tsp funds

tsp funds are the funds involved in the Thrift Savings Plan which is one of the finest retirement plans available to the federal employees of the US.

TSP Name Change: What’s The Difference?

April 15, 2024 /by marvin dutton

Shakespeare’s tragic play Romeo and Juliet features a line from Juliet Capulet asking, “What’s in a name?” (Act II, Scene II). What we refer to as a rose could just as quickly be called something else and still have the same pleasant aroma. In Act I of their new comedy show, “The Latest TSP Changes,” the TSP appeared to pose the same question more than once.

What exactly is meant by the term “contribution allocation”? Even though we call it an “investment election.”

Investment elections designate where your TSP contributions will go after you receive them. Your investment preference will apply to all future deposits your account makes. Your investment decision will not affect funds already in your account. Your investment decision will be valid until you create a new one. In some publications, the TSP refers to this action as a “contribution election,” which sounds like a combination of contribution allocation and investment election.

What exactly is meant by the term “interfund transfer?” Whatever we call “reallocation” or “fund transfer,” it will still be crystal clear what you want to do with the money already invested in your TSP.

Reallocation and transfer of fund

The difference between a reallocation and a transfer of funds might interest some people. With a fund transfer, you can move money within your account from one designated fund to another designated fund (or funds) without affecting any other funds. A fund transfer is a method for transferring money into or out of a mutual fund account. This does not affect the other funds in your account.

When you reallocate, the money in your account is moved between the TSP investment funds. When you reallocate, you decide how much of your money you want to put into each fund. You can’t transfer money between funds from one source to another. For example, if you have both traditional (including tax-free) and Roth money in your account, your reallocation will move a certain amount from each type of money into the funds you choose.

It tells us they’re the same thing, but the TSP seems to believe there’s enough difference to warrant two new terms. Why use one term (fund reallocation) when you can use both (fund transfer and interfund transfer)?

Even though they now go by different terms, reallocations and fund transfers are still bound by the same restrictions applied to interfund transfers. Each calendar month, you can use your first two reallocations or fund transfers to move money from one TSP fund to another. After the first two of either type, you can only move money into the G Fund for the rest of the month. Each account has its rules if you have both a civilian account and a uniformed services account.

You should download a copy of the Summary of the Thrift Savings Plan for yourself if you’re interested in understanding how the TSP functions in light of the most recent changes. It was updated in May 2022 and now contains information on the mutual fund window and other changes to the TSP.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

More Assistance Is Coming for Feds Having TSP Transition Issues and Flood Victims

April 5, 2024 /by kevin wirth

Participants in the federal government’s 401(k)-style retirement savings program have had a difficult month. In addition to suffering losses in the financial markets, they also experienced issues with the June 1 switch to a new recordkeeper.

According to Kim Weaver, Director of External Affairs for the Federal Retirement Thrift Investment Board, a high frequency of calls to the Thrift Savings Plan‘s Thrift Line has continued for more than a month following the switch. The workforce at the hotline will have nearly quadrupled by Friday, going from 485 on June 1 to a projected 955, which is fantastic news for participants attempting to get through to a representative who can answer their inquiries (there were already 805 contact center representatives as of June 21).

Weaver forewarned that the recently hired agents would need some time to get trained before taking their first call. Although the new recordkeeper offers several advantages, like a safer login process and access to 5,000 mutual funds, many participants first encountered difficulties with the fundamental actions required to utilize these features, such as setting up their accounts.

Weaver noted that the TSP executive director has promised to provide weekly updates on the recordkeeper transition to Del. Eleanor Holmes Norton, D-D.C., and will provide ad hoc updates to any concerned lawmakers.

Norton stated that she was “pleased Director [Ravindra] Deo accepted my request to be issued weekly updates.” She went on to say, “The new system continues to cause my constituents, federal employees, and retirees around the nation significant problems, including taxes being wrongfully deducted from accounts, inaccurate beneficiary information, and inability to access their retirement assets.”

Weaver reported that 1.2 million different TSP participants had used the new system since it launched on June 1. In a typical year, almost 3.3 million participants – or half of all participants – log onto My Account.

An Expansion of the COVID Response’s Special Hiring Regulations

On June 27, the Office of Personnel Management expanded the use of special hiring privileges to aid in recruiting personnel for the federal response to the COVID-19 epidemic. According to the email sent to agency heads by OPM Director Kiran Ahuja, hiring officials may still use the Schedule A recruiting power for excepted services to fill temporary positions directly relevant to the pandemic up to March 1, 2023.

Schedule A enables agencies to forego traditional competitive hiring processes to discover candidates more quickly and effectively. For instance, organizations are not required to make the position public on USAJobs.gov (though they can still do so if they would like).

To fulfill their missions and/or to fill open positions, agencies currently “continue to need more tools to perform strategic, targeted hiring for specific, short-term tasks,” Ahuja stated. According to OPM, “Agencies have ongoing obligations directly tied to the COVID-19 epidemic. Hence the continuous exercise of this extraordinary power is justified.”

Specific hiring regulations apply for temporary appointments lasting up to a year in positions directly related to the COVID-19 response. Hires made before the deadline may be kept on for an additional year.

Assistance for Flood Victims

To assist federal workers and their families impacted by the catastrophic storms and flooding in Montana, OPM has created a leave donation program. In June, major floods brought on by heavy rain and melting snow affected Yellowstone National Park and the surrounding areas, necessitating rescue efforts, evacuations, and closures.

Through the emergency leave transfer program, flood victims in Montana’s Carbon, Park, and Stillwater counties can take extended time off to recover from floods that occurred on June 10 or later without using up any of their own paid leave. If an agency had staff members impacted by the storms and flooding, OPM left it up to the individual agencies to determine their needs and set up contribution programs.

The July 1 memo from Ahuja to agency heads stated, “Agencies with employees affected by the disaster are in the best position to determine whether and how much donated their employees need annual leave, and which of their employees have been adversely affected by the specific emergency within the meaning of OPM regulations.” Additionally, they are best positioned to promptly arrange the transfer of donated annual leave inside their agencies.

If officials don’t have enough donated leave on hand to meet their needs, they can potentially ask other federal agencies for assistance.

If an employee wants to contribute time off, they should speak with their agency rather than OPM, and if they need assistance, they should write to their agencies.

Contact Information:
Email: [email protected]
Phone: 9143022300

Bio:
My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial planning.

[email protected]
914-302-2300

Disclosure:
These articles are intended for educational purposes only. Please contact your advisors for legal, accounting or investment advice.

Why You Should Consider a Thrift Savings Plan Investment Today

February 14, 2024 /by rick viader

The Thrift Savings Plan (TSP) is a one-of-a-kind retirement plan that provides significant benefits to participants who join the program, use its features, and do their best to plan for their financial future.

Some may see its simplicity as a disadvantage; however, it makes managing one’s retirement very simple for the average person.

The TSP’s use of only five essential proprietary funds poses a problem. This means that there are only five primary funds to choose from; as a result, you cannot invest in your preferred company, no matter how much you like Apple, Disney, Ford, or any of the thousands of other companies. You cannot even consider investing in energy or retail mutual funds.

However, analyzing the dozens of funds, ETFs, or thousands of stocks available to you will not require much mental effort or time.

The fact that you can only choose from five different funds makes it simple to invest in the market and build a comfortable nest egg for your golden years. Unfortunately, the government does not make things as easy as they appear.

Your payroll deductions will be deposited into the TSP G Fund, as directed by the government. If you keep your money in the G Fund, it will not earn any interest or profit. It is a highly conservative bond fund to keep pace with inflation. You won’t be losing money, which is good, but you won’t be contributing to a retirement fund, so even if it keeps up with inflation, you won’t have enough money to live comfortably when you’re older.

What options do you have for your TSP?

The other four funds are as follows:

F Fund

The F Fund is similar to the G Fund in that it invests in bonds, but it offers a higher potential return than the G Fund, meaning that your capital will experience more growth.

C Fund

The objective of the C Fund is to replicate the performance of the most significant component of the S&P 500 market index, comprising the 500 largest companies.

S Fund

The S Fund is an investment vehicle that attempts to model its investments after the largest U.S. companies in the Dow Jones group.

I Fund

The I Fund is a group of different international funds that work together.

There are additional Life Time funds known as L Funds. These funds adjust the proportion of their holdings in each of the five primary funds based on when you plan to retire. The disadvantage of these funds is that government administrators assume everyone is the same and will have the same financial needs, goals, and challenges during their investment years and after retirement. This could be challenging since no two people are alike.

You may be able to increase the size of your account to accommodate your goals if you use a personal investment program. A few mutual and exchange-traded funds (ETFs) accurately replicate the TSP funds. However, because the government does not release day-to-day data, investment software cannot analyze and make decisions using the government TSP funds. However, several other mutual funds and ETFs are exact duplicates of the TSP funds. You will be able to know the best time to move your money from one fund to another by entering these funds into a program and developing back-tested strategies. Alternately, you can consider your personal preferences when building a portfolio of investments to maximize your return and get the most for your money.

There are a few precautions to take and a general strategy to follow to implement a good TSP management plan successfully:

According to the TSP trading rules, investors can only make two trades (transfers) per month unless they invest in the G Fund.
The best way to handle payroll deposits is to direct them to the F Fund, where they can be traded or transferred the following month.
Use personal investment management software as a guide to help you decide when and where to move your money within the various TSP funds.

Putting money in your retirement account to work for you rather than against you will result in a larger retirement nest egg and less stress about your finances. Establishing your TSP strategies should only take 20 to 30 minutes every few weeks.

You Could Borrow from Your TSP Account

TSP loans allow you to borrow money from your TSP account. In this case, you essentially act as your own lender, making payments to your account with interest that varies depending on the average yield of all U.S. Treasury securities with at least four years to maturity.

Loan Caps

A TSP loan has a $1,000 minimum borrowing amount. The following rules govern the maximum amount you can borrow:

You can’t borrow more than you’ve put into the account plus your earnings.
You cannot borrow more than 50% of your account’s value or $10,000, whichever is greater.
You cannot borrow more than $50,000 minus any TSP loans taken within the past year.

Given the median home price in the U.S. of $355,900, a TSP loan will not buy you a decent home in most areas. But you can still use your loan to pay for closing costs or even your down payment. This can help you buy a bigger home than you might be able to otherwise.

Your TSP plan administrator handles all the back-end work, such as sending out loan funds and depositing them back into your account as you repay them over time. However, remember that the interest rate you’ll pay yourself is likely lower than what you could earn elsewhere, such as in the stock market or another interest-bearing account.

Contact Information:
Email: [email protected]
Phone: 9568933225

Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.

In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.

His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.

How to Get the Most Out of Your FERS Pension

February 13, 2024 /by jason anderson

The federal government’s FERS has a three-legged stool of retirement benefits comprising the Basic Benefit Plan, the Thrift Savings Plan (TSP), and Social Security.

This article focuses on the Basic Benefit Plan, also called the federal government pension.

Pension Calculation for FERS

The FERS Basic Benefit Plan, or pension, is determined by multiplying the duration of creditable service by a percentage (typically 1% or 1.1%) and then multiplying by the “high-3” average wage. The 1% is used for those under age 62 at the time of separation for retirement and those over 62 with fewer than 20 years of service.

If a federal employee quits at 62 with at least 20 years of creditable service, the percentage rises to 1.1%. These three years are typically your last three years of service, but they might be earlier if your basic pay is more. Your basic pay is the basic salary you earn for your job.

As a result of evaluating the three years of your highest pay more heavily to maximize the pension benefit, it makes sense to retire after you have earned the highest salary in the federal government. Furthermore, if you work until age 62 and have 20 years of service, you will receive 10% extra in lifetime pension income!

Survivor’s Benefit

With the pension, the survivor’s benefit is equally essential to consider. That’s particularly important since you can leave the surviving spouse half of your pension if you die before them. The pension annuity is lowered by 10% if the survivor’s benefit is 50%.

The survivor’s benefit is sometimes overlooked when calculating your FERS pension benefit. You can offer your surviving spouse 50% of your annuity for a minor 10% reduction in your monthly payout.

Cost-of-Living Adjustments (COLAs)

COLAs are an essential part of the pension. When the cost of living rises for basic necessities such as groceries, gas, and so on, your purchasing power diminishes.

So, the FERS pension includes a cost of living adjustment. In general, it would be best if you were 62 to increase the cost of living. Inflation is currently near 40-year highs and is unlikely to fall for some time.

The cost-of-living adjustment (COLA) is an essential component of the pension since it is one of the major issues with many pensions that aren’t adjusted for inflation. As a result, your purchasing power erodes over time, and you must make up the difference elsewhere in your budget.

Maximizing FERS

The following are the top four ways to maximize your FERS pension:

1) Retire with at least 20 years of service and at least aged 62. Your monthly pension payment will grow if you can retire with more than 20 years of service. However, aim to maintain a minimum of 20 years and an age of 62.

2) Retire in your 60s with the highest three years of salary. Before you retire, work on achieving your large advancements in the federal government. In this case, your multiple is based on a greater last three years’ wage.

3) Defer taking the pension benefit until you reach 62 to maximize the COLA and then take advantage of it instead. Then, if possible, retire at 62 or later.

4) If married, consider the survivor’s benefit. You may cover your spouse with a 50% monthly annuity for a modest reduction in your monthly annuity.

These four basic guidelines don’t apply to all situations, so you should discuss them with a financial consultant for advice tailored to your situation.

Contact Information:
Email: [email protected]
Phone: 3234811328

Bio:
For over 13 years, Jason Anderson has served as a Personal Financial Advisor, Estate and Retirement Planner, helping to educate individuals from all walks of life and income levels on wise money investment and planning for a comfortable lifestyle and retirement.

Over time, Jason Anderson has become the ‘Go-To’ leading authority on personal financial advising, financial planning, and analysis, as well as retirement planning and financial planning for SMALL BUSINESS OWNERS. He also provides HIGHLY Popular financial education seminars for groups. These financial seminars empower people to more effectively budget, plan, manage their money, and achieve their personal financial goals. As a result of the excellent results, praise, and feedback that their financial seminars have received, the City of Los Angeles, The AFL-CIO union groups, as well as several other organizations, have decided to partner with Jason to more effectively accomplish their mission. He was also honored to be showcased in the November 2014 issue of Forbes Magazine “Americas Financial Leaders” and has been dubbed by the media as ‘The Financial Educator.’

Jason is passionate about the work he does because it brings him joy to help his financial planning and advising clients reach their financial goals. He finds excitement in assisting families in saving and paying for their children’s college education without stress, thanks to the financial plans he designs for them. He also takes pride in witnessing clients reach retirement and enjoy it precisely the way they desire.

Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.

He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.

► Like to discuss your personal financial situation?
☏ Call Jason at (323) 481-1328 for a FREE Consultation
✉ Email him at [email protected]

Disclosure:
All annuity and life insurance products are designed to supplement securities as part of an overall plan. The recommendation of annuities and life insurance is not designed to eliminate the need for securities in any way.

Contact Information:
Email: [email protected]
Phone: 3234811328

Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.

He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.

► Like to discuss your personal financial situation?
☏ Call Jason at (323) 481-1328 for a FREE Consultation
✉ Email him at [email protected]

Benefits and limitations of thrift savings plan annuity

February 8, 2024 /by todd carmack

Annuity, like other retirement plans, is a plan in which you pay a certain amount now, enabling you to receive a monthly allowance until your last breath.

The Thrift Savings Plan (TSP) annuity provider provides different services like:

Joint life annuity: This TSP is for you and your spouse or someone closer and dearer to you. Your joint annuitant is advisable to be part of the people with an insurable interest in you. The joint life TSP annuity allows you and your partner to receive monthly earnings as long as you are both alive or one dies, leaving the other partner alive. The pension still covers the monthly allowance of the survivor for the end of their life.

Single life annuity: The TSP single life annuity only offers you the monthly payment benefits as long as you are alive and stops after you die. This annuity plan can not be transferable to your partner.

100% survivor annuity: This is one of the benefits of the joint life annuity package. Choosing this pension plan allows the survivor to receive the same monthly amount you receive when both of you are alive. For instance, the monthly payment for you and your annuitant is $1000; when both of you are alive, the survivor will also get that amount if any one of you dies.

50% survivor annuity: The 50% survivor annuity plan is also not a bad idea. The monthly fees to the survivor will be 50% of the initial amount paid while both of you are alive. It is advisable to choose this plan option, especially if you are ten years older than your joint annuitant. It will serve as a windfall, not something you will rely on as a means of surviving.

Annuity payment options

You should choose the joint or single life annuity and consider the two payment options and the factors that affect the monthly annuity payments.

Level payment: If you choose this payment option for either the single or joint life annuity. You will receive the same amount of money monthly throughout your entire life for the single-life grant. While for a joint life grant, you and your joint annuitant will receive the same amount monthly every year without any increment. The survivor’s amount will later depend on whether you chose the 100% or 50% survivor annuity.

Increasing payments: This payment option might not be impressive to you because the amount paid per month is small compared to the level payment option. However, This increasing payment is preferable to the level payment due to the rapid economic growth. Things are changing every day, and your income should also be increasing. The annuity payment will be increased yearly by 2% on the first day of payment. Before March 2, 2020, the income from the TSP annuities rose between 0% and 3% annually based on the consumer price index.

The other side of this plan is that you can not choose this payment option if your joint annuitant is not your spouse.

Factors that can affect your monthly annuity payment include the following:

§ The amount you used to acquire the TSP annuity.

§ TSP annuity option you opt for (the single or joint life annuity).

§ Your age or the age of your joint annuitant when you bought the annuity.

§ The “interest rate index” when you purchase the annuity.

Additional features of TSP annuities

Providing payment for beneficiaries

You can provide payment options to your beneficiary(ies) in the annuity section of your TSP withdrawal form. Note that your monthly receivable amount will be lesser than when you did not choose any additional features.

Cash refund

Assuming you and your partner (if the joint annuitant is applicable) die before they pay you, the remaining amount of the TSP balance you used to obtain your annuity will be paid to your beneficiary(ies) in a heaping sum. This feature applies to any of the annuity plans.

Ten-year certain

If you buy the single life annuity, you can add the ten-year specific feature to your plan. The features give you 100% assurance that you or your beneficiary can receive your money until ten years if you are alive or dead. Also, if you live beyond ten years, you can still collect your monthly payment. Still, your beneficiary(ies) are not eligible for the annuity payment when you die.

Special considerations (spouse’s rights)

The additional pension feature gives your spouse rights over your annuity purchases whether you are together or separated. Presuming you are a uniformed officer or FERS, your spouse is legally eligible for a joint life annuity with level payments, no cash refund, and 50% survivor benefit. Suppose you have more than $3,500 and want to make a total withdrawal from your account; your spouse must sign the statement on your withdrawal form, which waives their right to it. In this case, you do not use the aggregate money to purchase the annuity.

Contact Information:
Email: [email protected]
Phone: 7735026467

Bio:
Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and started working in financial services and insurance, helping families prepare for the high cost of college for their children. After spending years in the insurance industry, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.

Converting TSP Money Into Annuities

January 8, 2024 /by aaron steele

An annuity is one of several choices for withdrawals from a Thrift Savings Plan (TSP)â€”payments can be given in lump sums, monthly, or a combination of both. Only a tiny fraction of TSP withdrawals are annuity purchases.

But, before you discard it, learn about its features. For one reason, the TSP’s annuity benefits are more customizable than FERS or CSRS.

The TSP provides three primary forms of annuities:

• Single life annuity – an annuity paid solely to you during your lifetime.

• Joint life with spouse – an annuity given to you and your spouse while you’re both alive. When one spouse dies, the surviving spouse will get an annuity for the rest of their life.

• Joint life with someone that’s not your spouse – an annuity paid to you while you and a person of your choosing (but not your spouse) remain alive. This individual must have a vested interest in you. When one of you dies, the survivor will get an annuity for the rest of their life. Individuals deemed to have an insurable interest in you are the following: a previous spouse, blood relatives or adopted relatives who are closer than first cousins, and an individual with whom you’re living in a relationship that constitutes a common law marriage in countries that allow common-law marriages.

Joint life annuities can offer a 100% or a 50% survivor benefit. That implies that if one of you dies, your monthly payments will either continue in full (100%) or be reduced by half (50%) to you or your joint annuitant.

The basic annuity types can be paired with various annuity features, including growing payouts, cash refunds, and a 10-year guaranteed payout. The monthly payment amount increases by 2% every year with rising payments. Suppose you (or your partner annuitant) die before receiving payments equal to the account balance used to purchase the annuity. In that case, your designated beneficiary will get a cash return equal to the difference between the total of the payments and the annuity purchase value. If you die within ten years of the commencement of your annuity with a 10-year certain payout, your beneficiary receives payments for the remaining of the 10-year term.

Not all features can be coupled with every type of basic annuity. Also, once an annuity is purchased, the money is transferred to a private company. That company, rather than the TSP, provides the benefit.

The calculator at www.tsp.gov allows you to see how a certain amount might translate into income under various scenarios.

If you’re a married participant with an account balance greater than $3,500, the spouses’ rights criteria will apply to your withdrawal option. If you’re a married FERS participant, unless your spouse waives their right to that annuity, they have the right to a joint and survivor annuity with a 50% survivor benefit, level payments, and no cash return feature. If you’re a married CSRS participant, your withdrawal election must be communicated to your spouse by the TSP.

Contact Information:
Email: [email protected]
Phone: 3604642979

Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Federal Retiree COLA 2023; The Highest Since 1981

November 21, 2023 /by marvin dutton

COLA at 8.7% in 2023

The Bureau of Labor Statistics (BLS) inflation data are utilized annually to create an automated cost-of-living adjustment (COLA) for employees (BLS).

Inflation has been growing in 2022, one of the most pressing concerns for Americans today. If you are retired or planning to retire, keep an eye on monthly inflation statistics because they impact the annual COLA adjustment for federal retirees and Social Security income. The additional payments will be made available to recipients beginning in January.

The CPI-W index is used to calculate the magnitude of the increase automatically.

COLA 2023, All-Time High Since 1981.

According to the Bureau of Labor Statistics’ most recent 2022 inflation report, inflation was 0.4% higher in September based on the Consumer Price Index for All Urban Consumers (CPI-U). According to the BLS, the all-items index (a different index from the CPI-U) climbed 8.2% during the last year.

The Consumer Price Measure for Urban Wage Earners and Clerical Workers (CPI-W) is the BLS index that many FedSmith readers are interested in. This index has risen 8.5% in the last year.

The CPI-W is the most important index for retirees who receive a federal employee annuity payment. It is also the amount computed for the 2023 COLA for Social Security payments.

It is now at 291.854 on the index.

The average CPI for the third quarter of 2021 was 268.421. This is critical because the yearly COLA is calculated by comparing the year-over-year growth in the CPI-W using the average of the third-quarter months of July, August, and September. This equals an 8.7% rise over the third-quarter average last year.

The greatest COLA rise in the last three decades was 14.3% in 1980. The 2023 COLA increase will be the highest since 1981, when it was 11.2%.

In 1981, inflation was 10.3%, and the annual COLA was 11.2% higher than the current amounts.

Since Obama assumed office, inflation has been on the rise. If the methods used to calculate it haven’t evolved, the current trend could be far more severe than the one observed during Carter’s tenure. In general, modifications in inflation calculations have resulted in lower reported inflation. The updated method shifted the CPI’s idea from assessing the cost of living required to maintain a steady level of life. The revised computation technique considers the cost of living rather than price increases.

According to one source that records this data, the current inflation rate would be around 17% if the earlier calculating technique had been utilized.

Are You Dissatisfied with the Cola Increase?

In 2022, inflation has remained high. As a result, retirees may be surprised by downward revisions to their 2023 COLA expectations, as earlier estimates in 2022 were 11% or higher. The bad news does, however, have a bright side.

COLAs do not fully offset inflation. As a result, the purchasing power of a retired person’s income decreases with time. For example, since 2000, the purchasing power of Social Security income has plummeted by more than 40%.

Retirees benefit financially with lower inflation and lesser COLAs. Because COLAs do not entirely replace the purchasing power of retirement income, lower inflation and lower COLAs usually better retain a retiree’s purchasing power. While huge COLA payments in response to high inflation deliver more funds, each dollar buys less than it did previously. In light of this, seniors should view lowering COLA estimates as great news.

Why Does Your Retirement System Affect Your 2023 COLA?

Retired federal employees who retired via the FERS system will get 1% less than those who retired under the CSRS system in 2023. This is because they receive the full COLA for Social Security while not the full COLA for their pension or annuity.

Beginning in 1987, CSRS was phased away. Less than 100,000 active government employees are still employed under the CSRS system. The majority of federal retirees receive CSRS benefits.

Social Security is not a benefit of the retirement plan for CSRS employees. Some CSRS employees earn Social Security benefits based on jobs other than working for Uncle Sam. However, this is not a mandatory component of the CSRS scheme.

During their federal government careers, FERS personnel can also invest for their future retirement through the Thrift Savings Plan (TSP). The federal government contributes an additional matching amount to the TSP to offer a higher income stream during retirement.

Contact Information:
Email: [email protected]
Phone: 2129517376

Senators from The Republican Party made a last-minute appeal for the TSP to delay the opening of the mutual fund session

November 21, 2023 /by mack hales

Legislators are concerned that the newly implemented federal retirement savings scheme may encourage government employees to invest in Chinese businesses.

This week, six Republican senators requested a retirement savings plan similar to a 401(k) to delay the establishment of a mutual fund due to concerns that government employees may invest in Chinese businesses.

The requirement was established just as the Thrift Savings Plan (TSP) began transitioning to a service provider to handle the mutual fund scheme. A week before the new regime, which incorporates a phone gadget and other technologies, is slated to go live.

Members of the TSP’s retirement plan can choose from more than 5,000 mutual funds, some of which are devoted to ecological, social, and governance practice concerns. The TSP’s website is now down for most of its features due to the organization’s move to a different recordkeeper.

Because there is a possibility that certain mutual funds may have holdings in “Chinese entities,” a group of six Republican senators wrote a letter to the FRTIB, which is the authority that oversees the Thrift Savings Plan (TSP). In the letter, they requested that the authority halt or delay the provision of mutual funds to TSP participants.

For federal TSP members, “we write to express serious concern over the FRTIB’s intention to create a new mutual fund scheme beginning next month.” A move like this could reveal the retirement funds of U.S. federal workers and service personnel to firms in China, such as those presently authorized by the U.S. Government for human rights violations or otherwise delisted for the danger they pose to the United States’ global defense.

TSP officials say it’s unfair that government workers can’t invest in the same corporations and market indexes as the public. They urged the Treasury Department to ban Americans from investing in banned or threatening businesses.

In their email, TSP’s argument that tracking more than 5,000 mutual funds would be “extremely expensive” was questioned by the senators. The government should at least delay adoption until they discover a means to do it.

It is highly improbable that your panel could guarantee that approximately 5,000 index funds are independent of Chinese firms that present a danger to American global defense or businesses allegedly involved in human rights violations by the Chinese Communist Party, or businesses that otherwise neglect the necessary financial trajectories given the large number of Chinese companies involved in this decision and the FRTIB’s past efforts to include such firms in TSP.

TSP representative Kim Weaver said the mutual fund window is “totally voluntary,” and TSP participants won’t need mutual funds.

Contact Information:
Email: [email protected]
Phone: 7705402211

Bio:
Mack Hales has spent the past 4 decades helping clients prepare for retirement and manage their finances successfully. He also works with strategies that help clients put away much more money for their retirement than they could in an IRA or even a 401k. We involve the client’s CPA and/or their tax attorney to be sure the programs meet the proper tax codes.

Mack works with Federal Employees to help them establish the right path before and after retirement. The goal is to help the client retire worry-free with as much tax-free income as possible and no worries about money at risk of market loss during retirement.

Mack has resided in Gainesville, GA since 1983, so this is considered home. Mack is married to his wife of 51 years, has two boys and five grandchildren.

The Limited Eligibility of a Lump-Sum Annuity

November 20, 2023 /by todd carmack

Lump-sum annuities (or lump-sum option or alternative form of an annuity) remain a primarily misunderstood portion of the federal retirement policy. However, trending data shows that, as they approach retirement, most employees ask for lump-sum annuities even when it isn’t readily available. So, what exactly is a lump-sum option, and will it be phased out in the future?

The lump-sum annuity was created as a replacement option for the three-year recovery rule, in which retirees were exempt from paying taxes on annuity payments for up to 3 years. Said retirees would receive an amount equal to past contributions into the retirement fund, which had previously been taxed. These individuals were also permitted to receive an amount equal to previous contributions during retirement, while they also received a reduction in their annuity based on life expectancy.

Although the lump-sum option was widely available and quite popular since its creation, it drew much attention from the federal government. Ultimately, the opportunity was eliminated in 1994 for most Americans, aside from those dealing with a medical condition deemed fatal within a two-year period. Individuals facing such life-threatening conditions can choose the lump-sum option with a few contingencies.

While quite a bit of time has passed since changes were enacted, many employees on the heels of retirement are banking on lump-sum annuity availability. This confusion may be due, in part, to the time in which they entered government employment, around the original design of lump-sum options. A Thrift Savings Plan (TSP) may serve as a decent alternative for those looking to pay off loans, a mortgage, or make a significant purchase.

Contact Information:
Email: [email protected]
Phone: 6232511574

The FERS Annuity Is A Great Deal

November 9, 2023 /by marvin dutton

Whenever it comes to ensuring your financial security in retirement, the FERS annuities are a comparative steal.

What is a FERS annuity?

In 1986, Congress explicitly created the Federal Employees Retirement System (FERS) for federal civilian employees. Benefits are available under the FERS retirement plan from three main sources:

Basic Benefit Plans
Social Security
Thrift Savings Plan (TSP)

Two of the three benefits under FERS (TSP and Social Security) will go with you if you leave the federal government before retiring, according to the Thrift Savings Plan (TSP).

What’s the value of your FERS annuity?

The government and you must make mandatory contributions to the FERS defined benefit plan. You spend less money on this benefit than Uncle Sam does. Your service history (measured in months and years and high-3 yearly pay) determines your FERS annuity.

If you retire before age 62 and have completed at least 20 years of service, you will earn an annual annuity based on 1%. If you retire after the age of 62 with at least 20 years of service, you will earn an annuity based on 1.1% per year. The 1% component is used for individuals who are 62 years or older but also have fewer than 20 years of service. Employees in particular categories (such as firefighters, police officers, air traffic controllers, etc.) would be paid a larger proportion.

How much money would you have needed to accumulate on your own to obtain a payout similar to what you will receive from your FERS annuity?

A lot of it! Consider the scenario where you have 30 years of total federal employment and retire before age 62. Your top three salaries are $100,000 annually. Once you turn 62, your FERS pension will be $30,000 per year with a cost-of-living adjustment. The COLA begins to apply when a special category employee retires.

What amount would you have to save to earn a $30,000 annual inflation-indexed income?

The consensus is that the answer is $750,000. This is based on the so-called 4% rule, which states that if you start taking withdrawals from a lump sum at 4% and adjust them for inflation each year, there is minimal risk of running out of money. The 50 years between 1926 and 1976, encompassing the Great Depression, were used to create this rule. Then, it was compared to withdrawal rates that would protect capital.

Bill Bengen, the financial planner who conducted the analysis, concluded that there wasn’t any possibility that a person who adhered to the 4% rule would’ve run out of cash in fewer than 33 years, even under exceptionally unfavorable market conditions. In reality, Bengen asserted that a 5% rate could be more practical, reducing the sum that must be amassed for the individual in our case to around $625,000.

According to a recent MetLife analysis, the average retirement fund amount is anticipated to be $450,000. However, for the individual in this scenario, that amount would not be sufficient to match the value of the FERS annuity.

Would you have been capable of replacing 30% of their pre-retirement salary with savings?

Whenever it comes to ensuring your financial security in retirement, your FERS annuities are a relative steal.

How your FERS annuity is computed

The first step is to find your current “high-3” – the highest average basic wage you have received during three consecutive years of employment. A federal employee’s high-3 pay is typically the sum of the three most recent years of compensation.

Divide your full creditable years of service by your high-3 average yearly salary, then multiply that result by 1%.

If your high-3 average is $85,000 and you’ve worked for the government for 30 years, then you qualify. Your FERS annuity would then be $2,125 per month or $25,00 per year. Your annuity will now receive a bonus if you retire after age 62 and have at least 20 years of service. You will multiply your service years and high-3 by 1.1% instead of 1%. As a result, instead of receiving $25,500 per year, as in our previous example, you would now earn $28,050 ($2,337 monthly instead of $2,125).

Contact Information:
Email: [email protected]
Phone: 2129517376

What is the TSP?

October 21, 2023 /by marvin dutton

Put plainly, the Thrift Savings Plan (TSP) is a type of retirement plan made available to federal government employees, including uniformed service members and members of Congress. It is similar to a 401(k) plan offered by private employersâ€”it enables federal employees to set pre-tax contributions aside for investment options with funds that ultimately pay toward retirement. By educating yourself on the ins and outs of a TSP, you can reap the rewards of your investment for years to come.

Currently featuring more people than the number of citizens across several countries, the TSP is a government-created retirement program with over 99,000 millionaires. Its net worth is also larger than several nations across the globe, something the private sector is incapable of touching. As a federal employee, the Thrift Savings Plan (TSP) is a must-have you don’t want to miss out on, with advantages that will pay off well into your retirement years. Before you miss out on the available perks, please consider how the TSP was created and how it was intended to benefit government employees.

Introduced as part of the Federal Employees Retirement System Act in the 1980s, the Thrift Savings Plan (TSP) provided workers with investment opportunities much like a 401(k). The rule since its inception was to keep the TSP simple and affordable, with low administrative fees. Federal workers can make contributions up to $20,500 per year for those younger than 50. Anyone older than 50 years may take advantage of the $6,500 catch-up limit. The government also matches contributions, much like a 401(k), for anyone eligible within the Federal Employees Retirement System (FERS). For example, by contributing 5% of your salary, you are eligible to receive an additional 5%.

Depending on your plan, the overall cost of a TSP is arguably one of its best features, with expense ratios averaging to a mere 0.058% (for the F Fund). In terms of fees, for each $10,000 held within your plan, you should project paying as much as $5.80 annually. The differences between a TSP and the average cost of a 401(k) equates to additional savings you could invest toward maximizing your TSP retirement savings.

Upon reaching the age of 59 ½, TSP participants may begin making withdrawals without risk of a penalty with a few exceptions (including death or permanent disability). Should you start suffering from adverse health conditions spelled out by the TSP, you may qualify to withdraw early. This is not without exemption, though, and comes with a penalty of 10% additional taxes on the withdrawn amount. However, once you reach 72, you will be required to make TSP withdrawals. Taxes are also not paid until you begin taking distributions upon reaching the minimum age.

Contact Information:
Email: [email protected]
Phone: 2129517376

Retirement COLA? Here’s What To Do

October 9, 2023 /by marvin dutton

Millions of current and retired federal employees pay attention to the magnitude of the federal pay boost and the retiree inflation catchup every year. As a result, they are even more vital to the communities where they reside, vote, shop, and raise children.

Therefore, in his State of the Union address, President Joe Biden made a particular point of announcing that federal employees who are now working remotely will return to their offices “soon,” as in “soon.”

Both current employees and those who have already retired may be concerned about the importance of increases and COLAs, but they may be unaware of the specific amounts.

Especially when the sums are so vastly different, the system dictates that the methods used to arrive at such figures are primarily of scholarly interest to the two parties. You’ll receive what you’re looking for. Period!

Cost of Living Adjustment

The Bureau of Labor Statistics provides a cost of living adjustment for retirees. The inflation rate does not play a role in any base raise for active duty federal employees.

As a result, federal employees in high-paying cities like New York, Houston, and Los Angeles earn more than their counterparts in lower-paying states like Kentucky and Idaho. COLAs are frequently granted to retirees even while government salary increases are capped, as in 2011, 2012, and 2013.

Pay for government employees increased by 2.7 percent in 2013. Old-system civil service retirees received a 5.9 percent cost of living increase, while new-system federal employee retirees received a 4.9 percent adjustment.

In January 2023, then Vice President Biden proposed a 4.6 percent increase for federal employees. The September cost of living statistics must be reviewed to establish the retiree COLA. However, considering how quickly things have evolved, the COLA for 2023 might be a monster.

Raises vs. Cost-of-Living Adjustments

For most people, the debate over a pay increase versus a cost-of-living adjustment is purely academic. There is disappointment among those who receive the lowest percentage raise. And so it goes. However, “regular times” is the most important word. These, on the other hand, are not.

We’re in the thick of a European land war. Refugees, mainly women and children, have fled to six nations, including the United States, Germany, and Canada. Nearly 11 miles from Poland, the Ukraine conflict has shifted its focus to the east.

One assault on a member of NATO (the United States included) is an attack on all NATO members. Many people in the United States think that the recent election was rigged. Many people are eager to see how the elimination of controversial mask mandates will affect the economy.

Ex-President Barack Obama tested positive for COVID earlier this week. Who knows what effect the first large-scale gatherings in recent years â€” from Mardi Gras in Louisiana to the Florida beaches â€” will have when people return to their hometowns and colleges?

Increase in the Cost of Fuel

The fuel price looks to be rapidly rising from $4 a gallon to $5 a gallon. Unless, of course, you reside in California, where time moves at a breakneck pace. It’s a little bit! What’s next? It’s hard to say when this “return to the office” trend will run out of gas.

Supply chain issues might become worse before they get better at present. The “economy,” as most people refer to it, is affected by various factors, including new trade restrictions. Your biweekly income and monthly annuity are also real.

Will the massive wave of retirements be triggered if the gap between a COLA and a salary increase widens? It has been foretold for over a decade, yet nothing has happened â€” for the time being. More than a hundred thousand active-duty federal employees are now eligible to retire.

They need to determine whether they can afford to retire and rely solely on diet COLAs in an inflationary environment. To achieve this, they’ll need to see how their Thrift Savings Plan account is doing and whether they need to make any changes to its allocation in light of the current economic climate.

Contact Information:
Email: [email protected]
Phone: 2129517376

Special Cases Exempt from the 10% Early Withdrawal Penalty.

September 26, 2023 /by joe carreno

Your IRA contributions are made to supplement your income throughout your retirement. While you’d like to keep your IRAs whole until retirement, unavoidable costs can compel you to take part of your assets out sooner. You may still pay the 10% penalty if you take withdrawals from your traditional or Roth IRA too early. Still, early withdrawal exceptions allow you to avoid the penalty.

This article discusses the exceptions to the 10% early withdrawal penalty. A list of the exceptions is provided below.

1. Unreimbursed Medical Costs.

You may be qualified to make a penalty-free withdrawal from your IRA to pay for these costs if you don’t have health insurance or have out-of-pocket medical expenses that aren’t covered by insurance.

The medical expenses must be paid in the same fiscal year as the withdrawal to qualify for it. Furthermore, your medical expenses that were not reimbursed must equal more than 10% of your 2021 adjusted gross income (AGI).

The maximum amount you can withdraw without incurring penalties, for instance, is $5,000, which is the difference between $15,000 and 10% of your AGI ($10,000) or between your AGI and your unreimbursed medical expenses ($15,000).

2. Permanent Disability

The IRS allows an individual to take money out of an IRA without incurring the 10% penalty if you become permanently disabled and cannot work. The distribution can be utilized in any way. However, remember that your plan administrator may request documentation of your condition before authorizing a penalty-free withdrawal.

3. Health Insurance Premiums When You’re Unemployed

You can withdraw from your IRA without incurring penalties to cover your health insurance costs if you are unemployed. The distribution will be exempt from penalties if you meet these requirements:

1. You were fired.

2. You received unemployment benefits over 12 weeks.

3. You took the distributions when you got unemployment benefits or the year after.

4. You received the distributions within 60 days of returning to work.

4. You Receive IRA as an Inheritance

The 10% early withdrawal penalty is waived if you are an IRA beneficiary and take distributions. The exception doesn’t apply if you’re the sole beneficiary, the account holder’s spouse, and you want to transfer your account share to your spouse (to roll over the funds into your own non-inherited IRA). The IRA will be handled as if it were yours from the start in this situation, and the 10% early withdrawal penalty will still be in effect.

When completing IRS Form 1099-R (the form used to report the distribution), your IRA provider should indicate in box seven that the money is a death distribution by entering the code “4.”

5. Costs of Higher Education Expenses

A college education is a massive expense in today’s world. Your IRA could be a helpful source of funding if you’re paying for your education. With IRA funds, you can avoid the 10% penalty when paying for qualified higher education costs for you, your spouse, or your child.

Tuition, fees, books, supplies, and other costs related to a higher education program are considered qualified higher education expenses. Accommodations and board for students enrolled at least half-time are also covered.

Be sure to speak with a reputable tax expert to determine if your expenses count toward the deduction. Also, ensure the school meets the criteria for participating in the program.

6. To Purchase, Build or Rebuild a Home

You can take withdrawals that are penalty-free from your IRA of up to $10,000 (lifetime maximum) to buy, develop, or reconstruct a home. Not owning a property in the preceding two years qualifies you as a “first-time” homebuyer.

If you’re married, your spouse can contribute an additional $10,000 from their IRA. You can also utilize the funds to support a parent, grandparent, or child as long as they fit the qualifications of a first-time homebuyer.

7. Periodic Payments That are Significantly Equal

The IRS permits you to withdraw money from your IRA without incurring penalties if you need to make regular withdrawals from it for a few years.

Essentially, you must take a certain amount out every year for five years or until you reach age 59Â½, whichever comes first. This amount is computed using one of three IRS-preapproved procedures.

Contact Information:
Email: [email protected]
Phone: 8139269909

Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.

We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.

Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.

Fed retirees are doing better because of the FERS Annuity’s indexing for inflation

September 3, 2023 /by michael crowe

It shouldn’t be a surprise that employees nearing retirement are more scared of inflation, per a recent survey by Schwab Workplace Financial Services®. Monthly costs (mentioned by 35% of participants) and stock market volatility (cited by 33% of participants) came in second and third, respectively, behind inflation, which was noted by 45% of survey respondents.

Should government workers be as concerned about inflation as poll participants are? The answer is “No.”

It’s not that inflation is unimportant; it’s just that federal pensioners experience it to a lesser extent than the typical retiree in the private sector.

Why? Because both the FERS annuity and the Social Security payout you will receive are indexed to inflation. The majority of workers in the private sector don’t get annuities like FERS, and for those who do, the payouts are usually not inflation-indexed.

The FERS cost-of-living adjustment (COLA) is based on changes in the Consumer Price Index (CPI) between the third quarter of one year and the next. The CPI may increase by 9% by the end of September 2021, when Social Security announces the COLA amount in the middle of October.

Since the FERS COLA trails the CPI by 1% in years with inflation of 3% or more, FERS retirees are likely to get a COLA of 8% or more. The full Social Security COLA is per the CPI.

FERS retirees will have access to social security, the FERS pension, and the Thrift Savings Plan as their three primary income sources. These three sources have been adjusted for inflation in two of them.

Nearly half of all retirees in the private sector will participate in a defined contribution plan like the TSP and receive Social Security benefits. Thus, inflation will have a negative effect on a more significant portion of their retirement income.

In the Schwab poll, one-third of participants were unsure of the lifespan of their funds. In a previous American Advisors Group® poll, 29% of respondents predicted that their financial situation would likely worsen before time ran out (although they would still have Social Security).

You won’t run out of funds from your FERS pension, Social Security, or any of those sources, leaving your TSP.

What steps could you take to ensure that your TSP balance won’t be depleted and that your withdrawals will be able to cover inflation? Here are a few ideas.

• Increase your TSP contributions while you’re still working to have more money when you retire. Remember that the amount you can contribute increases by the year you reach 50.

• Start with a specific proportion of your account each year (many financial advisors advise starting at 4%), then raise it each year by the rate of inflation to ensure that your withdrawals stay up with inflation. According to studies, using this method, sometimes known as the “4% rule,” increases your chances of not running out of money during retirement.

• You might want to think about choosing installment payments calculated using the IRS life expectancy chart if you plan to utilize your TSP as a source of ongoing income. Your payment will be revised by the TSP each year. The amount you withdraw would be adjusted upward in a “good” year and downward in a “poor” year since this re-calculation is based on your year-end balance (for example, the 12/31/2021 balance was used to compute the 2022 installment payments, etc.).

Keep in mind that this, too, shall pass. Yes, inflation has been high, but monetary policy has finally controlled it. Note that inflation has averaged 3% a year over the past century. High inflation may be there for a while, but it won’t last forever. Not to worry.

Contact Information:
Email: [email protected]
Phone: 6023128944

Bio:
Mike was born in Chicago, Illinois on August 13, 1946. He was brought up in the
suburb of Skokie on Chicago’s northwest side and graduated from Niles Township (
East ) high school In 1964. Two years later he joined the US Air Force in November of
1966. After 2 years of Intense training he volunteered for Viet Nam and was sent to
Bien Hoa Airbase, which was 25 miles from Saigon, the nation’s capital. He
volunteered for a number of especially dangerous missions on his days off, such as
flying as a door gunner on a US Army helicopter and as a technical assistant on a
psychological operation on an Air Force O-1E observation aircraft. Capping off his
impressive accomplishments was winning the coveted Base Airman of the Month for
March 1969, a feat which was featured in the Pacific Stars And Stripes newspaper
read by every service man stationed in the Pacific theater of operations. After his
Viet Nam tour of duty he was stationed at Luke Air Force Base in Glendale, Arizona
where he met and married his wife, Lequita.
He graduated from Arizona State University in May, 1973, and after a 30-plus year
career as a financial advisor he joined a number of service organizations including
Easter Seals and Valley Forward, sponsor of EarthFest. He was also involved with the
National Federation of Independent Business and became the longest-serving
chairman of the Leadership Committee ever. He spoke before the ( AZ ) House Ways
and Means & Senate Finance committees. He then joined Disabled American
Veterans ( DAV ) in September of 2015. He rose quickly through the ranks and
became Chapter 8 Commander in May of 2019 where he served with Distinction for 3
years before being “ termed out”. The next year, as Vice Commander, he won the
title of National Champion Recruiter!

TSP With a Pay-To-Play Arrangement

July 28, 2023 /by michael crowe

A magazine reporter once questioned a PGA Tour golfer about their starting salary. Their response was that, for their first year, they actually lost money. Today’s economy makes establishing a career in this profession more expensive than a generation ago. Accommodation, food, and transit costs rapidly increase while traveling for weeks. Then there are the tournament fees, a fixed salary for the caddy (who also gets a percentage of winnings on a scale with more for top finishes and wins), coaches, trainers, dietitians, etc.

To succeed, you must break even. When the TSP investing window opens in June, it’s crucial to provide participants (within constraints) access to outside mutual funds. Investors have long grumbled about the TSP’s limited choices of broad, index-based products. Success costs them.

It will take some time before the TSP becomes a full-fledged pay-to-play organization. In response to a minority of investors treating their TSP funds more like passbook banking accounts than long-term retirement savings, the program decided to start charging $50 for customers who took out a loan. Loans were taken out for various reasons, such as paying a semester’s worth of college tuition and then repaying over some time via paycheck withholding. The TSP’s overhead increased due to each of those transactions, and the program determined that individuals who caused the expenditures should bear the burden.

So, it shouldn’t be surprising that the TSP has adopted the same investing strategy. The $28.75 trade fee is an additional charge. As a result, if a person decides to invest $10,000 outside of a mutual fund, they will be approximately 2% behind at the start of their new investment.

Are mutual funds focusing on specific market sectors, or even wide ones, capable of beating the TSP stock index fund in terms of performance? Sure. At the very least, it will have to perform at least as well to avoid a financial loss. And the losses will be more significant if it becomes worse. The TSP aims to “redetermine” such costs every three years, implying they will go up or down depending on market conditions. There will also be an additional $600 cost for processing alimony and child support orders as part of the more extensive set of changes to the TSP tied to the new record-keeping system.

To make the TSP more affordable for investors, the program’s general expenditures are divided out among all participants reasonably. On the other hand, certain services come at an additional cost, and individuals using them are expected to foot the bill. Even if individuals who must pay the fees feel slightly irritated, that’s how the TSP is going.

Contact Information:
Email: [email protected]
Phone: 6023128944

The Installments vs. Annuity Dilemma When Using TSP for Regular Income

July 21, 2023 /by marvin dutton

The primary reason we contribute to our Thrift Savings Plan account is so that we can begin withdrawing from it at some point in the future. In addition, most of us view our TSP balance as a source of monthly income to augment our government annuity and Social Security (both of which are also paid monthly).

If we want to replace 80% of our pre-retirement income (as many financial advisers recommend), the great majority of us will fall short of that objective if we rely only on an annuity and Social Security. As a result, many retirees choose to receive TSP payments regularly.

In fact, over half of the separated employees choose a TSP withdrawal option that offers recurring income. Two income-generating withdrawal options are available: installment payments and a TSP life annuity. Installment payments can be made monthly (most common), quarterly, or annually. With installment payments, your money will stay in the TSP, where it’ll (hopefully) grow. A TSP life annuity involves withdrawing money from your TSP account and using it to buy a single premium immediate annuity (paid monthly) from MetLife; you can use all or part of your TSP balance to buy the annuity.

So, what’s the distinction between installment payments and a life annuity? Though both options allow us to collect recurring payments, the rules are significantly different. The most significant distinction is that a TSP Life Annuity is an irrevocable option, whereas installment payments can be altered frequently. Individuals who use installment payments can start and stop payments at any time and adjust the amount of the installments many times per year.

The TSP life annuity ensures that you won’t run out of money over your lifetime; you won’t have to look after your investments. But unfortunately, there’s no guarantee with installment payments, and you must watch after your withdrawals to verify that you continue receiving payments.

Both installment payments and life annuities allow you to receive payments based on a certain amount of money (level payments) or your life expectancy (increasing payments).

The Thrift Savings Plan has various calculators, including the TSP Payment and Annuity Calculator, with which we came up with the following examples. Due to the ongoing repercussions of the Thrift Plan’s new system, this calculator is no longer available on TSP’s website (as of July 2022). In our calculations (completed in April, before the new system’s implementation), we estimated that a 57-year-old retiree had $350,000 in their TSP when they started withdrawals upon retirement. We also assumed they would live to be 90 years old and that any money remaining in their TSP account would grow at a rate of 5% per year. The annuity interest rate index was 2.075% – the rate for TSP annuities in February 2022.

Level monthly payments of $1,750 would remain until death at 90, leaving a $4,244 balance in the TSP account.

Monthly benefits would begin at $1,045 and would have reached $2,247 at 90, according to the IRS life expectancy chart. As a result, $295,069 would stay in the TSP account.

A monthly annuity with a basic level payment would earn $1,394 and keep paying that amount throughout the individual’s life. At death, there would be no funds left.

A basic increasing payment annuity would have started at $998 and grown to $1,887 at 90. At death, there would be no money.

Which option is most popular among separated federal employees? Monthly payouts are significantly more common than life annuities. Separated employees appear to prefer the opportunities for continuous development and the freedom to adjust their payouts that monthly payments provide over the certainty of the Life Annuity.

According to recent research, there are 1.2 million fewer workers than before the pandemic. However, it also said that if the pre-pandemic worker growth rate had remained, there would be 3.5 million more employees in the workforce today.

Contact Information:
Email: [email protected]
Phone: 2129517376

TSP Compiles a List of June’s New Features

July 15, 2023 /by marvin dutton

All TSP participants will need to create a new login for the new My Account after the transition in June. This one-time setup process will guide you through the steps of verifying your identification, creating a username and password, updating your contact information, and securing your account. You’ll notice a new design, additional tools, and expanded functionality to help you manage your account once you log in to My Account:

â€“ The configurable, user-friendly homepage will provide rapid access to the information you want to see first.

â€“ You’ll be able to see all the information for both accounts in one spot if you have both a civilian and a uniformed services account. This includes your overall total amount.

â€“ You’ll have the option to use your device’s identification software, such as fingerprint access and facial recognition, to add an extra layer of security when you access My Account from your mobile device.

â€“ If you need tailored assistance, you can utilize our virtual assistant, AVA, to ask account-specific inquiries and connect directly to a Thrift Line Representative for a live chat session during business hours.

The window for mutual funds

TSP participants who want more investment freedom may look into the mutual fund window. You can choose from a pool of over 5,000 mutual funds if your account fulfills specific qualifying conditions. This flexibility comes at a cost, as it does with most mutual funds:

TSP participants who do not utilize the mutual fund window pay a $55 yearly fee to ensure that using the mutual fund window does not increase TSP administration expenses.

The annual maintenance charge is $95

Distributions and withdrawals

The process for requesting a withdrawal or distribution will be more efficient and time-saving with the improvements coming in June:

â€“ We’re providing the opportunity to use electronic signatures and submit many requests online, just like we do with other transactions.

Support choices have been expanded.

With our increased support options, you’ll have more opportunities to have your issues answered starting in June:

â€“ On our website and in the TSP Mobile App, you’ll have 24/7 access to help through AVA, a virtual assistant (coming in June). AVA will provide a secure place for you to ask questions regarding your account and, if necessary, will link you to a live ThriftLine agent through chat during office hours.

Online transactions that are quick and easy

We’re providing new ways to perform most transactions and requests online to save you time and reduce paperwork:

â€“ You’ll be able to request transactions, upload forms and documents, and electronically sign your name in the new My Account.

Other useful information

You’ll be able to submit beneficiary information online through a new tool in My Account or by calling the ThriftLine. There will be some modifications to the way beneficiaries are designated:

â€“ You’ll be asked to confirm beneficiary information once a year to ensure it’s accurate.

â€“ You can easily designate equal distribution to beneficiaries using the online option for providing beneficiary information through My Account, without having to list precise percentages unless you choose to.

Contact Information:
Email: [email protected]
Phone: 2129517376

The TSP’s Strategic Plan

July 9, 2023 /by marvin dutton

Despite the necessity of focusing on day-to-day operational concerns, many firms need help to build a practical and realistic Technology Strategy. The inability to examine essential components of an IT strategy can have disastrous effects on a company’s ability to compete in the marketplace and effectively address infrastructure and data security concerns.

Technology Leaders are well-versed in industry best practices, and their wide variety of experiences servicing customers of all sizes offers us the benefit of providing you with an informed and impartial perspective to help you find opportunities and avert catastrophes.

We are professionals in assisting loan clients in comprehending the significance of the right software, a solid and secure infrastructure, and a competent support team in achieving overall objectives. So whether you define success in terms of sales, cost savings, risk mitigation, or better company efficiency, we will happily provide a business case for each of our recommendations.

The Thrift Board has determined its objectives by considering the following five visions:

• Our procedures are executed without a hitch;

• We assist participants in making informed decisions;

• We are careful with the money contributed by participants;

• We make the FRTIB a wonderful place to work and an environment in which outstanding work may be accomplished and

• We cultivate fruitful partnerships with those with a stake in the TSP.

The Thrift Board has decided to focus on the following three goals in terms of the consequences that plan participants would experience:

• Make it easier for participants to make decisions by giving information specific to their needs;

• Investigate and put into practice any improvements in plan design and benefits policy; and

• The percentage of participants that carry out a predetermined goal due to FRTIB outreach is increased.

Concerning the achievement of another aim, the provision of services, more time is spent on the participants. The following are the four goals that fall under the participant services goal:

• Raise knowledge about how the services supplied by the TSP compare to those provided by other defined contribution plans, providers, and financial institutions;

• Work in collaboration with employment agencies and payroll offices to provide participants with more seamless service;

• Understand the requirements and expectations of participants and respond to them;

• Open up the opportunity for mutual funds. This task was finished a couple of months ago.

They also wanted the TSP to move toward a managed services strategy, another of their objectives. This shift occurred in May and June, and it needed to measure up to preserve program performance while also maintaining the participant satisfaction that the Thrift Board had set for itself.

The TSP, as of late, has been more user-friendly and proactive than it was in its earlier days. This contrasts with how it was in its earlier days. Their strategic plan will make it possible for them to enhance the services they provide for the benefit of participants who are both employed and retired.

The Target Date Fund (TSP) employs the IRS Single Life Table to calculate life expectancy-based distributions for participants who have yet to reach the age at which they are obliged to begin receiving RMD payments when those payments commence.

These participants are eligible to transition to the Uniform Lifetime Table once they reach the age for RMDs, which is presently 72 years old.

Contact Information:
Email: [email protected]
Phone: 2129517376

An Annuity from TSP Money

May 8, 2023 /by joe carreno

One of the several Thrift Savings Plan (TSP) withdrawal options is an annuity, and it is the least used. Payments may be paid in lump sums, monthly installments, or a combination. Only a tiny fraction of TSP withdrawals are made in the form of annuities. However, before you rule it out, you should familiarize yourself with its advantages and disadvantages. The TSP’s annuity benefit is more customizable than the standard FERS or CSRS benefits.

Three annuity options are available via the TSP:

– An annuity paid to you for the rest of your life is known as a â€œsingle-lifeâ€ annuity.

– â€œJoint lifeâ€ refers to an annuity you and your spouse get while you are still alive. An annuity will be provided to the survivor for the rest of their life if either of you dies.

– Joint life (other than your spouse): An annuity given to you if two of you (but not your spouse) are still alive. It’s essential that this individual profoundly cares about you. An annuity will be provided to the surviving spouse for the rest of their life if either of you dies. You have an insurable interest in a former spouse, blood, or adoptive relatives closer than first cousins, and a common-law spouse in countries that allow them.

There are two options for joint life annuities: a 100% or 50% survivor payout. This implies that if you or your joint annuitant dies, you or your joint annuitant will get the same (100 percent) or half (50 percent) monthly payments.

The basic annuity kinds may be paired with a variety of additional features. Payments are rising, and a 10-year guaranteed payout is included. The monthly payment amount increases by 2% each year because of growing costs. You (and your joint annuitant) may die before receiving annuity payments totaling as much as the account balance used to buy the annuity. Your chosen beneficiary will get a cash return. An annuity with a 10-year payout means that your beneficiary receives the remaining payments if you die within ten years of the annuity’s commencement date.

Every primary annuity type isn’t compatible with every feature. That money is then given over to a private corporation rather than being used by the TSP to deliver benefits after an annuity has been bought.

The www.tsp.gov calculator tools enable you to calculate how much a certain sum would convert into revenue under different scenarios, as shown in the following table.

Spouses’ rights will apply if your account balance exceeds $3,500. Your spouse can forego their entitlement to a joint and survivor annuity, which provides 50% of your spouse’s survivor benefit with level payments, and no cash return option if you are a married FERS member. CSRS spouses must be informed of their spouse’s withdrawal decision by the TSP.

Contact Information:
Email: [email protected]
Phone: 8139269909

Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.

Senate Urges Diversity in TSP Offerings

April 26, 2023 /by rick viader

Senate Democrats are urging the Federal Retirement Thrift Investment Board in Washington to give federal employees more options for investing in funds managed by various asset managers.

Their request comes ahead of plans by the TSP board to open a mutual fund window for TSP participants in the summer of 2022.

The proposed mutual fund window would open simultaneously with the board’s new contract with Accenture Federal Services, signed in November 2020.

A letter was sent to David A. Jones (board’s acting chairman) by the Senate Democrats â€” Cory Booker and Robert Menendez (New Jersey), Ben Ray Lujan (New Mexico), Alex Padilla (California), Sherrod Brown (Ohio), Tim Kaine (Virginia), and Jeff Merkley (Oregon). It read, “As part of this effort, we urge you to provide options for federal employees to invest in funds managed by asset managers that are ethnically, racially, and gender diverse…When it comes to their retirement assets, federal employees need the option to promote diversity on a strategic and values-based basis.”

The senators said in their letter that executive diversity is a good business practice that has been shown to improve returns, citing a 2020 McKinsey study that found companies in the top quartile for racial, ethnic, and gender diversity were more likely to have returns above their industries’ national medians.

“Given that the TSP’s present investment managers have been failing at diversity, especially at the executive level,” the senators noted, “…the mutual fund window is a significant opportunity.” “While the board manages a portion of the TSP’s funds itself, the board hires BlackRock as their primary investment manager and State Street Global Advisors as their secondary investment manager.”

In 2020, only 20% of BlackRock’s top management were female, 5% were African American, and only 3% were Hispanic. State Street’s top management consisted of 32% women, 2% African Americans, and 3% Hispanics.

The senators also cited a 2017 report from the Government Accountability Office that outlined ways that government retirement plans and other programs may improve chances for minority-owned and women-owned asset managers.

The FRTIB said five years ago that it didn’t see a mutual fund window being offered before 2020. While it didn’t rule out the possibility of offering funds managed by minority and women-owned businesses, it couldn’t guarantee which funds would be included in a future MFW because the market is always changing.

Senators stated that the board collaborated with Accenture Federal Services last fall to build tools to allow its members to search for funds managed by women and minority-owned businesses. They do, however, want to see the board do more to connect with and diversify the pool of asset managers.

They added that “more federal workers may choose to join in the TSP or boost their contributions if the board offers TSP funds specially managed by diverse asset managers.” “The board might encourage more federal workers to join the TSP and protect their pensions by responding to the public’s desire for diversity.”

The Thrift Board manages the TSP, a $774.2 billion retirement scheme for 6.4 million federal employees and uniformed service personnel.

Participants will have access to more than 5,000 mutual funds when the mutual fund window goes live, according to Kim Weaver, the board director of external relations, in an email Thursday.

“The mutual fund window will allow participants to take a portion of their TSP account and put it into a wide range of investment options, allowing them to customize their retirement portfolio,” Ms. Weaver explained. Participants will be able to incorporate a certain investing outlook into their portfolio through the mutual fund window to the extent they choose.

Ms. Weaver said, “We’re excited to answer to the senators and provide them with information about the mutual fund window.”

Contact Information:
Email: [email protected]
Phone: 9568933225

His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.

Tag: tsp funds

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