Hi All!!

[jeepjeep92]

I've been lurking for about a month now and thought it was time to finally jump in and say Hi. So, uhm, "Hi!" Great site; I'm learning a lot!

I spent five years in the active duty Army, started contributing to TSP in May, 03 while in Afghanistan--yay, tax free $$$. Loved that so much, I spent some time gaining more tax free $$$ in Iraq!! Then, it seemed like my TSP was doing so well (5% G; 10% F; 20% C; 25% S; 40% I) that it just made sense to focus my job search in the federal sector so I could keep going AND get the gov't matching!!

I started my federal job in August, 05 and have that set up as follows: 5% G; 10% F; 2% C; 33% S; 50% I. Here's a first question (and please let me know if I should be posting this in a different topic), should I "roll over" my military TSP money into my federal TSP money? Would it make much of a difference?

I sort of like having the military TSP separate. I'm not contributing, so all I see is growth (and so far, thankfully, no loss). I was told that I wouldn't be able to roll over the money I contributed while in the tax-free combat zone anyways.... Thoughts?

Thanks in advance!! Looking forward to learning more!!!

Angela

 

[tsptalk]

Welcome Angela! Thanks for joining us. I'll let the military folks here take your question.

Good luck!
Tom

 

[mlk_man]

Hi Angela, welcome to the board!

Does the TSP actually give you two seperate accounts? This seems a little odd to me. I just assumed that your TSP account would remain the same even though you switched from military to civilian because your still govt. and our TSP is a govt. plan?

Interesting.........

M_M

 

[Rod]

Welcome, to the best of my knowledge you do not have 2 separate accounts. You simply get the match now.

BTW, do you see more than 2 account balances when you log into your TSP account?

 

[jeepjeep92]

While in the military, I was able to check my account online with my SS# and pin. When I joined federal service, I was expecting the money to just get dumped into that account, but it didn't. After about a month of work, I called and spoke to the people at TSP. They send they would send me a new pin for the new account. I still use my SS#, but depending on which account I'm checking, I use the respective pin. I basically log in twice.

In fact, I was told that I would be able to change the pins through the online system, but that I should never make the pins the same for the two different accounts. That would cause confusion and the system wouldn't be able to tell between the two accounts. (I really think that the money I put in during the tax-free times has something to do with it. The way I interpreted what they told me, I could take that money out now, without penalty as I won't ever owe taxes on it.)

BTW, even though I had an established TSP account with the military, I'm still going through the waiting period until the gov't matching begins!! So, my military time counts towards me being in the 6-hour a PP leave category, and I can "buy-back" my five years towards retirement, but still have to wait through a waiting period to get the gov't matching. That seemed odd, too; but a little piece of knowledge to pass on to anyone moving from military to federal service.

Still, I'm loving the whole TSP system and really appreciate all that I'm learning from this forum--thanks for the welcome's!!

Angela

 

[mlk_man]

If you truly will never owe taxes on your military TSP, I would check into rolling it over into a Roth IRA. That way all the earnings you make will also be tax free after you turn 59 and a half and you will have many, many more investment options with it. I use Scottrade myself. Plus, you'll still have your civilian TSP with it's low expense fees. This is what I currently do myself.

Good luck,

M_M

 

[Rod]

If you truly will never owe taxes on your military TSP, I would check into rolling it over into a Roth IRA. That way all the earnings you make will also be tax free after you turn 59 and a half and you will have many, many more investment options with it. I use Scottrade myself. Plus, you'll still have your civilian TSP with it's low expense fees. This is what I currently do myself.

Good luck,

M_M

Hey Mike,

She will only not owe taxes on the contributions (not earnings) she made while in a tax-free zone. All of her other contributions and earnings will be taxed.

 

[Rod]

My best guess on the 2 account thing is you probably have to request your military TSP to roll into your FERS- which would be the wise thing to do.

More $$$ you have in one account= more shares= more $$$

 

[jeepjeep92]

Honestly, my strategy has been to dump as much as I possibly can into whatever, and as many, retirement savings vehicles as I have available to me!! LOL--now, I think it's time I start being smarter about where that money goes.

So, I already have ROTH started (began in early 2003, before I even started military TSP). If I choose to consolidate, that means my tax-free contributions could get rolled into the ROTH, taxed contributions AND earnings would get rolled into my "new" federal TSP? Does that sound correct?

A

 

[mlk_man]

Hey Mike,

She will only not owe taxes on the contributions (not earnings) she made while in a tax-free zone. All of her other contributions and earnings will be taxed.

Right. I'd go ahead and pay the taxes on the earnings now and roll it into a Roth. Otherwise, if she's able to fund her Roth now with money she has in savings etc, the yearly max is now $4000, she could just roll her military TSP into a regular IRA and not worry about the taxes now. That would give her 3 retirement accounts and put her way ahead of were most of us fools were back in the day............

Plus she can get a VA loan, free health benies for life, VFW membership..........will you marry me Angela..........

 

[mlk_man]

So, I already have ROTH started (began in early 2003, before I even started military TSP). If I choose to consolidate, that means my tax-free contributions could get rolled into the ROTH, taxed contributions AND earnings would get rolled into my "new" federal TSP? Does that sound correct?

A

Not sure they will break it down for you like that, but they might. If you already have a Roth and are contributing to it, I'd consider a regular IRA.

 

[jeepjeep92]

The VFW membership DOES rock!!!

I am contributing to my ROTH, but still have a little way to go until I've maxed that out. My plan--I'm already contributing 5% to TSP for fully matching (when it finally kicks in...*sigh*), next I'll work on maxing the ROTH. The yearly max of $4K is for everything combined? I should know this, but the answer escapes me right now.... The regular IRA would come after I hit $4k/year....?

 

[mlk_man]

No, the $4000 dollar limit is for all one's IRA's. You can divide into the two. Say $2000 each, but that's it.

 

[jeepjeep92]

Okay, thanks!!

Like I said, I've got a little ways to go before I hit that milestone. I will look into rolling funds over appropriately, though--thanks!!

A

 

[mlk_man]

Your welcome! Also, if you are able to save more than $4000, it goes up to $5000 in 2008 BTW, I would adjust your TSP contributions according. You can always change it back at the end of the year to save up your $4000 as soon as possible. Some people recommend putting some funds into a savings account or money market account were you have some "quick" funds. This is okay but I wouldn't put more than a couple grand away like that. If you get into a "bind", you can do an electronic transfer from your ROTH into your checking in about a week and pay no penalty on any contributions you have made to it. Just remember this doesn't include earnings.

That's about all I have to say about that............

 

[jeepjeep92]

Hmmmmm....... Now, that's interesting.

I've always heard the usual "6-8 months living expenses" socked away as an emergency fund. As a federal worker, I've always figured I could get away with less than that in a money market because I feel fairly secure in my job. So, right now, I have 4 months sitting in a money market account. Sounds like I can move that into a ROTH and still consider that lump contribution as "emergency fund" since I could pull it out fairly quickly (within about a week)??? And as long as I don't need it, the earnings are all tax-free for retirement as opposed to in my MMA getting taxed every year?!

Wow!! I think I just learned something VERY importnat here--consider me done for the day!!! But also, correct me if my logic is incorrect....

A

 

[mlk_man]

Sounds like a plan to me. Others are free to chime in of course..............

oh that's right, it's Friday................

Hmmmmm....... Now, that's interesting.

I've always heard the usual "6-8 months living expenses" socked away as an emergency fund. As a federal worker, I've always figured I could get away with less than that in a money market because I feel fairly secure in my job. So, right now, I have 4 months sitting in a money market account. Sounds like I can move that into a ROTH and still consider that lump contribution as "emergency fund" since I could pull it out fairly quickly (within about a week)??? And as long as I don't need it, the earnings are all tax-free for retirement as opposed to in my MMA getting taxed every year?!

Wow!! I think I just learned something VERY importnat here--consider me done for the day!!! But also, correct me if my logic is incorrect....

A

 

[James48843]

Jeep-

I maintain two seperate TSP accounts-

My military one is small, as it was started with funds from National Guard duty for a year- not active duty, and was about $1000 upon my Guard retirement in 2004.

My other is my federal employee account, which I started when I joined government in 92- so it is a bit bigger.

I keep both seperate- I had the fed first, so when I got the military account (they didnt' let Guard people have TSP until 2002, I think it was..) I use different strategy for that one. They have a single log-in (SSN, and only one password), and then I get to click a button asking which account, mil or civilian.

I play hard with my Mil account, moving only a few times a year, but putting in a single fund (It is in "G" right now, I just came out of four months of "I") .

ON the other hand, my civilian account is usually balanced between different stock funds, and then moved back and forth to "G" as the market timing appears to me. I rarely use "F" fund, now that we are in a interest rate rising cycle. When interest rates were falling, I sometimes would get a boost from "F".

It's nice to have two sets of funds to play with. That way I can compare returns when faced with trying two philosphys of investing. When one appears to be working better, I can adjust the other.

Anyway, that's what I do.

Welcome, and have fun.

 

[jeepjeep92]

Thanks, James!

That's interesting that you have one log-in and I don't. I can't believe it's because I started military and went fed as opposed to you starting fed then going military.

I've been thinking about the responses that I've gotten and Rod said:

More $$$ you have in one account= more shares= more $$$ (I don't know how to quote another post on these boards yet....)

But, is that thinking flawed? Only because when I started TSPing in 2003, I was buying I shares at a much lower rate than what I would be purchasing them for now if I were to roll over the money.... Seems to me that I would then have less shares. Or should I be looking at it as "the shares roll over from one account to another and not the money amount"?

Thanks in advance for responses--I'm about to head out for the weekend but will be back with a new round of questions for Monday!! Hope everyone has a great weekend!!

Angela

 

[James48843]

The price of the shares is exactly the same- it doesn't matter whether its in a mil account or a civilian fed account.


One thing to think about-

If you ever want to take out a TSP loan, you can take it out from the civilian side, but once you leave the military, you are considered a "seperated employee", and are not able to take money out in the form of a loan from that military account- because you have "seperated."

In this kind of a situation, you might benefit from consolidating the two accounts into one. Then you could borrow from it if you needed to. Otherwise, you can only borrow from the account that you still are employed under (civilian), and there are ratios and limits on how much you can borrow. Until you build up your civilian account there are $ limits involved.

Anyway, have fun. Playing with money that you can't touch for years is a lot of fun. Especially the challenge of how fast can you use it to work for you. You can leave it in one place , or you can move it around. You just can't take it out for a long, long time.

But then again, that's half the fun.