Retirement Talk

[robo]

Re: Market Talk / July 16 - 22

I'm retiring at age 57 and will be taking money out of my TSP around 2k a month. Can anyone answer the question Wheels posted about this subject.

Use retirement link below to answer.

http://www.tsptalk.com/mb/showthread.php?t=2856&page=2

Last post in the link...

Can anyone please answer this question.

" Here's a good question for someone who knows more about this stuff than me. Are you allowed to trade your account the way we do here while you are drawing this via this method, or are you forced into the G fund so that you will return something close to the allowable interest rate?


Please post the answer in the retirement section if you know the answer, or where I can read about it. Went to TSP web site and didn't find it yet. Maybe someone is currently receiving TSP retirement money and can answer this..

I want to keep a balanced portfolio 50% G Fund and 50% in the market. I want the ability to make IFT's whenever I want.

Just a few more years to go! Thanks...

 

[Spaf]

Robo,

Moved your post to the retirement section.

I don't know the exact answer right now. At the end of this month I will retire.

I decided to leave funds with TSP and take a monthly payment. I am assuming you can continue with IFT's, just like regular stuff.

I don't know how they will take out the monthly deduction. I planned to leave the G-fund with at least 20%.

I was told to wait 2-weeks after seperation to contact TSP. I'll find out then. That's when TSP form-70 is submitted to tell TSP what to do with your account.

Most of the FERS stuff, why do I feel like the blind leading the blind?

Regards.................... .......................Spaf

 

[ocean]

Re: Market Talk / July 16 - 22

I want to keep a balanced portfolio 50% G Fund and 50% in the market. I want the ability to make IFT's whenever I want.

Just a few more years to go! Thanks...

Yes, robo, you can do that and there is no restriction which funds you will be investing while receiving monthly payment. At the end of each year you have an option to decide how much you want to receive for next year.

Refer to early post in this thread by Walli1 http://www.tsptalk.com/mb/showthread.php?p=48287#post48287, he described the similar situation that you were asking.

Also, please refer to the link: http://www.govexec.com/dailyfed/0306/032406rp.htm for TSP withdrawal options.

I am planning to do the same in about 5 years.

Ocean

 

[robo]

Spaf and Ocean,

Thanks!!!!

 

[eino]

Remember, the money in TSP accounts has never been taxed, so any cash withdrawals will be subject to income tax in the year they are taken out.

 

[EW_ret]

There are no restrictions on moving between TSP funds while taking monthly payments. The monthly payment is withdrawn in percentage proportion from each fund you are invested in at the time of the monthly payment. That way your asset allocation is maintained. It’s the same principle that TSP uses when you repay a loan. You make a payment and its deposited in percentage proportion to each fund. For example, if you have $100,000 and have an asset allocation of 40% G ($40,000), 35% C ($35,000), 15% S ($15,000), and 10% I ($10,000), a 400 monthly payment is withdrawn as follows: from G 0.40X400 = $160; from C 0.35X400 = $140; from S 0.15x400 = $60; and from I 0.1X400 = $40.

 

[Wheels]

There are no restrictions on moving between TSP funds while taking monthly payments.

I agree. However that doesn't answer the question I asked that Robo is refering to. The scenario I described is this:
TSP only offers one type of life expectancy payment. However the IRS allows other types that allow you to apply a "reasonable interest rate" to your monthly payment. This results in a much higher payment. Since TSP doesn't offer this method, you would have to first roll your balance over into an IRA of some sort. Then take advantage of the other method. My question was in this scenario, are you restricted in where your money can be invested. Since you are being allowed to assume a rate of return, are you forced to try to earn that rate of return?

Dave
<><

 

[EW_ret]

I believe I have answered the question regarding any restrictions on where you park your money in TSP while taking monthly payments from your TSP account.

I did not realize you are considering a Rollover IRA, to get a larger monthly payments. You should ask the new custodian that question.

 

[Wheels]

I did not realize you are considering a Rollover IRA, to get a larger monthly payments. You should ask the new custodian that question.

I'm not. It was a hypothetical situation. I was explaining to someone how to get a larger life expectancy payment and the question was born from that.

Dave
<><

 

[robo]

I believe I have answered the question regarding any restrictions on where you park your money in TSP while taking monthly payments from your TSP account.

I did not realize you are considering a Rollover IRA, to get a larger monthly payments. You should ask the new custodian that question.

EwGuy,

Thanks for your answer. I mixed up a couple of idea's in my question. That happens when you work nights, I'm tired and out of it most of the time. It's taken a toll on my health. That's why I'm retiring soon. I average around only 4 to 5 hours a sleep a day, it sucks!

Thanks again! I will put 50% in G Fund and 50% I will use for Stock Market investing. Based on what you have told me I can continue to make ITF's whenever I want. I will make fewer and lower risk trades in my TSP account the next few years going into retirement.

I will not rollover my TSP account. The cost of TSP is cheap and I already have traditional IRA's and Roths to liquidate. The Roths are the sweet deal I think. As Enio pointed out about taxes on TSP, no such thing on Roths. I will max them out as long as I'm working. My wife will work 5 years longer than I plan on so that's around another 100K in 401k money and 25k in her Roth.
However, Uncle sam could change things, but for now I will plan on the rules not changing much.

Thanks to all others that answered this question.

 

[Spaf]

EwGuy,

I will not rollover my TSP account. The cost of TSP is cheap and I already have traditional IRA's and Roths to liquidate.

Gotta agree with ya! My TSP account stays. It's not the best of funds, but it's better funds [Good..better..&..best]. I checked with a dozen or so investment companies and they all have good retirement plans. However, they can't beat the low TSP expenses. And, mutual funds have lost my trust. I had rather do it myself, besides it's fun! Instead of going with a traditional IRA or a Roth, I'm staying with TSP and my internet broker. I really like the ETF's, especially the ones controlled by iShares. I like the option of selling to cash or making a trade on an instant basis, without getting a letter from the fund manager accusing me of being a [bleep] trader. Like my small investment is going to ruin his billion dollar fund.

Once you read the TSP options on their form-70, you have a lot of things to choose from.

The TspTalk board is a second reason I opted to stay with TSP. With all this information. It beats a prospectus hands down (never could read one of them things, all their small print and stuff). I did have to get out the glasses to read EWGuy post # 6 in that small font, but at least I understood it.

Thanks guys for the retirement talk!............Regards............Spaf

PS: EW, I'm going to bump #6 up to a bigger font, iffn U don't mind....Good post there!

 

[Spaf]

More Retirement Tibits​

I opted for the monthly payment from TSP. Well today was my 28th day in retirement. Per the bank, they recieved a TSP direct deposit on the 24th. I had faxed TSP my TSP-70 on the 16th. The same day a lady from TSP called and told me they had recieved my seperation code from OPM.

I went over to TSP and checked my account. Sur-nuf they had reduced my shares proportionally.

Also, today the 28th day. I recieved my annual leave (+other) reinbursement via direct deposit from the finance agency.

Well thats the latest news from the retirement pod!

Regards, and be careful!.......... ...............Spaf

 

[EW_ret]

Spaf,
I'm glad to see the financial aspects of your retirement are going well. I hope your retirement package is finalized by OPM swiftly. My annual leave lump sum was deposited into my account seven days after retirement with my final paycheck. I attribute this to the efficiency of the Navy’s Human Resource and payroll offices.

It only took four weeks for OPM to adjudicate my retirement application and issue the final annuity. I retired September 30, 2005 and by November 2nd had two direct deposits from OPM totaling my full annuity. I was pleasantly surprised with the quick turn-around by OPM. I attributed it to the thrust by Congress and the new OPM director to decrease the turn-around time for retirement application cycle. I hope OPM remains focused on their goal to minimize the time to finalize the retirement applications.

 

[Spaf]

Thanks EWGuy,

The time frames will hopefully give others some sort of gauge of when to expect things!

Of course I realize there will be differences between agencies!

I'll reference mine as the Department of Labor!

BTW: Annual leave reinbursement, their will be variations depending on annual pay. but, I think a ball park figure could be a net $24.00 an hour.

Rgds
Spaf

 

[mlk_man]

Thanks for the info guys. So it seems fair to say that at least one month cash to get by on and to be safe, two months? I was planning on at least three so I'm glad to see this "should" be enough to get through. I'll be transferring about half of my TSP into my IRA so this may slow down the process some.

 

[Spaf]

M_M,
I would give it at least 2 months.
For Social Security you have to be off for at least a month, and then they pay you the following month depending on the first letter of your last name. Mine comes out the third Wednesday of each month! Wierd!
Rgds
Spaf

 

[EW_ret]

I concur that 2 to 3 months expenses should be adequate to fill the void between retirement and receipt of final/full annuity. The majority of annuitants receive their first interim annuity within six weeks of retirement. OPM tries to send the first interim pay the first week of month when due. The annual leave lump sum payment helps meet your expenses during the interim payment phase of retirement. The interim annuity that OPM provides is less than the 85% they claim.

My gross interim annuity was 69% of my gross final pay. The interim annuity payments only have federal taxes withheld. The net interim pay represented about 74% of the net final annuity. I received the makeup pay the day after the first interim annuity was deposited into my checking. This makeup pay was the difference between the final/full annuity and the interim annuity. Its withholdings included federal tax, health insurance, and life insurance. State taxes are not withheld from the interim or final annuity payments. One must have their CSA number and PIN to telephone or go online to initiate state tax withholding.

I hope my experience helps those who are planning for retirement. Of course many may already know what to expect.

 

[Spaf]

I hope my experience helps those who are planning for retirement. Of course many may already know what to expect.

Your experience will help. In MHO I would say some know what to expect. But, I fear many consider that the auto-pilot is working. Recently an auto-pilot was installed in the L-Funds. But, what I was considering was the total picture!

Here is the basis for my concern: All Govt. employees should be given a retirement (full) briefing within their first couple of years. And, it should be specific to CSRS or FERS. Our office got one the last year I was there! The briefing was a combo briefing. And, there was a lot of confusion afterwards. The TSP section almost made me ill. [Edit almost, I was ill]

So any tidbits you can offer can be copied and filed for future reference. EW you have been down the road, and are now standing on the other side. I'm almost to the other side. What we are both saying is how wide and deep the potholes are, and dang at least make sure your on the right runway!

Thanks EW
Regards
Spaf

 

[Spaf]

After Labor Day we (retired) get to reclaim the lakes back! Not to hot , not to cold. Retired and loving it!

Will keep ya posted on how the FERS retirement system and the social security system unfolds! Still a mystery!

 

[grandma]

...The TSP section almost made me ill. [Edit almost, I was ill] Spaf

Clarify what it was that got your attention here....
thanx -