U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 11-29-2007, 06:11 PM
 
Location: Lovelock, NV - Anchorage, AK
1,195 posts, read 4,993,872 times
Reputation: 465

Advertisements

I know this question has been ask before way back when but frankly I'm so stressed over this I can't find the thread so I will start a new one.

My husband works for the Govt we have a large amount in a supplemental fund along with the normal pension. Should we move the funds out of the supplemental fund and transfer to another retirement fund.

I've recently found out that we can leave it there but can only withdrawl twice a year. There is no 10% penality for withdrawing the funds but they will of course hold out 20% for uncle sam.

My husband will only be 55 when we retire so if I transfer it to an IRA we will be penalized for withdrawing any funds prior to him being 59.5. This fund will only supplemnet our pension and we are not sure exactly how much we will need monthly or if we will need any additional at all.

I know I'm rambling and for that I apologize but this is going over and over in my head.

I'm sure there's somebody else out there that was in our shoes at one time or another, can you share your experience or advise with me please.
Reply With Quote Quick reply to this message

 
Old 11-29-2007, 07:40 PM
 
Location: Forests of Maine
30,682 posts, read 49,449,101 times
Reputation: 19134
Unless you are starving, I would never recommend that you take out any money at a penalty.

Never!

Unless you are starving.

I retired on a Federal pension, so what is the problem?

I think perhaps that you are simply sweating it too much, relax.

You know roughly how much your pension will be, and you know how much your current monthly household cost-of-living budget is.

If you are spending to much, then you may need to cut back.

I retired overseas, so we had to move back stateside on pension, and find a home. We are fine, and you will be fine too.



As for them taking out 20% for taxes, relax. Living on pension you go down into much lower tax brackets, so you end up getting it all back in January anyway. No big deal
Reply With Quote Quick reply to this message
 
Old 11-29-2007, 10:35 PM
 
Location: Lovelock, NV - Anchorage, AK
1,195 posts, read 4,993,872 times
Reputation: 465
So you are paying a mortgage too? We will be financing a $150,000 home I guess that is my scare, we will be going from 116,000 down too 46,000 as I won't have a retirement until i'm 59.5
Reply With Quote Quick reply to this message
 
Old 11-29-2007, 10:37 PM
 
Location: Lovelock, NV - Anchorage, AK
1,195 posts, read 4,993,872 times
Reputation: 465
I could continue to work but don't want too so when i quit we will lose $60,000 annually
Reply With Quote Quick reply to this message
 
Old 11-30-2007, 01:29 AM
 
1,174 posts, read 6,300,940 times
Reputation: 1083
First let me say that an internet forum is not the best place to seek financial advice. You never know who is responding to you, including me. Instead, I would suggest that you begin with the retirement counselor at your work, which I asume you have available since it's a government entity. Then, you can go from there with various private sector advisors if you want to take it further.

Now that I've made the disclaimer, let me explain what I did. I also worked for a government entity, which gave me a pension and a 457(b) account. For those in the private sector, a 457(b) is roughly the same thing as a 401(k), except it is for government employees. It allows for the withdrawl or annuitization of monies, without penalty, before reaching the traditional restricted age of 59.5 on other retirement accounts like IRA's.

Quote:
Originally Posted by Tressa View Post
My husband works for the Govt we have a large amount in a supplemental fund along with the normal pension. Should we move the funds out of the supplemental fund and transfer to another retirement fund.

I've recently found out that we can leave it there but can only withdrawl twice a year. There is no 10% penality for withdrawing the funds but they will of course hold out 20% for uncle sam.
Well, it depends onyour situation. In my case, I left my 457(b) alone. It has a variety of investment options and, even though I'm retired, I can still change them when I want to do it.

If you were to roll it over to an IRA, you're going to limit your ability to withdraw funds before reaching 59.5 years old. I didn't want that limitation and there was no benefit to moving the funds for me. I already had enough investment options, and any other options that I might gain were things I wouldn't use in the retirement account.

If you're limited to only two withdrawls each year, it will take some disipline on your part to manage your money. However, I have a hard time believing that it is your only option. Please understand that I'm not saying it's an untruth. Instead, I suggest that you reinvestigate and see if there is an option to annuitize your Deferred Comp account.

When I say "annuitize," I don't mean to buy an annuity in the account. What I mean is that the company that runs the account will take your amount, apply it to establshed longevity tables, and come back with an amount that needs to be with drawn each year to meet your life expetancy or time frame you've established.

Since the account is a retirement fund, I would expect there to be options for monthly or quarterly withdrawls. There may be a rule that once the withdrawls begin, they can't be stopped, but there should be something more than a semi-annual withdrawl option.

Quote:
I'm sure there's somebody else out there that was in our shoes at one time or another, can you share your experience or advise with me please.
Well, a little of what I did was listed above. Again, I recommend that you seek out the retirement counselor for your agency. I can't imagine that you dont have one to help transition the emloyees into the retirement world.

Good luck!
Reply With Quote Quick reply to this message
 
Old 11-30-2007, 05:56 AM
 
3,752 posts, read 9,604,552 times
Reputation: 7044
The first thing you need to do is to figure out what you are spending and what your actual budget needs are in the future with various scenarios. We have been budgeting for over 20 years and know exactly what we will need in each category so we can make accurate decisons on what do do with various types of money.

Sit down and start writing. If you do not know, start this minute and start discussing all your expense options and plans with your spouse. Otherwise any decision could be based on faulty assumptions whether by you or an advisor. Every advisor should ask you what you have, what you will be getting and what you NEED. The last one is the one I am talking about.

What is withheld from your withdrawals may or may not be all that is needed to pay your taxes on that amount. It is an average and you will pay whatever your tax rate is determined to be when all your income and deductions for the year are shown on your tax return. 20% may or may not be enough.
Reply With Quote Quick reply to this message
 
Old 11-30-2007, 09:08 AM
 
Location: DC Area, for now
3,517 posts, read 12,051,697 times
Reputation: 2141
Yes, knowing what your expenses and expenditures are now will go along way in being able to determine what you need to live on. Get the basic Quicken or Money program, save every receipt and log in exactly what you are spending. You could also do this in a spreadsheet or by hand, but those programs will make it easier. Only by doing this will you know what your needs are.

You may also be appalled at the amount of money that is wasted on frivolous stuff or stuff that you won't need after retirement. You will be able to see how much is spent on things that you will not need after retirement (commute costs, clothing, etc.). I've done this for over 20 years, then put in my budget into spreadsheets where I can play different scenarios.

There are retirement courses (3 days for us) that your spouse should be able to sign up for. They go thru all the benefits and even include sections on what are we going to do with ourselves. Spouses are encouraged to attend as well. His agency should pay for this and he should have gone to one long before now.

I, like garth assume you mean the TSP. What he outlined is what I plan to do with mine. You will not be penalized or pay any tax if you do an immediate institution to institution rollover into an IRA. If you take possession of the money, then it gets a lot more complicated. But as garth noted, you actually have more flexibility and access to the money by leaving it in place. I don't remember the rules for withdrawal from the TSP, but whatever the limits are, just take out what you need in those chunks. They have limits because they do not want you using it as a checking account.

All of this info is available on the web. The OPM.gov site has all the info you could want and there are several web sites as well. Get the IRS Civil Servant publication. (irs.gov) Do the budgeting work and you will gain a lot more confidence in your plans.
Reply With Quote Quick reply to this message
 
Old 11-30-2007, 12:16 PM
 
Location: Lovelock, NV - Anchorage, AK
1,195 posts, read 4,993,872 times
Reputation: 465
Thank you all so much for your input I do realize that the forum is not always reliable but I was hoping for personal experience and I believe that I received that, again thank you
Reply With Quote Quick reply to this message
 
Old 11-30-2007, 03:11 PM
 
Location: Blue Ridge Mtns of NC
5,661 posts, read 24,675,176 times
Reputation: 3808
Yep, assuming you're a retired Fed with a TSP account:

The Official TSP Home Page, maintained by FRTIB; 2007-11-15
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top