Should You Really Stay in TSP (Thrift Savings Plan) in Retirement?
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- เผยแพร่เมื่อ 16 ก.พ. 2022
- TSP VS. IRA
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There’s so much information on here it’s incredible. I am so grateful for this help !!!
Thanks for those tips! I didn't know about that locality pay issue! I found that very useful.
Great to hear!
Thanks for sharing a video on this particular retirement package!
Thanks for the videos. Helps Federal Employees navigate their benefits. Keep them coming.
My pleasure Chris, Have a great day!
Very good Q and A 🏆👏👏
Glad it was helpful!
Dallin, you probably heard this a lot but I want to remind you how grateful I am. Thank you for being in TH-cam educating us fellow GOVT employees on TSP.
- Tony
Thank You, I really appreciate it. We thank you for watching!
great content as always, but hard to listen to echoing audio - just get a nice mic and you are solid gold!
GREAT JOB
Do special pays, like STEM, incentive pays, retention pay for technical fields count towards the Top 3?
I am under foreign service pension system. What are the differences between FERS and FSPS?
Hello, got a quick question for you and hope you can address it. Let's say someone retires on December 31, 2020 and have an accrued sick leave payment that was paid on let's say January 24, 2021 or later. For tax purposes, will that payment be counted as income for 2020 or 2021? Thanks in advance for your response.
Yes, it will count in whatever tax year it is received
“IS THERE A BENEFIT TO WAITING UNTIL LAST DAY OF JANUARY, since it is a pay rasie”….. YES YES YES … IF you have annual leave lump sum pay, it is based on the last day that you worked. Your lump sum annual leave will be at the new year’s pay rate. If you have the whole 240 hours, that could be worth it.
Exactly what I was thinking, he dropped the ball on this one!
Usually you have to use your annual leave by the last pay period of the year, which is normally ends by 2nd week of January
No, I think Dallen is right. You definitely don’t want to let any annual leave above 240 hours expire at the end of the year before you retire. (A lot of feds do as I did and take relatively little annual leave in their last year of work, then retire December 31 and get well over 240 hours of lump sum payment. But your retirement party may be small because most of your coworkers are away on vacation! Lol.) Lump sum annual leave payments are calculated going forward as if you had worked those days. So you DO get any annual pay raise included in the calculation of your lump sum payment, for whatever portion of those annual leave hours would have fallen after the date of the upcoming raise.
You have to do the math - 240 hours at January pay rate minus #hours times December pay rate. Lost hours will normally outweigh increased pay/hour and Margaret Marshall below is correct that payout is at rate as if you used it so those hours that would have been used in January will be paid at January rate.
There is a reason it is called use or lose, if you don't use it, it's not paid, it simply ceases to exist. You have lost everything over the 240 mark if you wait until the end of January.
So as I understand it, it does not have to be consecutive. Say you take a detail at a higher pay rate for 6 months, so that's now 6 months at a higher pay rate. Then again the following year, then you retire. That would count as 12 months at a higher pay rate, and 24 months as your highest pay rate as normal. Those details could actually occur anywhere in your career and as long as they are higher than your final ending normal payrate they supplant the normal on a month by month basis. This is assuming that your last three year are your highest.
If a federal employee is about 9-10 years from retirement, when is the best time to shift some of the TSP funds to G that will be needed for 7-8 years during retirement?
I went from 100% C,S,I to a 2040 target date 5 years out (currently about 70/30 stocks/bonds). My final retirement allocation is 70/30. You can also just shift 5-10% a year over a couple of years to get to your allocation. I plan on transferring all but a small amount of G to Fidelity when I retire.
I am in Palo Alto California at the VA. Lol.
Thanks for being a part of the community!
Can you do a video on withdrawing when you retire from Feds. If you decide to take installment payments, monthly, it’s not a cut & dry 20% for taxes. I had a very helpful woman who went through the process with me. She also stated since my account will not go under 10,000 in ten years, I need to take out an additional dollar amount for taxes. Also since the monthly amount is under $1720.00 per month, that additional tax amount was needed to get to the 20% . She suggested I withhold married rate with 1 allowance, then the additional amount. It was very confusing & I’m sure many will have no idea about this. Hopefully, you can give more insight on this.
Great point, Stu this is a good topic
TSP website states that after the death of beneficiary TSP owner, his or her beneficiaries have to take lump sum distribution and cannot rollover the distribution to external IRA and will be taxed the same year. Can they open external IRA account within 90 days to take advantage of 10 year period allowed by Cares Act.
They can roll to an IRA if they are a spousal beneficiary
Hi Haws. Let's say I decide to draw tsp @ 55. But I want to work until my MRA of 57. Will tsp let me contribute for another two years while waiting for my fers pension?
If you are still employed by the government you can take withdrawals under 59 and 1/2
Once you retire you can no longer contribute to TSP. You normally cant withdraw AND contribute at the same time. You could do a hardship withdraw or a TSP Loan but those have their own issues
So you can only sell back 240 hrs of Annual Leave even if you have 300 hrs currently???
No, that's not what he said. Most FERS employees can only carry over 240 hours from one "Pay Year" to the next, although there are ways to have a higher leave carryover. In the scenario he was talking about, a person with 300 hours leave would lose ~60 hours if they waited until Janurary to retire in order to get a higher hourly rate for selling their leave, because they would "reset" from 300 hours to 240 hours with the new "Pay Year".
@@rgodsy thank you. I would love to cash out more than 300 before I retire this year. I have only lost 5 hrs of leave in my 20 years. Thank you again.
Born 1970 or after MRA is 57 with 30 years.
Thanks for sharing!
Is there a requirement to convert TSP to Traditional IRA?
No. You can leave retirement in the TSP
Another great video chalked full of information. Can you shed more light on why I wouldn't want to move my TSP to a traditional IRA at retirement for the sole purpose of making more money?
The TSP funds are high quality and perform well
@ Elaine what investments outside of TSP do you think will make you more money than TSP?
@@alrocky I have been told that the TSP only has 5 groups to chose from. A broker...if I am using the right word, has a lot more options. Do you disagree with me? Right now my money is in the Life Cycle L2025 fund. Plus I can't contribute to it. Why would I care if I have more options? Can I move my money around in an L fund? Will it make most money in TSP? Right now 50% is in g fund.
@@elainenilsson5472 Yes there are lots more investment options available to your in an IRA. However it's fairly difficult to consistently out perform S&P 500 Index (C Fund). It's okay to move TSP to IRA brokerage but you generally want to avoid having a broker (person) handle your account as it's there's a fair chance he's working on commission and selling you *_LOAD_* mutual funds which comes out your pocket into his. Unless you know exactly what investments you have in mind to replace the C S and G funds you should reconsider and research more.
@@alrocky Well, I'm trying to research more which is why I'm listening to Dalen.
The FERS/TSP is low risk investment but after 20 years you're essentially guaranteed to be a millionaire if you're single, start at GS 11 or above, and own a basic property. Let's say you start at 35 (late), start at GS 12 making 90k a year, and after 1 year in service you buy a 1 bedroom condo (225k) at a 30 year fixed rate mortgage (3-4% interest rate). Presuming you retire at 65, you would be debt free (mortgage, student loans, etc.) and a pension worth well over a million dollars providing around 1k extra a month + social security + your individual Roth tsp. Now, if you're smart at around age 45, you would use the equity in you're property to buy a second property and turn it into a rental (or rent out that condo and use that condo as a rental) and you'll have extra cash flow. By the time you retire you can pay them both off if you live within reason. Stay out of crypto and don't give into FOMO. Work hard to be rich and plan to be a millionaire as a federal employee.
Thanks for sharing!
"TSP is low risk investment" C S I Funds are *NOT* considered *_low- _risk_*
I think what they mean is low-cost fees
@@nickthekid6516 That would make more sense. Hopefully he'll re-edit his post again to reflect that correction.
Can I move my Roth to the Roth tsp from an external account?
Unfortunately, no.
@ fessit It's generally a bad idea to move Roth IRA to Roth TSP.
@@alrocky Why?
@@fessit What advantage (aside from consolidation) do you perceive from moving Roth IRA to Roth TSP?
@@alrocky I needed to move my tradition TSP to an IRA and then roll it into a Roth. I can't do that within the TSP. Once I roll this into a Roth and paid the taxes, then the Roth could be transferred to the existing TSP Roth to make it grow more.
Can I roll a portion of my TSP to an I Bond?
No
You could sell some of your tsp to buy some I Bonds. But I probably wouldn't recommend it.
@@johngill2853 Why? It's a guarantee of 7 percent, I am mostly in G.
Retired.
@@Riseabove22 it's not guaranteed 7%, but for the next 6 months. That rate changes and it fluctuates with inflation.
It's not because you must pay taxes on them tsp contributions
@@Riseabove22 You can sell (withdraw) some of your TSP to buy I Bonds.
I use new money to buy 10k in I-bonds a year, it is our emergency fund and part of our bond allocation.
Should I move all my money to g fund? Because of the Ukrainian war? Stock market is taking a huge hit. I'm not about to retire anytime soon. 15+ years. However I have over 300K in there.
If anything increase contribution to TSP.
Did you do it? It would have been a huge mistake.
@@SpookyEng1 no
TSP has very low fees than most IRA outside.
and very few options for investment and ZERO help for guidance on where and how to invest
Total Stock index, Total international, Total Bond index. Fees comparable to TSP, none of TSPs silly withdrawal requirements.
Move Traditional TSP to Traditional IRA then to a Roth IRA...
You can't... I tried to move money from TSP to my Vanguard Trad IRA so I could later do a Roth conversion, they won't let you unless you are separated. the TSP is total trash, as soon as I leave fed service I'm moving everything to Vanguard. In the meantime, I'm losing money because I'm getting a big Solar Power tax credit this year that I was going to use to off set the taxes on the Roth Conversion.
@@SteelDoesMyWill the TSP is the gold standard of retirement plans
@@johngill2853 yes, for people who don't understand investing, sure it is. For people who don't need to be spoon fed a grade school level understanding of financial products, its TRASH.
@@SteelDoesMyWill but you invested in it?
Don't get me wrong I like TSP as long as I am civil service but once I retire I will convert it to my fidelity IRA.