Voluntary Contribution Plan

[The HalfBreed]

for CSRS or CSRS Offset folks....

What do you think of that option (if you're familiar with it) to convert this into a ROTH IRA prior to retirement ???

 

[Warrenlm]

This plan is a major benefit of CSRS. Up to the day you retire you can deposit up to 10% of your gross lifetime earnings through periodic after-tax deposits or one last big one. And that 10% is in addition to the TSP/401K and IRA (Traditional/ROTH) annual limits on contributions, allowing creation of a much larger IRA in retirement. On retirement all interest ends so transfer to an IRA is necessary. I had to go through a Non Deductible Traditional IRA and wait for the law to remove income limits on conversion but I believe paying the tax due on the interest and other gains was well worth doing now vice waiting. If the law allows direct transfer/conversion into a ROTH, leaving the TIRA uninvolved, it's one heck of great deal. Tax is due only on the gains in the VCP. www.federalsoup.com has a lot of posts about it. I can't speak to conversion prior to retirement but the process at retirement went flawlessly. I included my form in the retirement application.

 

[The HalfBreed]

I've read and participated in one conversation on this topic @ Federalsoup recently. I've applied to open a VCP account in Nov. and purchased Micah Shilanskis' book on the topic. I have a record of my pay for about 32 years, so I'm leaning in that direction. As I understand, the money can be rolled over into a ROTH IRA directly, bypassing the IRA option, and must remain in the ROTH for 5 years, untouched. Federal Radio had a 1 hr program on it back in about July of 2010 (it's still there and archived, so one can still access it), and according to them, whether you transfer the $$$ in the VCP to the ROTH IRA in January or December 2011, the the 5 year clock starts at the beginning of the year, in this case Jan. 2011. I guess that, if that's the case, one can actually START a ROTH in Nov/Dec 2011, and the 5 years ends Jan 2016 ? Looking to research that one...