[Nightengale212]

Despite attending several retirement workshops at work the info relayed at each one seems to change which is very confusing at best. I am currently 57 and plan to retire at 65 which will give me almost 21 years of Federal service and a somewhat decent pension. My pension plus taking my full SS at 66.5 without drawing on my TSP or needing to use the SS of my currently common-law-husband (jury is still out if we will legally marry and that will be sorted out in the near future with an elder lawyer) should cover most if not all of our retirement expenses if we relocate to TV which will be accomplished primarily by not having a morgage. At present all my TSP funds are non Roth as Roth was not an option until a few years ago. Would like to know the advantages or disadvantages of transferring some or all of my TSP to Roth.

Any input from FERS retirees or those familiar with this retirement system will be most appreciated.

[OBXNana]

Originally Posted by Nightengale212

Despite attending several retirement workshops at work the info relayed at each one seems to change which is very confusing at best. I am currently 57 and plan to retire at 65 which will give me almost 21 years of Federal service and a somewhat decent pension. My pension plus taking my full SS at 66.5 without drawing on my TSP or needing to use the SS of my currently common-law-husband (jury is still out if we will legally marry and that will be sorted out in the near future with an elder lawyer) should cover most if not all of our retirement expenses if we relocate to TV which will be accomplished primarily by not having a morgage. At present all my TSP funds are non Roth as Roth was not an option until a few years ago. Would like to know the advantages or disadvantages of transferring some or all of my TSP to Roth.

Any input from FERS retirees or those familiar with this retirement system will be most appreciated.

This is a wonderful forum to get information for those that may be in similar situations as you. It may not be identical and what works for them may not help you. Have you considered emailing the person that taught your class? The instructor we had said to email him personal questions any time. My husband did and his question was very specific to his own personal needs. The instructor answered.

My husband asked the same question through the Ft. Meade help desk and the answer would have pushed his retirement back by 3 years. He asked the local HR and she "thought" she knew the answer. He was able to get accurate information through the instructor and was told to keep the email since there was discrepancy. His reply was the same as the HR and this was now in writing.

The lengthy class is very informative and I attended with my husband, who is the Federal employee. (CSRS) 4 ears were better than 2. We know some people that have taken the 16 hour class more than once to make sure they have things straight. You may want to repeat the class now that you have specific questions.

Good luck.

[Nightengale212]

Thank you for your response. I work for the VA and my particular VISN does not give formal retirement classes but periodic workshops held by various retirement specialists. The last one I attended a few months back toward the end the attendees found out that the speakers were private sector financial planners and were pretty much there to recruit for business prospects!!

Retirement preparation and planning are no longer done by the HR dept. of my facility, and we are assigned a supposed retirement specialist, and my happens to be in Maine. I have been in contact with her a few times and due to several issues regarding wrong info she gave me I do not have much faith in her.

I just happened to come upon a TSP forum so I will do some research there.

[KayakerNC]

I found the FedWeek dot com FERS retirement planning guide to be a good starting point, and well worth the $9.95.
Beware of information from insurance companies and "financial planners" whose main interest is getting your TSP.

[784caroline]

The biggest disadvantage in converting TSP to Roth would be the immediate tax hit and the fact that it "could" put you in a higher tax bracket. Say for example if you have $100,000 and you convert it all at once, depending upon your bracket you will only transfer approx $80,000 assuming you are in the 20% bracket. You dont say where you are now living, but If you live in a state that has state income tax you must also figure that percentage into the equation which would further reduce the amout of money transfered into Roth.

If you dont convert, you would be required at age 70 1/2 to take the RMD and pay taxes on that amount every year for the rest of your life and your estate would pay taxes upon distribution.

If you convert to Roth after age 65 and have Medicare parts A and B....your part B premium will most likely increase for at least one year since the premium is based upon you MAGI from the year prior tax return and this would effect both people filing if it were a joint return.

The ideal situation is to convert as soon as possible for "time" is your friend. The positive aspects of converting is no RMD at age 70 1/2 and estate planning for your heirs.

If you convert to a Roth are you going to manage the money yourself or through a mutal fund??? Your TSP money has produced fairly good returns over the years with very very low costs, and little input required on your part. You need to consider if you can manage the Roth money as well as the returns your TSP money has provided you over the years. For some this is a very daunting task.

These are just some thoughts...Im sure there are other views and opinions. Good luck!

[KayakerNC]

Originally Posted by 784caroline

If you convert to a Roth are you going to manage the money yourself or through a mutal fund??? Your TSP money has produced fairly good returns over the years with very very low costs, and little input required on your part. You need to consider if you can manage the Roth money as well as the returns your TSP money has provided you over the years. For some this is a very daunting task.

There is a ROTH TSP feature.
https://www.tsp.gov/PDF/formspubs/high12b.pdf

[Nightengale212]

Thanks all for your input. Looks like the two choices are either pay Uncle Sam (my boss) now or pay him later.

[Rosie53]

I just mailed off my retirement paperwork today! I will be a FERS retiree. Hubby and I will be down in January to start living full time in the home we bought 2 years ago. My advice, which is something I wsh I had done, would be to put a small amount into a Roth so that you can withdraw some money out without worrying about the tax hit when you are setting up your new home in the Villages.

[Nightengale212]

Originally Posted by Rosie53

I just mailed off my retirement paperwork today! I will be a FERS retiree. Hubby and I will be down in January to start living full time in the home we bought 2 years ago. My advice, which is something I wsh I had done, would be to put a small amount into a Roth so that you can withdraw some money out without worrying about the tax hit when you are setting up your new home in the Villages.

Lucky you and enjoy your retirement

[KayakerNC]

Originally Posted by Rosie53

I just mailed off my retirement paperwork today! I will be a FERS retiree. Hubby and I will be down in January to start living full time in the home we bought 2 years ago. My advice, which is something I wsh I had done, would be to put a small amount into a Roth so that you can withdraw some money out without worrying about the tax hit when you are setting up your new home in the Villages.

Keep in mind the ROTH 5 year rule. The 5-year rule for contributions must be met before any Roth earnings can be withdrawn tax-free

[Average Guy]

Originally Posted by KayakerNC

Keep in mind the ROTH 5 year rule. The 5-year rule for contributions must be met before any Roth earnings can be withdrawn tax-free

The key word in your statement is "earnings." The 5 year rule does not apply to money you deposited into a ROTH account, only to earnings that you received from your deposits. For example, if you contributed $10,000 into a ROTH account and it is now worth $13,000, the 5 year rule only applies to the $3,000 you earned.

[Nightengale212]

Originally Posted by 784caroline

If you dont convert, you would be required at age 70 1/2 to take the RMD and pay taxes on that amount every year for the rest of your life and your estate would pay taxes upon distribution.

1/2 of my current TSP balance was from inheritance from my late father's TSP as I was able to put those funds into a similar account to defer the tax hit.