Author Topic: Any FERS + TSP FIRE folks out there?  (Read 36683 times)

coffeefueled

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Re: Any FERS + TSP FIRE folks out there?
« Reply #150 on: December 11, 2017, 02:01:13 PM »
Posting to follow.

Dragonswan

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Re: Any FERS + TSP FIRE folks out there?
« Reply #151 on: December 11, 2017, 02:11:24 PM »
Correct.  Upon separation from service at any age you can roll the Roth portion of your TSP to a Roth IRA.  I am unsure of the 5 year aging rule for rolledover money so you'll have to research that.  You could contribute to a Roth IRA as suggested above and if there is an aging requirement, at least the money you put in now will have aged by the time you need it.

Ricksun

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Re: Any FERS + TSP FIRE folks out there?
« Reply #152 on: December 12, 2017, 02:45:43 PM »
Correct.  Upon separation from service at any age you can roll the Roth portion of your TSP to a Roth IRA.  I am unsure of the 5 year aging rule for rolledover money so you'll have to research that.  You could contribute to a Roth IRA as suggested above and if there is an aging requirement, at least the money you put in now will have aged by the time you need it.

I may be wrong here, or the TSP modernization law may have changed this, but I don't think one can just roll over their ROTH portion of the their TSP.  I understood that any withdrawal must be proportionate to the account balance.  So you'd have to roll over the entire TSP balance to a Traditional and Roth IRA respectively.

frugalecon

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Re: Any FERS + TSP FIRE folks out there?
« Reply #153 on: December 14, 2017, 06:42:49 AM »
Correct.  Upon separation from service at any age you can roll the Roth portion of your TSP to a Roth IRA.  I am unsure of the 5 year aging rule for rolledover money so you'll have to research that.  You could contribute to a Roth IRA as suggested above and if there is an aging requirement, at least the money you put in now will have aged by the time you need it.

I may be wrong here, or the TSP modernization law may have changed this, but I don't think one can just roll over their ROTH portion of the their TSP.  I understood that any withdrawal must be proportionate to the account balance.  So you'd have to roll over the entire TSP balance to a Traditional and Roth IRA respectively.

I seem to recall that this is true, but I think that the way around this is to roll almost all of it out, leaving a token amount in, and then reroll the Traditional portion back in. I will be looking into this as I decide whether to shift my contributions to Roth, but that is at least my recollection.

DebtFreeinPhilly

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Re: Any FERS + TSP FIRE folks out there?
« Reply #154 on: December 14, 2017, 09:49:43 AM »
Why won't a Roth ladder work?  You shouldn't be in a high tax bracket once you quit, unless you're spending a buttload of money.


As a Fed LEO with 20+ years of service, it's almost a guarantee that he'll have too much income from his pension (and SRS) to make a Roth conversion ladder work.

This is why a Roth conversion ladder won't work. In today's dollars, I would receive a $47k pension + $12k SRS ($59k total). As far as I know, there is no way to not receive this money. As a LEO I don't have the option to defer acceptance. I'm still new to the Roth Conversion Ladder concept so correct me if I'm wrong, but converting anything more than $20k would put me into the same tax bracket I am now (25%).

DebtFreeinPhilly

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Re: Any FERS + TSP FIRE folks out there?
« Reply #155 on: December 14, 2017, 09:53:04 AM »
Correct.  Upon separation from service at any age you can roll the Roth portion of your TSP to a Roth IRA.  I am unsure of the 5 year aging rule for rolledover money so you'll have to research that.  You could contribute to a Roth IRA as suggested above and if there is an aging requirement, at least the money you put in now will have aged by the time you need it.

I may be wrong here, or the TSP modernization law may have changed this, but I don't think one can just roll over their ROTH portion of the their TSP.  I understood that any withdrawal must be proportionate to the account balance.  So you'd have to roll over the entire TSP balance to a Traditional and Roth IRA respectively.

I seem to recall that this is true, but I think that the way around this is to roll almost all of it out, leaving a token amount in, and then reroll the Traditional portion back in. I will be looking into this as I decide whether to shift my contributions to Roth, but that is at least my recollection.

Yes, you can take all of your money out of the TSP (Roth and Trad) and roll it into a private sector account. The private sector accounts would separate out the Roth and Trad amounts into the proper Roth IRA and Trad IRA for you. Then, as long as you left some money in your TSP ($2k or so), you can roll the Trad IRA back into the TSP.

DebtFreeinPhilly

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Re: Any FERS + TSP FIRE folks out there?
« Reply #156 on: December 14, 2017, 09:55:55 AM »
Correct.  Upon separation from service at any age you can roll the Roth portion of your TSP to a Roth IRA.  I am unsure of the 5 year aging rule for rolledover money so you'll have to research that.  You could contribute to a Roth IRA as suggested above and if there is an aging requirement, at least the money you put in now will have aged by the time you need it.

As I understand it, rollover Roth IRAs don't reset the clock on the 5 year aging rule on existing Roth IRAs. I found an article by Mike Kitces that explained it really well.

Fomerly known as something

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Re: Any FERS + TSP FIRE folks out there?
« Reply #157 on: December 19, 2017, 08:22:54 AM »
I have 13 years in as a FERS LEO. I am 36. At 43, I'll have 20 years but cannot access my pension until age 50, limited in my TSP options (72t, annuity, or wait until 59 1/2). At age 48, I'll have 25 years and get my pension right away but still limited in TSP options as at age 43. Backdoor ROTH conversion, IMO, won't work out well because my tax bracket will be too high. Does anyone know if the ROTH TSP can help get around that issue?

At age 50, I get my pension and TSP penalty free. Yes its 14 more years, yes it sucks, and yes I am looking for other options....buuuuuut...until then I'm here because the benefits are too good as the sole income earner and it looks like ACA will change not making it wise to depart FEHB.

I hope someone smarter than me can come up with a better method to get out.

Fellow LEO.  I'm 4 years ahead of you.

Check out the FERS guide from Dan Jamison.  https://fersguide.com/

He's a former FBI SA and for $15 for the year he does a guide for LEOs at the GS 13 journeyman level and another aimed at the GS 9 journeyman.

On Roth his opinion is no unless you are going to roll thing out of TSP.

Fomerly known as something

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Re: Any FERS + TSP FIRE folks out there?
« Reply #158 on: December 19, 2017, 09:23:00 AM »
Just got this update from previously referenced Dan Jamison.

"There was a BIG surprise in the TSP's most-recent Fact Sheet publication!  On 12/14/2017, the TSP released a publication (TSP Fact Sheet 10) answering questions about the TSP Modernization Act of 2017. Near the beginning of the document, which you can view here, the TSP states that in addition to the changes required by the Act, "we're also adding the ability to specify how much of your withdrawal should be Roth and how much should be Traditional; withdrawals currently come out pro rata from both sources." 

Dragonswan

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Re: Any FERS + TSP FIRE folks out there?
« Reply #159 on: December 20, 2017, 07:26:31 AM »
This is great news!  But to answer the other question about rolling over just your Roth, yes you can do that under current rules.  You don't have to do any tricky manipulations.  When you separate you specify you would like to rollover your Roth balance to your Roth IRA.  You can do this because it's a direct rollover or transfer and is not considered a withdrawal for purposes of the one withdrawal rule.  Just make sure you have the money transferred directly from TSP to Roth IRA (do not take the money yourself then deposit into the Roth IRA, that counts as a withdrawal or indirect rollover).

DebtFreeinPhilly

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Re: Any FERS + TSP FIRE folks out there?
« Reply #160 on: December 20, 2017, 09:04:07 AM »
Check out the FERS guide from Dan Jamison.  https://fersguide.com/


I already subscribe to the FERSGUIDE. Its a huge wealth of knowledge in there. I also saw the most recent update as well. It seems like it will remove the need for the Roth conversion ladder if we can withdraw amounts from specific accounts.

Now the question is this: I have $300k in my TSP ($275k in Traditional & $25k in Roth) and I currently max out the Traditional ($18k). With 14 years left, do I start contributing to the Roth instead of the Traditional? The idea being that I use my traditional when I retire at age 50 and then switch to Roth at 59.5.

The theory is that the Traditional TSP would reach $700k in the next 14 years ($275k at 7%) and the Roth TSP would reach $913k in the next 23 years. Does this sound good?   

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #161 on: December 20, 2017, 01:11:02 PM »
Couple thoughts -- how big will the tax hit be if you are no longer contributing pre-tax dollars?  The MadFientist has shown that the Traditional is generally the better way to go. Also, rather than tap the Roth at 59.5, I'd want to hang onto it until 70.5, when RMDs on your traditional might push you into a higher tax bracket. Might be better to draw down your traditional account before age 70.5, then use the Roth to manage your tax situation. Also, Roth a much better deal for passing on to heirs than traditional.

Dragonswan

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Re: Any FERS + TSP FIRE folks out there?
« Reply #162 on: December 21, 2017, 06:53:02 AM »
Or you could think of it as when will you need the tax break most during your career.  At the earlier stages of your career you make less money and are typically in the lowest tax bracket you'll ever be in ('cause your pension will be hefty) so you might want to do Roth early on then as your salary increases and you need the tax break more, you could switch to Traditional.  The new higher standard deduction also comes into play if you won't be itemizing anymore or never itemized. With double the standard deduction you could hedge your bet and put $6000 into Roth and the rest traditional and break even with current year taxes while still setting up some future tax free income.  Lots of options.  You really can't go wrong just so long as you do continue to contribute to the TSP.

DebtFreeinPhilly

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Re: Any FERS + TSP FIRE folks out there?
« Reply #163 on: December 21, 2017, 07:05:41 AM »
Soooo many options....sooo confusing!! Who designed this anyway?! LOL!

Thanks for the help. I will have to find a tax professional that knows the Federal system to figure out the best route. My initial feeling is that Traditional will be the way to go for now since my salary is $125k +/-.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #164 on: December 21, 2017, 12:36:09 PM »
Soooo many options....sooo confusing!! Who designed this anyway?! LOL!

Thanks for the help. I will have to find a tax professional that knows the Federal system to figure out the best route. My initial feeling is that Traditional will be the way to go for now since my salary is $125k +/-.

Consider fully funding a Roth IRA too if you're below the income phaseout limits, or a backdoor if you're over.

Cycling Stache

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Re: Any FERS + TSP FIRE folks out there?
« Reply #165 on: December 22, 2017, 07:27:40 AM »
Our office just told us to adjust our TSP withholding for 2018 because there will be 27 pay periods in calendar year 2018.  Anyone else receive that advice?

Came up when I bumped up my withholding to $18,500 to new max.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #166 on: December 22, 2017, 08:25:49 AM »
Our office just told us to adjust our TSP withholding for 2018 because there will be 27 pay periods in calendar year 2018.  Anyone else receive that advice?

Came up when I bumped up my withholding to $18,500 to new max.


Yes, we will also have 27 and they will each be 1/26 smaller than average.  I think it depends on what day of the week your agency does payroll, because some still have 26 next year.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #167 on: December 22, 2017, 12:46:14 PM »
Yep, for NFC, it's 27 because the official pay date for PP25 2018 falls on the Monday EFT payday of Dec. 31. Very confusing because my E&L statement always lists the Thursday after the payroll processing weekend as the official pay date.

For GSA and some other payroll providers, there's 26.

frugalecon

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Re: Any FERS + TSP FIRE folks out there?
« Reply #168 on: December 29, 2017, 01:21:57 PM »
Our office just told us to adjust our TSP withholding for 2018 because there will be 27 pay periods in calendar year 2018.  Anyone else receive that advice?

Came up when I bumped up my withholding to $18,500 to new max.


Yes, we will also have 27 and they will each be 1/26 smaller than average.  I think it depends on what day of the week your agency does payroll, because some still have 26 next year.

Sol,

I believe that you are incorrect that your paychecks will be 1/26 smaller than average. I believe that they will be exactly the same as before. In years with 26 paychecks, your actual wages are slightly less than what is listed in the GS table, because of the extra work day. You basically get that back every 9 or 10 years. Thus, in a year with 27 paychecks, you will earn more than is listed for your grade and step in the GS table. Plus you will get an extra day of leave! (or however many hours you earn per pay period)

I hope that this information improves your holiday weekend.

Regards,
FE

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #169 on: December 29, 2017, 01:29:47 PM »
Thanks for the optimistic update.

Unfortunately, I'm far enough along my FI journey that it won't matter.

frugalecon

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Re: Any FERS + TSP FIRE folks out there?
« Reply #170 on: December 29, 2017, 01:59:24 PM »
Thanks for the optimistic update.

Unfortunately, I'm far enough along my FI journey that it won't matter.

Unfortunately!?!

desert_phoenix

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Re: Any FERS + TSP FIRE folks out there?
« Reply #171 on: April 28, 2019, 01:13:39 PM »
For feds with a job that allows for an MRA of 50 with 20 years of service, does anyone know how it works if you hit 20 years at a younger age?

For example, I understand the deferred/postponed difference for the regular FERS option.  But I wondered if the deferment still had to be to age 62 if you otherwise qualify for a FERS pension at 50? 

For example, if you hit your 20 years of service at age 44, would you be able to quit working at 44 and begin to collect your pension immediately at 50?  Or are the options to work until 50 to get the pension at 50 or quit at 44 and wait to collect until age 57 (MRA with reduction) or 62 to avoid a reduction?

I just was unclear on if one had to work through the date for those eligible for a FERS pension sooner.

Or is this a situation where even the varieties of retirements at 50 with 20 years (LEO, Foreign Service, etc...) would all answer this differently?

Edit: I realized I had the wrong age which undercut my fundamental question of whether completing the 20 would allow for collecting beginning at 50 even if I stopped working at 44 or whatever age I hit 20 years of service at.
« Last Edit: April 28, 2019, 05:28:23 PM by desert_phoenix »

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #172 on: April 28, 2019, 01:33:44 PM »
Generally, MRA means MRA and you can't collect any sooner, regardless of length of service.

desert_phoenix

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Re: Any FERS + TSP FIRE folks out there?
« Reply #173 on: April 28, 2019, 01:50:27 PM »
Generally, MRA means MRA and you can't collect any sooner, regardless of length of service.

That is what I fear.  I guess I can ask and get an official answer for my agency this week.  But damn, that would suck, haha.

I have a bit over 10 in, but would need to wait ~8 more to get to 50 when I hit 20 years of service.

Pretty crazy peaks and valleys to compare FIRE at, for example, 40 with delayed pension crushed by inflation at 62 and sticking it out until 50 to get the pension immediately.
« Last Edit: April 28, 2019, 01:54:38 PM by desert_phoenix »

Buffalo Chip

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Re: Any FERS + TSP FIRE folks out there?
« Reply #174 on: April 28, 2019, 02:33:42 PM »
See, this is why the forums are freaking awesome!  You all just saved me an ugly surprise about my sick leave not counting if I defer my retirement.  I'm starting to think I'm coming down with something; every other Friday to be precise.

Hope you feel better soon!

alohaKane

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Re: Any FERS + TSP FIRE folks out there?
« Reply #175 on: April 28, 2019, 07:02:34 PM »
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coffeefueled

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Re: Any FERS + TSP FIRE folks out there?
« Reply #176 on: April 29, 2019, 10:47:33 AM »
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desert_phoenix

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Re: Any FERS + TSP FIRE folks out there?
« Reply #177 on: April 29, 2019, 04:07:06 PM »
Generally, MRA means MRA and you can't collect any sooner, regardless of length of service.

I was able to confirm that I would have to work all the way to age 50 or my departure would be treated like any other resignation.  Kind of a bummer, but I guess they don't want to make it too easy on us.

So back to tightening the budget to up the savings percentage, haha.  Though maybe I need to consider moving to another agency to move up the pay scale quicker, hmm.
« Last Edit: April 29, 2019, 04:17:31 PM by desert_phoenix »

x02947

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Re: Any FERS + TSP FIRE folks out there?
« Reply #178 on: April 30, 2019, 07:22:04 AM »
Any chance of dropping to part time?  The final pension is calculated as a ratio of hours worked vs hours worked if you were full time, so for a few years at least the extra 1% per year more than offsets the lowered ratio thanks to the majority of your career being full time.  Leave is prorated as well, so you would still be getting the equivalent of 8 hours every pay period (assuming top bracket).

So no, not full FIRE, which might get me lambasted, but if you've only got a couple years left and are feeling chained to making it to MRA it might be worth exploring.

Johnny Aloha

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Re: Any FERS + TSP FIRE folks out there?
« Reply #179 on: April 30, 2019, 07:59:39 AM »
PTF.

Johnny Aloha

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Re: Any FERS + TSP FIRE folks out there?
« Reply #180 on: April 30, 2019, 08:22:14 AM »
Has anyone heard of tips or advice on "engineering the layoff", kinda like Financial Samuri did?

In other words, can you specifically target organizations that are downsizing in order to be offered VERA?  I have no idea of how you would know which organizations are downsizing or affected, but that could be some very useful information.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #181 on: April 30, 2019, 08:40:29 AM »
Has anyone heard of tips or advice on "engineering the layoff", kinda like Financial Samuri did?

Just for starters, I should mention that FS is not terribly popular around these parts.  Some of his financial advice is questionable, and his ethical advice is pretty seriously fucked up.

Quote
In other words, can you specifically target organizations that are downsizing in order to be offered VERA?  I have no idea of how you would know which organizations are downsizing or affected, but that could be some very useful information.

This is significantly more difficult in the federal government than elsewhere.  Most agencies go under a hiring freeze for several years first, because upper management sees the coming crunch well ahead of time.  And then the hiring process is usually slow and cumbersome, so it's not like you can just see a news story about problems with EPA and then run out and get an EPA jobs real quick before the VERAs come out.

Then on top of that the VERA offers are not available to everyone.  It's not like a typical corporation's headcount where they do last in first out.  VERAs are targeted at people who are already near retirement, and to be eligible to receive a VERA offer you need to have already achieved the specified time of service requirements before the window opens.  Those requirements are typically 20 years.  They're trying to give a little push to people who are already close to retirement.

But if you're already a long-serving fed and have enough management seniority that you can transition between agencies with relative ease, it's probably not too hard to put yourself in a position to get the offer.  The rats don't usually swim toward the sinking ship.

Johnny Aloha

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Re: Any FERS + TSP FIRE folks out there?
« Reply #182 on: May 01, 2019, 09:45:59 AM »
Has anyone heard of tips or advice on "engineering the layoff", kinda like Financial Samuri did?

Just for starters, I should mention that FS is not terribly popular around these parts.  Some of his financial advice is questionable, and his ethical advice is pretty seriously fucked up.

I haven't read enough of his stuff to have an opinion one way or the other.    But I do know he wrote a book about organizing your own layoff.

Quote
The rats don't usually swim toward the sinking ship.
Agree - which makes it an opportunity!

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #183 on: May 02, 2019, 09:07:29 AM »
For feds with a job that allows for an MRA of 50 with 20 years of service, does anyone know how it works if you hit 20 years at a younger age?

For example, I understand the deferred/postponed difference for the regular FERS option.  But I wondered if the deferment still had to be to age 62 if you otherwise qualify for a FERS pension at 50? 

For example, if you hit your 20 years of service at age 44, would you be able to quit working at 44 and begin to collect your pension immediately at 50?  Or are the options to work until 50 to get the pension at 50 or quit at 44 and wait to collect until age 57 (MRA with reduction) or 62 to avoid a reduction?

I just was unclear on if one had to work through the date for those eligible for a FERS pension sooner.

Or is this a situation where even the varieties of retirements at 50 with 20 years (LEO, Foreign Service, etc...) would all answer this differently?

Edit: I realized I had the wrong age which undercut my fundamental question of whether completing the 20 would allow for collecting beginning at 50 even if I stopped working at 44 or whatever age I hit 20 years of service at.
 

You cannot collect the pension immediately or even at age 50 if you're 44 and haven't reached your MRA. You'd be eligible for a deferred pension, which would be a monumental waste of 20 years. Assuming you're a LEO/Air Traffic/FF (based on your 20 at 50 question), what you can do is get out of the higher stress LEO/AT/FF job after you do your 20, and take a regular FERS position elsewhere, ideally an easy, low stress job close to home. There are lots of opportunities out there. Then you'd just have to stick around until your MRA. There is another, riskier option too -- and that's to leave your job after 20 years, do whatever in the interim, then get re-hired into a FERS position right before your 50th birthday. You could then retire as soon as you hit 50, and begin to immediately collect your LEO/AT/FF pension since you've now fulfilled the age (50) and service (20) requirements.
« Last Edit: May 02, 2019, 09:09:18 AM by dude »

desert_phoenix

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Re: Any FERS + TSP FIRE folks out there?
« Reply #184 on: May 02, 2019, 10:39:09 AM »
For feds with a job that allows for an MRA of 50 with 20 years of service, does anyone know how it works if you hit 20 years at a younger age?

For example, I understand the deferred/postponed difference for the regular FERS option.  But I wondered if the deferment still had to be to age 62 if you otherwise qualify for a FERS pension at 50? 

For example, if you hit your 20 years of service at age 44, would you be able to quit working at 44 and begin to collect your pension immediately at 50?  Or are the options to work until 50 to get the pension at 50 or quit at 44 and wait to collect until age 57 (MRA with reduction) or 62 to avoid a reduction?

I just was unclear on if one had to work through the date for those eligible for a FERS pension sooner.

Or is this a situation where even the varieties of retirements at 50 with 20 years (LEO, Foreign Service, etc...) would all answer this differently?

Edit: I realized I had the wrong age which undercut my fundamental question of whether completing the 20 would allow for collecting beginning at 50 even if I stopped working at 44 or whatever age I hit 20 years of service at.
 

You cannot collect the pension immediately or even at age 50 if you're 44 and haven't reached your MRA. You'd be eligible for a deferred pension, which would be a monumental waste of 20 years. Assuming you're a LEO/Air Traffic/FF (based on your 20 at 50 question), what you can do is get out of the higher stress LEO/AT/FF job after you do your 20, and take a regular FERS position elsewhere, ideally an easy, low stress job close to home. There are lots of opportunities out there. Then you'd just have to stick around until your MRA. There is another, riskier option too -- and that's to leave your job after 20 years, do whatever in the interim, then get re-hired into a FERS position right before your 50th birthday. You could then retire as soon as you hit 50, and begin to immediately collect your LEO/AT/FF pension since you've now fulfilled the age (50) and service (20) requirements.

Yeah, it kind of sucks.  It seems I could hit FIRE or thereabouts about 18 years of service in.  Staying two extra years for a pension would be worth it.  But since it is that much longer to hit 50, it seems less worth it.  I guess not anything to worry about for now.  Just keep saving and investing and see how it all feels a few years from now.

Mathew675

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Re: Any FERS + TSP FIRE folks out there?
« Reply #185 on: May 03, 2019, 09:10:13 PM »
Interesting thread, thanks for all the great info. Quick question - could those looking to retire very early simply leave the government at say 45 and then come back in to a FERS position at say 60 even at a much lower grade and get all the benefits back? My question is based on the idea that my family stops now and travels for several years before coming back when the kids are high school age and re-establishing ourselves for just a few years.

For instance, if I leave now and am making 6 figures but then come back and make much less would my high three be based on a cola adjusted wage from 10 years ago? Assume no.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #186 on: May 03, 2019, 09:13:34 PM »
could those looking to retire very early simply leave the government at say 45 and then come back in to a FERS position at say 60 even at a much lower grade and get all the benefits back?

Yes.  It's a risky play, but that would technically qualify you for immediate benefits. 

What those benefits are, exactly, isn't always clear.  You can already take a deferred pension and collect age 60, so getting rehired before doesn't get you all that much.

desert_phoenix

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Re: Any FERS + TSP FIRE folks out there?
« Reply #187 on: May 04, 2019, 08:37:29 AM »
You could look at historical GS pay scales and do a comparison to get an idea of what a drop might be.  I am sure there are tables going back further, but this is back through 2007:

https://www.federalpay.org/gs/2019

So if you were a 12 Step 5 in DC for example, you are at $94,520 currently but a 12-5 in 2007 was $75,671.  That is only a 12 year gap, so of course would be an even larger gap if it was 17 instead.

It is also hard to know if low inflation will continue for that long.  A few years of really high inflation in the interim could render the pension not so helpful.

marion10

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Re: Any FERS + TSP FIRE folks out there?
« Reply #188 on: May 04, 2019, 01:30:50 PM »
Also- I would never count on being able to get rehired.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #189 on: May 04, 2019, 07:45:36 PM »
A few years of really high inflation in the interim could render the pension not so helpful.

Even at normal inflation rates, the lack of inflation protection on a federal pension absolutely eviscerates the early retiree.  I retired at 41 and am expecting roughly 20 years of inflation erosion on my pension.  That eats almost half of it, even if inflation stays at 2%.

DoNorth

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Re: Any FERS + TSP FIRE folks out there?
« Reply #190 on: May 05, 2019, 03:21:23 AM »
I'm a military medical retiree (40 years old) and current term Fed serving overseas.

Did a year as a Fed in DC back in 2014, withdrew my FERS-FRAE contributions and put them in my IRA; I'll have about two years on this position and plan to do the same with my contributions after this assignment is up.

The lack of inflation protection from the time I'm 41 to ~60 almost certainly means those contributions are better sitting in my IRA than waiting almost 20 years for a devalued pension (even if I do over 5 years).

FIRE is next year, will roll TSP to traditional IRA and then over the next several years of retirement, will do the Roth conversion ladder until all the TSP funds have been converted.  Will probably look at another Fed term position sometime around then.

DoNorth

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Re: Any FERS + TSP FIRE folks out there?
« Reply #191 on: May 05, 2019, 07:04:05 AM »
Interesting thread, thanks for all the great info. Quick question - could those looking to retire very early simply leave the government at say 45 and then come back in to a FERS position at say 60 even at a much lower grade and get all the benefits back? My question is based on the idea that my family stops now and travels for several years before coming back when the kids are high school age and re-establishing ourselves for just a few years.

For instance, if I leave now and am making 6 figures but then come back and make much less would my high three be based on a cola adjusted wage from 10 years ago? Assume no.

you're assumption is correct.  I left as 14 step 2 in 2015, (perm position) restarted in 2018 as a 12, step 5(term position), but living in Europe this time.  my high 3 would still count my time as a 14, but none of it would be inflation adjusted.  the pension model is still counting on the fact that you work right up until retirement and that you're highest earnings are usually your last 3.

afox

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Re: Any FERS + TSP FIRE folks out there?
« Reply #192 on: May 06, 2019, 10:47:10 AM »
Interesting thread, thanks for all the great info. Quick question - could those looking to retire very early simply leave the government at say 45 and then come back in to a FERS position at say 60 even at a much lower grade and get all the benefits back? My question is based on the idea that my family stops now and travels for several years before coming back when the kids are high school age and re-establishing ourselves for just a few years.

For instance, if I leave now and am making 6 figures but then come back and make much less would my high three be based on a cola adjusted wage from 10 years ago? Assume no.

The problem with this plan is that in order to get the the FEHB benefit (basically group insurance with 50% of premiums paid by gov) you need to have been enrolled in FEHB for the 5 years prior to retirement (correct me if im wrong). If you retire at MRA with immediate annuity you can continue FEHB benefit for life (generally only needed till medicare eligibility but invaluable for the period between retirement and medicare age). At least monetarily, the FEHB benefit could be more valuable that the FERS  benefit at least until medicare eligibility age for all but the highest wage earners. Seems like going part time until you reach MRA could be a good compromise so that you retain eligibility for FEHB.  Also, note that in most states COBRA entitles you to 18 months of group insurance after you leave your job for any reason. You pay 100% of the premiums but just having access to the FEHB group plans is a massive benefit especially, even more massive the older you are.

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Re: Any FERS + TSP FIRE folks out there?
« Reply #193 on: May 06, 2019, 06:51:06 PM »
For feds with a job that allows for an MRA of 50 with 20 years of service, does anyone know how it works if you hit 20 years at a younger age?

For example, I understand the deferred/postponed difference for the regular FERS option.  But I wondered if the deferment still had to be to age 62 if you otherwise qualify for a FERS pension at 50? 

For example, if you hit your 20 years of service at age 44, would you be able to quit working at 44 and begin to collect your pension immediately at 50?  Or are the options to work until 50 to get the pension at 50 or quit at 44 and wait to collect until age 57 (MRA with reduction) or 62 to avoid a reduction?

I just was unclear on if one had to work through the date for those eligible for a FERS pension sooner.

Or is this a situation where even the varieties of retirements at 50 with 20 years (LEO, Foreign Service, etc...) would all answer this differently?

Edit: I realized I had the wrong age which undercut my fundamental question of whether completing the 20 would allow for collecting beginning at 50 even if I stopped working at 44 or whatever age I hit 20 years of service at.

Generally the 50/20 rule is for special categories (LEO, Firefighters, air traffic controllers.)  It comes with a out at 25 years with any age.  I'm under this, I get out at 47.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #194 on: May 07, 2019, 08:17:08 AM »
Interesting thread, thanks for all the great info. Quick question - could those looking to retire very early simply leave the government at say 45 and then come back in to a FERS position at say 60 even at a much lower grade and get all the benefits back? My question is based on the idea that my family stops now and travels for several years before coming back when the kids are high school age and re-establishing ourselves for just a few years.

For instance, if I leave now and am making 6 figures but then come back and make much less would my high three be based on a cola adjusted wage from 10 years ago? Assume no.

The problem with this plan is that in order to get the the FEHB benefit (basically group insurance with 50% of premiums paid by gov) you need to have been enrolled in FEHB for the 5 years prior to retirement (correct me if im wrong). If you retire at MRA with immediate annuity you can continue FEHB benefit for life (generally only needed till medicare eligibility but invaluable for the period between retirement and medicare age). At least monetarily, the FEHB benefit could be more valuable that the FERS  benefit at least until medicare eligibility age for all but the highest wage earners. Seems like going part time until you reach MRA could be a good compromise so that you retain eligibility for FEHB.  Also, note that in most states COBRA entitles you to 18 months of group insurance after you leave your job for any reason. You pay 100% of the premiums but just having access to the FEHB group plans is a massive benefit especially, even more massive the older you are.

afox, that's a good question, and yes, you're right about the 5-year requirement -- I wonder if there's wiggle room in the language that would allow the break in service to be disregarded so long as you were in FEHB for the requisite time before leaving fed employment and then enrolled immediately upon re-employment, thereby constituting being enrolled for 5 years prior to retirement.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #195 on: May 07, 2019, 08:19:47 AM »
And whaddya know, my question answered by OPM:

https://www.opm.gov/faqs/QA.aspx?fid=fd635746-de0a-4dd7-997d-b5706a0fd8d2&pid=86c7b3a5-d614-42eb-8070-9f3d3f5068dd

So the 5-year FEHB requirement is not a hindrance to the leave/get re-hired just before retirement strategy!

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #196 on: May 07, 2019, 08:59:35 AM »
So the 5-year FEHB requirement is not a hindrance to the leave/get re-hired just before retirement strategy!

It's not really in my plan, but it's good to know this particular safety is there if I ever need it.  As a retired fed with many years to wait until traditional retirement age, it's good to know I could theoretically regain FEHB for life by getting another federal position right before my MRA.  Losing lifetime access to heavily subsidized federal health insurance was one of the hardest parts about retiring at age 41.

afox

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Re: Any FERS + TSP FIRE folks out there?
« Reply #197 on: May 07, 2019, 12:14:56 PM »
thanks dude, good to know, i did not realize this distinction...

Sugaree

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Re: Any FERS + TSP FIRE folks out there?
« Reply #198 on: May 07, 2019, 01:23:57 PM »
Has anyone looked into using a postponed pension as a way to open up space for a Roth conversion ladder?  Apparently, once you hit MRA+10, you can not take the pension for a few years.  If you had enough in taxable accounts to cover living expenses for the years that you weren't getting the pension, it would free up some room to do the Roth ladder.

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Re: Any FERS + TSP FIRE folks out there?
« Reply #199 on: May 07, 2019, 02:39:44 PM »
For feds with a job that allows for an MRA of 50 with 20 years of service, does anyone know how it works if you hit 20 years at a younger age?

For example, I understand the deferred/postponed difference for the regular FERS option.  But I wondered if the deferment still had to be to age 62 if you otherwise qualify for a FERS pension at 50? 

For example, if you hit your 20 years of service at age 44, would you be able to quit working at 44 and begin to collect your pension immediately at 50?  Or are the options to work until 50 to get the pension at 50 or quit at 44 and wait to collect until age 57 (MRA with reduction) or 62 to avoid a reduction?

I just was unclear on if one had to work through the date for those eligible for a FERS pension sooner.

Or is this a situation where even the varieties of retirements at 50 with 20 years (LEO, Foreign Service, etc...) would all answer this differently?

Edit: I realized I had the wrong age which undercut my fundamental question of whether completing the 20 would allow for collecting beginning at 50 even if I stopped working at 44 or whatever age I hit 20 years of service at.

Generally the 50/20 rule is for special categories (LEO, Firefighters, air traffic controllers.)  It comes with a out at 25 years with any age.  I'm under this, I get out at 47.

Wow, that is a good caveat to know.  I fall under a special category, but was unfamiliar with 25 at any age working.  That also brings mine below 50 by a few years.  Good stuff!