Question 1
My wife separated from service at around age 35 after 8 years of service (FERS) a few years ago to stay home with the kids. Wondering what, if anything, we should do with the money left in her traditional tsp? I am contributing to my tsp as well. Should we move her TSP to a Roth IRA?
Answer 1
You have 3 options.
You can keep her TSP right where it is.
You can move it to a Traditional IRA without any tax consequences.
You can move it to a Roth IRA but you will have to pay taxes on the transfer.
Question 2
I am a GS-13 step 10 and am planning to retire at the end of December 2023 with 34 years of service.My issue is this; I have been having some difficulties with my present supervisor and it looks like I am going to be downgraded in grade to a 12 or maybe even an 11 after the first of the year. Concerning my leave balance at retirement, will I be paid the balance of my A/L at a GS-13 pay grade or will I be paid my leave balance at the reduced grade of 12 or 11 even though I will be still getting my GS-13 pay? I don’t plan on looking for another GS13 position since I will still be getting GS-13 pay up to retirement. Next question: will the grade reduction have any impact on my retirement in the future, will it cost me any reductions in my Pension or anything else that I may not be aware of? Also when an individual retires does retirement grade matter anymore?
Answer 2
Your annual leave payout is determined by what you would have been paid if you had continued working past your retirement date.
For example, if you have 2 weeks of annual leave at retirement then you’d be paid what you would have made if you would have just worked another 2 weeks.
Your pension is affected by your high-3 which is the average annual salary during your highest 3 earning years. So if this downgrade does affect your highest 3 years of earnings then your pension will be affected.
Question 3
My question is how significant of a penalty would I get if I were to retire 2 years early at age 50. I’m part of the special retirement provision (law enforcement). If I were to retire at 52 I would get full benefits and would have 41% of my high three which is currently $115,000. I have roughly 625k in tsp as well. Basically how bad would the blow be?
Answer 3
If you are not eligible to retire then there are always ramifications like not being able to get a pension right away or potentially getting a reduced pension.
If you are eligible to retire then retiring earlier than you had planned will often lower your pension and TSP balance.
You will just have to decide at what point you are comfortable with the amount of income you’ll have in retirement.
