Results 1 to 5 of 5

Thread: CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?

  1. #1

    Default CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?

    I'm within a year of retirement on CSRS and am about to make a sizable after-tax contribution to the voluntary contributions program. My intent is to then transfer this to a Roth IRA I have at Vanguard. However, since I will be 59 when I retire, I can also get a 7.8% fixed life annuity guaranteed by the federal government. From what I've seen, that is a great fixed annuity rate and there are no up-front fees, like there are with private annuities. Hence, I'm taking pause to consider this option, although I'm still leaning towards the Roth IRA. Thoughts?


  2.  
  3. #2

    Join Date
    Feb 2011
    Location
    Southeastern VA
    Posts
    236

    Default Re: CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?

    I have always heard that we should NEVER take an Annuity.

  4.  
  5. #3

    Default Re: CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?

    Quote Originally Posted by presskh View Post
    I'm within a year of retirement on CSRS and am about to make a sizable after-tax contribution to the voluntary contributions program. My intent is to then transfer this to a Roth IRA I have at Vanguard. However, since I will be 59 when I retire, I can also get a 7.8% fixed life annuity guaranteed by the federal government. From what I've seen, that is a great fixed annuity rate and there are no up-front fees, like there are with private annuities. Hence, I'm taking pause to consider this option, although I'm still leaning towards the Roth IRA. Thoughts?
    Just curious, who is underwriting a 7.8% annuity, I believe the TSP is currently offering 2.25%. Thanks

  6.  
  7. #4

    Default Re: CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?

    The Federal Government is underwriting it. I'm on the old CSRS (not FERS). One perk of this system is the ability to put up to 10% of your lifetime earnings in what is termed a "voluntary contributions" account. You can then (prior to retirement) roll all of this money into a Roth IRA. The other option is to begin receiving a lifetime fixed annuity at retirement from OPM - the yearly interest rate is 7% if you retire at age 55 and increases 0.2% each year later that you retire. So, if I retire at 59, my rate will be 7.8% per annum. Most advise to transfer the money to a Roth, which I'm probably going to do. Just looking for other's opinions - thanks, gegor.


    Sent from my iPhone using TSP Talk Forums

  8.  
  9. #5

    Join Date
    Oct 2010
    Location
    Aiea, Hawaii
    Posts
    1,122

    Default Re: CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?

    never say NEVER. And gegor is right, FERS annuity is currently2.25%.
    If your option with CSRS is in fact 7.9%, That is certainly a very enticing offer.
    The question becomes, 'Can you get better than a 7.9% (after tax?) return with your Roth (which is also after tax)?'
    Sounds like this is a pretty sweet deal, and I am not a fan of annuities usually.
    There may be estate planning concerns involved also.
    Roth is able to be passed down to heirs, who will continue to get tax advantages.
    If you die, does the annuity just stop? Refund the rest of your original outlay?
    I am not CSRS and have never heard of this option.
    Maybe other CSRS'ers can provide more details?
    There are 10 types of people in the world. Those who know binary, and those that don't!!
    Retired on December 31, 2018!!

  10.  

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
S&P500 (C Fund) (delayed)
CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?
(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)
CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?
(Stockcharts.com Real-time)
EFA (I Fund) (delayed)
CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?
(Stockcharts.com Real-time)
BND (F Fund) (delayed)
CSRS Voluntary Contributions roll over to Roth IRA or convert to annuity?
(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes