 70 1/2, Required Minimum Distribution, TSP, withdrawal