Question's about retirement

Managing your TSP and alternate investment options after retirement or separation from service.

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rcozby
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Re: Question's about retirement

Post by rcozby »

LONEWOLF wrote:Thought i read somewhere....Is there a maximum amount a retired person receiving fers retirement, ssi, tsp monthly payments can make if they take another job when they retire ??


"The retiree would receive the SRS until age 62. At that time the SRS would end, whether or not the retiree chose to apply for Social Security at that time. The SRS ends when one becomes eligible for Social Security Retirement benefits – not when one applies for them.

But wait – there’s more! The same earnings test that applies to Social Security benefits received before reaching the full Social Security retirement age will apply to the Special Retirement Supplement. For 2014, one may earn up to $15,480 before the earnings test kicks in. Once it kicks in, every $2 in earned income above $15,480 will result in a $1 reduction to the SRS. The test applies only to earned income, not to pensions, dividends, etc.
- See more at: http://www.fedsmith.com/2014/05/11/what ... O7x9R.dpuf"

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xforceguy
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Re: Question's about retirement

Post by xforceguy »

Since I just retired and new to this site what are the sentiments on the TSP L Income Fund?

BTW - lots of good info here and I appreciate all!

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evilanne
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Re: Question's about retirement

Post by evilanne »

L Income Fund is 74% G, 6% F, 11.2% C, 2.8% S, and 6% I.
Prior to this year it was 74% G, 6% F, 12% C, 3% S , and 5% I
https://www.tsp.gov/InvestmentFunds/Fun ... ncome.html

I have never cared for any of the L Funds as I like to see the individual funds-seems to be more intuitive and you know the risks for the individual funds. I think the Income fund is too conservative, but over the long run, it has performed better than 100% G and keeps you ahead of inflation. In 2008 it also lost money like all the funds, except for G & F. At the moment, I am even more conservative than L-Income fund as there seems to be many similarities to 2008 in the current market IMHO. Since I just retired, I want to avoid losses as much as possible.

TSPBuilder
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Re: Question's about retirement

Post by TSPBuilder »

evilanne wrote:L Income Fund is 74% G, 6% F, 11.2% C, 2.8% S, and 6% I.
Prior to this year it was 74% G, 6% F, 12% C, 3% S , and 5% I
https://www.tsp.gov/InvestmentFunds/Fun ... ncome.html

I have never cared for any of the L Funds as I like to see the individual funds-seems to be more intuitive and you know the risks for the individual funds. I think the Income fund is too conservative, but over the long run, it has performed better than 100% G and keeps you ahead of inflation. In 2008 it also lost money like all the funds, except for G & F. At the moment, I am even more conservative than L-Income fund as there seems to be many similarities to 2008 in the current market IMHO. Since I just retired, I want to avoid losses as much as possible.


Have you thought about how you will protect your capital when these similarities to 2008 manifest?

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xforceguy
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Re: Question's about retirement

Post by xforceguy »

evalanne - what are your thoughts on seasonal investing?

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evilanne
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Re: Question's about retirement

Post by evilanne »

TSPBuilder wrote:Have you thought about how you will protect your capital when these similarities to 2008 manifest?

Looks like G/F were safe in 2008. You can lose in F as well, but far less than the stock funds. Trying to figure out the charts, but I think the large buy backs & FED's monetary policy has resulted in stagnate growth and distorted markets, creating much volatility. One chart that Tomanyiron posted awhile back that I like is !GAAPSPX15. It reminds me to limit my stock exposure--url: http://stockcharts.com/h-sc/ui?s=!GAAPS ... 0562574611

xforreguy wrote:evalanne - what are your thoughts on seasonal investing?

It is interesting as it appears increases returns with less risk over the long run. I am wondering what the impact of the elections will have this year (see viewtopic.php?f=14&t=12362&#p49155 & viewtopic.php?f=14&t=12388#p49330) But most serious discussions on the subject say that seasonal investing should be used in conjunction with other measures like technical analysis. You have to pay attention to the market trends, economic indicators and cycles. In a strong bull market (like when we were coming out of recession), it may not be a good idea to be out of stocks over half the time. There are so many different variations, it is a little confusing to me. The only issue I really have with it is that I don't think I will ever be comfortable with moving 100% of my TSP funds in and out of the stock fund(s) on a regular basis but at some point I may be willing to try it in some limited way. I look at the data that Aitrus posts regularly--probability data can be useful when making IFT decisions.

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xforceguy
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Re: Question's about retirement

Post by xforceguy »

Thanks for the feedback evilanne!

TSPBuilder
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Re: Question's about retirement

Post by TSPBuilder »

dougellen1 wrote:philmiec is spot on with the answer!! There is no 10% penalty as long as you are at least 55 at the time of retirement and have 30 years of service.


I hope you are right. I just went to a financial advisor that is supposedly up on Federal government retirements and he said that I was going to have to file a 72t with the IRS for a waiver of the 10% penalty until I'm 59.5yrs old (considering deffered retirement at age 55. FERS MRA at 56 years old). This 72t also restricts me to about $1500/mo from my TSP until I'm 59.5

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rcozby
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Re: Question's about retirement

Post by rcozby »

TSPBuilder: Your advisor should know that one of the advantages of TSP vs. brokerage IRA is that withdrawals in retirement are penalty-free starting at your MRA, not 59.5, and using the 72t is not required. You can withdraw in a series of monthly payments in an amount that you choose and you can change that amount annually.

Once you reach 59.5, you may find that a roll out of TSP will give you greater flexibility, albeit at an increased cost. Send your advisor the book answer: https://www.tsp.gov/PDF/formspubs/tspbk02.pdf

TSPBuilder
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Re: Question's about retirement

Post by TSPBuilder »

evilanne wrote:
TSPBuilder wrote:Have you thought about how you will protect your capital when these similarities to 2008 manifest?

Looks like G/F were safe in 2008. You can lose in F as well, but far less than the stock funds.

The "G" Fund used to be my "safe haven" but I've been back-tracking inverse fund performance for another "2008-like" event and I am very pleased with earning solid returns instead of having to resort to a safe haven again. Right now I'm just trying to figure out whether to stop trading when the returns hit 30% (60% in my 2x funds) and greatly reduce the amount of capital I risk in each trade (25% instead of 100%).

TSPBuilder
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Re: Question's about retirement

Post by TSPBuilder »

rcozby wrote:TSPBuilder: Your advisor should know that one of the advantages of TSP vs. brokerage IRA is that withdrawals in retirement are penalty-free starting at your MRA, not 59.5, and using the 72t is not required. You can withdraw in a series of monthly payments in an amount that you choose and you can change that amount annually.

Once you reach 59.5, you may find that a roll out of TSP will give you greater flexibility, albeit at an increased cost. Send your advisor the book answer: https://www.tsp.gov/PDF/formspubs/tspbk02.pdf


I told the advisor that I was wanting to roll the TSP over to an IRA account so I could increase my returns and this would have required the 72t (I'm thinking).

So I have to keep my money in the TSP to not have the 10% penalty (correct?). Then I can roll what's left in the TSP at 59.5 years to an IRA.

I appreciate the helpful information and clarification rcozby!

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evilanne
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Re: Question's about retirement

Post by evilanne »

TSPBuilder wrote:I told the advisor that I was wanting to roll the TSP over to an IRA account so I could increase my returns and this would have required the 72t (I'm thinking).

So I have to keep my money in the TSP to not have the 10% penalty (correct?). Then I can roll what's left in the TSP at 59.5 years to an IRA.


See viewtopic.php?f=21&t=12417&#p49568 & viewtopic.php?f=21&t=12417&p=49631&
#p49631

You can transfer to IRA and have the same exception without penalty, however, before you transfer TSP anywhere, make sure that you know what fees will be applicable to your account if you are dealing directly with a broker and your responsibility for complying with the 72t exception if you are using self directed brokerage. For me it seems simpler to leave it in TSP. If your financial advisor is any good, they should be able to calculate your withdrawal amount for you annually based on life expectancy or other method. I believe you do have more options at MRA.

TSP's Retirement Income Calculator uses the life expectancy method https://www.tsp.gov/PlanningTools/Calcu ... lator.html Whatever method you chose, you have to do it for minimum of 5 years or until you reach 59.5, whichever is later.
Depending on the rate of return you chose, life expectancy would provide you with increasing annual amount during required period (The factor decreases .8 to .9 each year so end of year balance is divided by smaller denominator) see https://www.irs.gov/publications/p590b/ for life expectancy factors--it is more complicated if you are married. The tool has separate tabs for annuity options that you can play with. Once you are past the set period, you can change payments once a year in TSP or you can roll it over.

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rcozby
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Re: Question's about retirement

Post by rcozby »

evilanne wrote: Whatever method you chose, you have to do it for minimum of 5 years or until you reach 59.5, whichever is later.


That is not correct. As long as you are over 55 and separated from federal service (you don't even need to be retired, just separated), you can take monthly payments of ANY amount you choose (as long as you have the money) and you can change that amount annually. The life expectancy option really only has value if you separate BEFORE you're 55.

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evilanne
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Re: Question's about retirement

Post by evilanne »

rcozby,

Thank you for pointing this out. I stand corrected on that issue, however, then you would need to remain in TSP for this exception as far as I can tell. That is why I referenced other posts that had the links to IRS publications. Since discussion was regarding possibly rolling over TSP to IRA, I know that you can still access funds in IRA based on life expectancy exception. There may be other Substantially Equal Periodic Payment (SEPP) withdrawal methods available in an IRA, which I am not familiar with. Since 55 used to be the MRA age for CSRS, I hope they don't update it anytime in the near future to match FERS.

Publication 721 Tax Guide to U.S. Civil Service Retirement Benefits refers you to Publication 575. https://www.irs.gov/pub/irs-pdf/p575.pdf Publication 575 Pension and Annuity Income
Additional exceptions for qualified retirement plans. The tax does not apply to distributions that are:
From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees) (see Separation from service, later)

Separation from service. In order to meet the requirements for the first exception in the list above, you must have separated from service in or after the year in which you reach age 55 (or age 50 for qualified public safety employees). You cannot separate from service before that year, wait until you are age 55 (or age 50 for qualified public safety employees), and take a distribution.

For me, I'm still limited to payments based on life expectancy since I retired before 55. So rcozby is correct only if you separate from government service in or after the year you turn 55. I wouldn't rely on anything you get on a message board or from a broker without verifying it with an authoritative source.

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rcozby
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Re: Question's about retirement

Post by rcozby »

Right on, evilanne. I actually called TSP this morning to verify my facts before posting.

It's an important nuance for me and perhaps others. As a retired reservist, my pension income will be higher after age 60 than it will be when I retire at my MRA (56). During those four years I will need to extract a bit more from my TSP than afterward. Thus, my ability to control how much I extract is critical.

Best as I can tell, this can only be done if you stay in the TSP upon separation between age 55 and 59.5. This is a significant advantage of the TSP that is too frequently brushed aside by the proponents of brokerage accounts.

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Fund Prices2021-04-16

FundPriceDayYTD
G $16.56 0.00% 0.34%
F $20.66 -0.21% -2.53%
C $62.57 0.36% 11.92%
S $83.28 -0.04% 12.24%
I $38.19 0.63% 7.92%
L2065 $13.71 0.39% 10.49%
L2060 $13.71 0.39% 10.49%
L2055 $13.71 0.39% 10.49%
L2050 $27.99 0.31% 8.45%
L2045 $12.79 0.29% 7.92%
L2040 $46.72 0.27% 7.42%
L2035 $12.36 0.25% 6.82%
L2030 $41.20 0.23% 6.25%
L2025 $11.71 0.18% 4.93%
Linc $22.82 0.08% 2.45%

Pending Allocations

Under development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".

What else

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