Description: In this article about tsp login, the author is going to show you how to use your TSP login retirement plan. You should understand the most efficient ways to leverage your thrift savings plan login information for a comfortable retirement income plan through TSP retirement rollovers.
My name is Derrick Ifasi. I’m the owner of Ifasi Financial Group, today I want to discuss with you Thrift Savings Plan, what a TSP retirement is and how to essentially leverage your thirst savings plan for retirement and do it properly.
Thrift Savings Plans are something very similar to 457 plan, 401 k plan and 403 B plan, essentially this is the type of retirement account, that’s set up, if you are a federal employee such as a postal worker, you might have individual saving for the IRS.
Anybody who is a federal employee will have access to their savings plan, when they first started with their service, they might have something known as a FERS annuity and also a CSRS annuity, one of the good things about working for the government is that you have good benefits such as the FERS annuity and the CSRS annuity for your retirement.
As you’re working, you might give a twenty, twenty-five thirty years of service, there’s going to be a specific calculation determined on whether you’re going to be receiving some sort of pension income, this individual is working year by year, he also has that option to take dollars and place it into essentially this type of retirement bucket of money known as the Thrift Savings Plan account.
The way that this thrift savings plan account grows is that the individual places the amount of money in there whether it is the mutual funds they choose depending on what type of fund option that they choose, they have a couple of options with the Thrift Savings Plan whether this is going to gain that year or it’s going to lose that year.
An individual could be placing money in there, he could be doing it for 20 years, experience a downward market loss like in 2008 and see their portfolio go from $500,000 to maybe as low as $300,000 in the next year, they took a $200,000 hit that year because of the downward market loss.
Always be mindful of a couple other factors while you’re setting up your thrift savings plan and while you’re preparing for retirement, in general there are some of the negatives in this type of account, you need to leverage the Thrift Savings Plan to your benefit and make sure that it accomplishes your goals successfully.
You could do that through different things known as rollovers which would occur later on, let me go over the cons to the Thrift Savings Plan and why people typically like to take this money and roll it over into a type of IRA contract that provides specific contractual guarantees and will quarterly exactly reach to their retirement goals and the retirement income goals.
In the Thrift Savings Plan typically you could fall victim to something known as reverse dollar cost averaging, this is something that hinders a lot of individuals especially when they’re at the latter stage of their retirement, they understand that they’ve accumulated this bucket of money, maybe they have a couple of years left.
They understand if they want to start pulling money out for retirement, in that situation individuals that leave their money with the thrift savings plan are susceptible to certain mutual fund related fees with that Thrift Savings Plan account.
On top of it if they’re going to a financial advisor who are typically a wealth accumulation specialist, the advisor is going to be giving them recommendations, typically the advisor charges something known as a wrap fee or an advisor fee.
If you have mutual fund related fees of 1% and advisor is charging you a fee of one percent to monitor your account, you don’t have any guarantees that your account is going to go up, the only guarantee that you have is that you’re going to have to pay fees on that large bucket of money.
If you have something that’s five hundred thousand dollars that’s sitting there, you have a one percent fee and a one percent fee at the gate, if unfortunately the mutual fund performance that you chose experiences some downward loss or market loss like in 2008 the average portfolio lost fifty seven percent, this individual may experience a 10 percent loss, it’s not going to be 10 percent loss, it’s going to be the 10 percent plus the wrap fee plus the mutual fund related fee thus resulting down to minus 12 percent.
If this individual wants to try to pull out income from this account, a lot of times people do not know how to properly do that, so they play a guessing game, they think that maybe I’ll pull out 5% of income for that year, hopefully by the time I keep pulling out 5%, I shouldn’t outlive this money.
When you’re incorporating reverse dollar cost averaging into the overall effect of taking money out of this retirement or you are trying to get there successfully on a safe consistent basis, this reverse dollar cost averaging effect and negative aspects compound against that individual that’s trying to grow their accounts.
If they take out 5 percent of income that year, at the end of the day if the you have $500,000 sitting there, they would have taken out 5 percent, but they would have ended up losing 5% plus 10% plus 1% plus 1%, that would be minus 17 percent of pure value in there.
When you’re grasping the concepts behind this, you have to understand that if you have a couple of downward market years or even years that the markets not growing at all and you’re pulling money out of that account, there are no guarantees, there are no safety nets involved.
With TSP retirement one of the things that we specialize on is that we deal with a lot of individuals that have TSP plans, when they call in to their office and want to speak with a specialist, we have TSP specialists 24 hours a day, seven days a week that would be able to take your calls.
From there we’ll ask you questions, for example based upon your TSP plan how long have you worked there? Are you eligible for some roll over into an IRA or even is that necessary? What you’re currently doing with your pension income? What you’re going to be receiving through your Social Security income?
You’re utilizing your their savings plan as your fun money, you’re not having it set up for a specific goal, we always tell the individual to stay put, there’s no need to do a rollover, but for other individuals majority of the times we uncover some need there meaning that we understand that there’s gap in where they currently are and what their goals are for their retirement income plan.
The way that these goals could be accomplished from a TSP into an IRA rollover depends upon what type of IRA that they go into, we specialize on safe consistent money planning, you have some IRA contracts with an individual that says I want Derrick to explain that reverse dollar cost averaging effect.
I want to make sure that I’m not paying mutual fund related fees, I’m not paying advisor fees, I’m eliminating downward market loss, I want to make sure that every single year I want my TSP money to be rolled over into an IRA so that it does not trigger off a tax. I want to have this bucket of money.
Every year on an annual basis depending upon which IRA contract you are going to, you can utilize an indexing IRA contract where if that specific stock market index that you choose goes up, you’re going to receive a portion of the gain, essentially it’s a supporting.
Your bucket is bigger at the end of the year, the next year if the market goes down, we’ll rather than participate in that downward loss and have your bucket get reduced tremendously, that bucket is going to be completely sealed and completely closed, so you’re going to gain 0% that year.
At all times with these indexing strategies you have a floor of 0 percent and a cap up to a certain limit, a cap means if you have a 10 percent cap, the market gained 12 percent, then you’re only going to gain a max of 10 percent into your account.
The account gains 5 percent, if the market gains 5 percent underneath the cap of 10, so you’re going to gain 5 percent into your account, if the market loses 20 percent that third year, you have that floor of 0 percent, that’s one of the ways, it’s a very popular way on individuals that do a TSP to IRA transfer.
The other aspect would be for retirement income planning, you could do this through IRA contracts that have income riders attached to these IRA contracts meaning that if an individual says that I’m getting money from my pension plan through work through the government, I’m getting money through Social Security income.
I have a couple of hundred thousand dollars sitting there, five hundred thousand dollars is sitting in my TSP account, I want to utilize a portion of this specifically for retirement income planning, out of this number maybe their specific goal is ten thousand dollars of extra income that they need to live off of that year.
Maybe their pension plan is paying them thirty thousand, maybe their Social Security income is paying them twenty thousand, they want to make sure that they’re getting $60,000 per year, so we understand that they have a bucket of money a $500,000 but they have a specific retirement income need of $10,000, they want to make sure that it’s going to come to them.
This is the worst case scenario, this is where you could use insurance companies, IRA contracts offer insurance companies through the form of annuities that you could attach income riders, so you can make sure that you’re accomplishing your goal safely and successfully.
Out of this $500,000 you could splice up a portion of it, you only want to have the portion set up for income being the lowest amount of dollars possible, in that scenario out of this five hundred thousand maybe you only need a hundred fifty thousand dollars to go into some annuity contract such as a hybrid annuity IRA.
From there you would turn on that spigot within the year or within a couple of years making sure that it equates exactly to that ten thousand dollars of annual income or ten thousand dollars divided by twelve so that you get that out in a monthly income.
It’s very flexible with the income option so that it correlates to your pension and to your social security, you’re leveraging that portion to essentially create your own personal pension plan to make sure that you’re having that peace of mind and you’re spending your retirement dollars with confidence in retirement.
As that happens, you have an additional three hundred fifty thousand, you could have this fund money, this is a large misconception that a lot of people don’t understand, you could take portions depending upon the carrier that you place it with and depending upon the IRA contract.
You could take the full lump sum of this five hundred thousand dollars in that example, you could splice it up into company A, you could splice it up into company B, maybe company A is going to give you that specific income need where you’re going to took a hundred fifty thousand dollars there.
But maybe for company B, you want to have the safe consistent planning and you don’t care about income, you’re going to have three hundred fifty thousand dollars there, there are ways as long as the company’s accepted those transfers, they allow you to do a full rollover.
Therefore you don’t have to take the full five hundred thousand dollars and throw it into one contract, you could splice it up to a portion of different contracts, that’s one of the things that we do, we get a large volume into our office with Thrift Savings Plan members saying that I’m over the age of 59 and a half, I want to leverage a portion of my Thrift Savings Plan money. This is my situation, these are my goals, I was thinking what would be your recommendations.
We have an entire team, we are making sure that that you’re very comfortable throughout the entire process, you’re educated properly either through the use of videos or the use of literature pieces, we make sure that we correlate that properly.
We go through a system known as the retire sharp planning system, the name of our website is retiresharp.com and our YouTube channel is retired sharp, please make sure to subscribe to that, so you have the most updated videos, but essentially what the retired sharp planning system does is for the individuals that want some solutions and we uncover a need.
On average we go over 1200 different contracts and scenarios in your particular area making sure that we are producing you the most optimal recommendations, we give you these pros and cons, rather than going into something blindly and choosing a random company and a random advisor, you need to make sure that you’re dealing with a specialist.
We are A plus rated on the Better Business Bureau, we’ve always had very good reviews, we’ve never had any complaints because of our methodical process, my name is Derrick Ifasi. I’m the owner of Ifasi Financial Group. I want to thank you for reading this article.