DFAS stealing TSP funds

[Gatordev]

Chief;
What is your setup?
Do you have all your money deposited to a money market and then just use that money to pay your card?
I have been considering that route, but don't want to fall into the perma-debt trap...

I used to be in the same boat. I hated using the CC because it was too easy and have never (intentionally) carried a debt on a CC. However, in the last few years (in part to what I've read here) I switched over to Capital One and get miles for every dollar, though you can do the rewards thing, too. I pay just about everything w/ my CC now, except maybe lunch, and reap the rewards benefits. At the end of the month/cycle, CapitalOne's website allows me to transfer money from NFCU over to pay the bill.

 

[Ektar]

Since this post is talking about managing credit and debt, there is any interesting book that I would suggest reading to anyone who is trying to manage there finances. It's called Maxed Out, by James Scurlock. I read it a few months ago and its a very interesting expose on the credit card industry and the 'culture' of debt in America. If anything, its motivation to get out of debt and stay out of debt. It's not a self-help book, but still an interesting and informative read I think.

 

[jus2mch]

How old do you have to be in order to get your money out of a Roth? I thought it was 50, but I'm not sure. I don't like the fact that TSP is hoarding my money and earning interest off of it until it deposits. However, I do like the fact that I can have my money back without penalty when I separate from service or retire.

 

[FLYTPAY]

How old do you have to be in order to get your money out of a Roth? I thought it was 50, but I'm not sure. I don't like the fact that TSP is hoarding my money and earning interest off of it until it deposits. However, I do like the fact that I can have my money back without penalty when I separate from service or retire.

59 1/2.....You can take your principle contributions out at any time without penalty from a Roth. When you separate/retire, you have to roll the TSP account into a standard IRA.....you just don't get a check for the account, keep in mind TSP earnings will be taxed down the road.

 

[jus2mch]

59 1/2.....You can take your principle contributions out at any time without penalty from a Roth. When you separate/retire, you have to roll the TSP account into a standard IRA.....you just don't get a check for the account, keep in mind TSP earnings will be taxed down the road.

According to this they just send me a check when I get out.

"You are eligible to withdraw your account when you separate from Federal service.

What are my TSP withdrawal options?

The TSP provides several ways to withdraw your account:

You can make a partial withdrawal of your account in a single payment.

You can make a full withdrawal of your account using any one, or any combination, of the following methods:
– A single payment

– A series of monthly payments

– A life annuity

A combination of any of the above three full withdrawal options is called a "mixed withdrawal."

You can have the TSP transfer all or part of any single payment or, in some cases, a series of monthly payments, to a traditional IRA or eligible employer plan. If you submit a paper form to make your withdrawal request, payments to you can be deposited directly into your checking or savings account by means of electronic funds transfer (EFT).

Note: If you are a FERS employee and you have not met the TSP vesting requirements when you leave Federal service, you are not entitled to the Agency Automatic (1%) Contributions in your TSP account (or their earnings). This money will be forfeited to the TSP. (See "What does vesting mean?") Also, if your account balance is less than $5 when you separate, it will automatically be forfeited to the TSP. You may subsequently request that this amount be paid to you. "
http://www.tsp.gov/features/chapter13.html

 

[FLYTPAY]

However, I do like the fact that I can have my money back without penalty when I separate from service or retire.

I misread/misinterpretted your question regarding the "without penalty" part. You will get taxed out the ying-yang when you take a lump sum check and don't roll it over.

17. What are my withdrawal options once I separate from the uniformed services? ​

When you separate from the uniformed services, you may leave your money in the TSP or you may make a post-separation withdrawal.
If you leave your money in the TSP, it will continue to accrue earnings. Although you will not be able to continue to make contributions, you will be able to make interfund transfers. You must begin withdrawing your account no later than April 1 of the year following the year you turn age 70½ and are separated from service
If you decide to withdraw your money, there are two types of post-separation withdrawals:

• A partial withdrawal
• A full withdrawal

Partial withdrawal. You can take out $1,000 or more, and leave the rest in your account until you decide to withdraw it. You may make only one partial withdrawal from your account. If you made an age-based in-service withdrawal, you are not eligible for a partial withdrawal.
Full withdrawal. You can make a full withdrawal of your account using one — or any combination — of three withdrawal options available to you:

• Receive a single payment. All or portion of your account can be transferred to a tradition IRA or eligible employer plan (e.g., a 401(k) plan or your civilian TSP account)*
• Request a series of monthly payments based on a dollar amount or your life expectancy. All or a portion of certain monthly payments can be transferred to a traditional IRA or eligible employer plan;*

• Request a TSP annuity. You must have a least $3,500 in your account in order to purchase an annuity;

A mixed withdrawal allows you to combine any or all of the three withdrawal options. However, if you request a mixed withdrawal with an annuity, the percentage of your account used to purchase the annuity cannot equal a dollar amount of less than $3,500.
*Tax-exempt contributions to the TSP are eligible for transfer to a traditional IRA or eligible employer plan only if the financial institution or plan will accept the funds. Funds not accepted will be paid directly to you. If you transfer balances from your uniformed service TSP account to your civilian TSP account to your civilian TSP account, the TSP will not accept tax-exempt money into the civilian account.

 

[jus2mch]

&t

I misread/misinterpretted your question regarding the "without penalty" part. You will get taxed out the ying-yang when you take a lump sum check and don't roll it over.

Yeah taxes are inevitable, I should have clarified my statement. Basically, I just like knowing that I don't have to wait until I am 59 1/2 to withdrawal if I don't want to. I have a Roth also, but the age thing is what prevents me from making serious contributions.

 

[FLYTPAY]

I have a Roth also, but the age thing is what prevents me from making serious contributions.

Make the contribution regardless of your fear....Here is why. Say you make a $5000 contribution every year for the next 15 year.....You have contributed $75000 towards your future.......Now say you need any of that money whether it be $1 or $75000, you can withdraw up to the amount that you have contributed, without penalty....because you have already paid taxes on the Roth contribution.....So your contribution is always available to you for emergencies or anything that comes up.

 

[jus2mch]

Make the contribution regardless of your fear....Here is why. Say you make a $5000 contribution every year for the next 15 year.....You have contributed $75000 towards your future.......Now say you need any of that money whether it be $1 or $75000, you can withdraw up to the amount that you have contributed, without penalty....because you have already paid taxes on the Roth contribution.....So your contribution is always available to you for emergencies or anything that comes up.

Thanks for that info. I did not know that. I might have to adjust some of my allotments now.

 

[bert]

I have a Roth also, but the age thing is what prevents me from making serious contributions.

I was lucky enough to spend a year teaching integral calc and differential eqns at a service academy. One of my favorite things to do was make them figure out how many $$'s an old guy (35 at the time) like me had to contribute to match one $ that a 19 year old contributed.

If you either are capable of doing the math, or or are willing to trust the built in calculator in Money or Quicken or elsewhere on the web, you will realize how badly you really want to contribute to that Roth.

 

[FLYTPAY]

If you either are capable of doing the math, or or are willing to trust the built in calculator in Money or Quicken or elsewhere on the web, you will realize how badly you really want to contribute to that Roth.

The Navy retirement is like have a $1,000,000 dollar annuity at ~42 years old. If you contributed to your Roth every year (we will say $5000 a year for 38 years, taking you to age 60, with a 8% rate of return), you will have $1,190,000. Now here is how you make it big.......get your MBA and Masters from the Naval War College and you should be able to get a six-figure salary when you get out at 42. This, combined with your retirement from the Navy will put you living really confortably.
Age 42-60 ~140,000+ yearly income
Age 60-72 single ~140,000+95200=235,200
Age 60-72 married ~140,000+95200+95200=330,400
Of course, I cannot cover all of the assumptions, but here you go, continueing education, saving money in at least a Roth IRA, and make O-5 retirement will make for a "comfortable" lifestyle, and a posh inheritance for your spawn.

 

[HH-60H]

The Navy retirement is like have a $1,000,000 dollar annuity at ~42 years old. If you contributed to your Roth every year (we will say $5000 a year for 38 years, taking you to age 60, with a 8% rate of return), you will have $1,190,000. Now here is how you make it big.......get your MBA and Masters from the Naval War College and you should be able to get a six-figure salary when you get out at 42. This, combined with your retirement from the Navy will put you living really confortably.
Age 42-60 ~140,000+ yearly income
Age 60-72 single ~140,000+95200=235,200
Age 60-72 married ~140,000+95200+95200=330,400
Of course, I cannot cover all of the assumptions, but here you go, continueing education, saving money in at least a Roth IRA, and make O-5 retirement will make for a "comfortable" lifestyle, and a posh inheritance for your spawn.

I see your point with this, but the comparison isn't quite fair. You don't contribute anything to the Navy retirement, whereas in your example you contribute 5K/yr to the Roth. So, in reality with a Navy retirement you ALSO have the opportunity to contribute to a Roth.

You're example might factor that in, but if it does it doesn't seem obvious.

 

[KBayDog]

Of course, I cannot cover all of the assumptions, but here you go, continuing education, saving money in at least a Roth IRA, and make O-5 retirement will make for a "comfortable" lifestyle, and a posh inheritance for your spawn.

That's great, but what is MasterBates going to do?

 

[Flash]

That's great, but what is MasterBates going to do?

Become a pimp?

 

[FLYTPAY]

You're example might factor that in, but if it does it doesn't seem obvious.

I put the six figure assumption right at $100,000
I assumed $40,000 which is a low-ball estimate of 50% of base pay at 20.
$100,000+$40,000=$140,000
The retirement is "factored" into that. Botton line, retire from the Navy, get a good job, contribute to your Roth and you are set. If you invest more, you are more set. Of course, don't forget taxes, and lack of taxes for the Roth, hence my disclaimer of not considering everything.