Question 1
Found your podcast and have been listening to it everyday on my mail route. You have answered SO many questions. Thank you.
I will be 56 and have 30 years with the PO in 2023. If I start hitting my TSP at that time will I still have the 20% hit you talked about on a previous podcast? Even with 30 years in? Thank you
Answer 1
Great question. The vast majority of the time the TSP will withhold at least 20% of your withdrawal for federal taxes. You can always tell the TSP to withhold more but most of the time you can’t always have them withhold less than 20%.
But we have to remember that 20% withholding doesn’t mean that that is the exact amount we’ll owe in taxes. It could end up being much higher or lower depending on which state you live and and what other income you have.
Question 2
Can you explain the process of transferring an IRA into the TSP when you retire?
Answer 2
You are able to move a traditional IRA to your TSP during your career and in retirement. You can also move over an old 401k or 403b into the TSP as well. But you can not move a Roth IRA into the TSP.
People would want to transfer accounts to their TSP in order to consolidate and simplify their investments.
Form TSP-60 is used to make this transfer. In most cases you would contact the institution that holds the account that you’d like to transfer and they’d be able to walk you through the process. Just make sure they submit the TSP-60 to the TSP when they send everything over.
Question 3
Hello..great info you are providing. Learning a lot. Will be retiring 01/2027. Have my military pension, SSA benefits, Wife’s SSA benefits, my FERS benefits. With just all that. I believe me and my commander in chief will be okay(she’s in charge) in sustaining our lifestyle, even compensating by having 20% taken out of “ALL” for tax withholding. Have all in S Fund (I’m aggressive and it’s nicely growing). Thinking that I might not withdraw from it yet in 2027 or even 2028 and monitor our expenses and income a year after retirement to see if I need to make adjustments. Question is on my TSP, would it be better to keep it there to grow aggressively, or move it to some safe place like the G Fund which grows like a mustard seed? Can I dictate my TSP to not draw from it yet, but start maybe like 1 or 2 years down the road?
Answer 3
In my opinion, it rarely makes sense to be 100% S fund or 100% G fund. Normally, a balanced approach brings the best results.
You will want to figure out when you are going to need your TSP funds and then you can plan your investments from there. Any money you won’t need for 6+ years can be invested aggressively because you have lots of time before you would even need to touch it. But for money that you’d need within 5 years you would want to be conservative. This approach helps protect your short term needs while allowing you to get growth as well.
