Quick Financial Tips for Federal Employees

The author lists several tips for federal employees when it comes to their pay, benefits and retirement.

Here are a series of financial tips/information designed for quick reading, written in the style of Twitter.

  • Positive returns for April 2019 in the TSP across the board: .21% for the G fund, .02% for the F fund, 4.05% for the C Fund, 3.69% for the S fund and 2.92% for the I Fund.
  • The new TSP withdrawal options are expected to be in effect by September 2019.
  • The only options you have for access to your TSP without a 10% penalty if you are under 59 1/2 and still in service is a loan or a financial hardship withdrawal.
  • If you retire at your federal minimum retirement age (MRA) or later, you have access to your TSP immediately. You don’t have to wait until you are 59 1/2 (penalty free).
  • The latest projection has the combined Social Security trust funds that pay retirement and disability benefits running out of cash reserves by 2034. Unless changes are made, Social Security will only be able to pay out 79 percent of promised benefits at that point.
  • When a surviving spouse, who has inherited a traditional TSP account (becoming a Beneficiary TSP), passes away their account is passed to their designated beneficiary. The TSP balance is paid out in full immediately. This may cause unwanted tax liabilities that can be avoided.
  • Two of the biggest mistakes federal employees make with their TSP account is micro-managing their investment choices by constantly trying to time the market (moving $ from one fund to another) & not saving as much as they can. In 2019 you can save up to $19k and an extra $6k if over 50.
  • If you are over 70 1/2 and enjoy giving money to charity, a Qualified Charitable Distribution can save you a lot of money in taxes if you have money in an IRA. The funds are given directly from the IRA to a qualified charity pre-tax. This is not currently available in the TSP.
  • Time off awards can’t be converted to cash when you retire, unlike comp time or annual leave. It is use or lose.

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. Carefully consider your investment objectives, risk factors before investing. Investing involves risk, including the possible loss of principal. Diversification and asset allocation may not protect against market risk. Nothing in this article is intended as legal or tax advice. Please consult with your independent legal or tax advisor to seek advice based on your particular circumstances. For a list of states in which I am registered to do business, you can visit www.adviserinfo.sec.gov and search for my name.

About the Author

Alexis Hongamen founded FederalRetirementAdvice.com to exclusively help civil servants with their financial planning and investment needs. As a 28 year federal employee & a Chartered Retirement Planning Counselor, he writes about financial matters of concern to federal employees and retirees. He can be reached at (407) 900-1653.