roll over to Edward Jones or simular

[74vetguy]

My Christmas present next year will be my retirement. I have been thinking of rolling out of the TSP and moving over to someone like Edward Jones. I am alittle concerned with fees.

2.5% up front and they .5% every year after that. Is this standard? It seems high to me. Any comments would be greatly appreciated.


Thanks in advance.

Note: if this has been coverend in another thread somewhere, please direct me to the thread.

[SkyPilot]

Why rollover at all?

Why not continue to manage your own in TSP with very little cost as opposed to a manager who will charge you these fees.

You will likely make a better return, and still have a variety of withdrawal options.

Even sitting in the G fund ( or even better, the L lifestyle or L2010) maybe better (more cost effective) than a manager...

Seems to be a lot of TSP participants I talk to that are under the impression that they must rollover at retirement. Not so!

[74vetguy]

Just testing the waters, need to know if anyone has any experience with this.

I know I can leave $ in TSP but I can't add to it after I retire.

I am also alittle concerned about having all my eggs in one basket. Retirement pension from the government, TSP with government. Also, the withdrawl options for TSP are not clear to me. I am a FER LEO with 25 total service retiring at 52.

I see TSP has option for life expectancy and specific monthly amount. The life expectancy is to low ( approx 3%) and I am not sure if I can do the monthly withdrawl and not get hit with the 10% penalty. Not really sure of the IRS 52T lasw. Also I have to be aware that my TSP money need to last at least 30 years.

[Spaf]

Just testing the waters, need to know if anyone has any experience with this.

I know I can leave $ in TSP but I can't add to it after I retire.

Right: You are no longer making a allocation!


I am also a little concerned about having all my eggs in one basket. Retirement pension from the government, TSP with government. Also, the withdrawl options for TSP are not clear to me. I am a FER LEO with 25 total service retiring at 52.

One option is to tell TSP how much $ you want per month. i.e., You want $500 a month, x12 is 6K. If you had a 200K account, that would be a 3% annual withdrawl. With inflation about 3% you would need a 6% annual gain to keep your principal. Not hard to do when the G-Fund pays near 5%.


I see TSP has option for life expectancy and specific monthly amount. The life expectancy is to low ( approx 3%) and I am not sure if I can do the monthly withdrawl and not get hit with the 10% penalty. Not really sure of the IRS 52T lasw. Also I have to be aware that my TSP money need to last at least 30 years.

Go over to TSP.gov and print out "GETTING YOUR MONEY OUT AFTER YOU SEPERATE" about 7 pages. They also have a "Withdrawl Package" they can send you with items that explain the taxes, etc.

[SkyPilot]

The life expectancy is to low ( approx 3%) and I am not sure if I can do the monthly withdrawl and not get hit with the 10% penalty. Not really sure of the IRS 52T lasw. Also I have to be aware that my TSP money need to last at least 30 years.


I am also a LEO, so I have looked into our situation quite a bit. We are under the same rules in this case as ATCs and Firefighters.

Rolling over will not solve the problem of the 10% penalty. If you retire before the year in which you turn 55, you will not be able to avoid the penalty if you touch it before 59.5., unless you use the life expectancy scenario, buy an annuity (bad move) or go with the 72t (which will be the same roughly as the TSP life expectancy as it is calculated approximately the same way)

And if you decide on taking the payments based on life expectancy, you can change to any other method of withdrawal at 59.5.

Will you really need to access your TSP at 52 though?

In that you get your basic benefit and SS security supplement, you might already have what you need, along with a part time job. Also, many are not aware that the SS supplement is not affected by other earnings until you turn 55, at which time is will be reduced just as Social Security is affected by personal earning.

Finally, if you do need to draw on our TSP account to live when you retire at 52, then you might really look at your situation and see if you are really at the point that you can retire at 52. You want to consider putting ofj your retirement a couple more years, and go out at 55. Also, you only have to work until the first week of January in the year in which you turn 55 to retire without the penalties. Depending on when your EOD is, this could be as little as 24 months.

Also, for every year after 20, you will get an additional 1% per year added to your basic benefit. If you work until 55, this could put you at around 42% of you hi-3, plus your hi-3 is higher due to the extra time in service.

Unless you have a dynamite job waiting for you outside of fed service, it might be strongly to your advantage to put up with your job for just a bit longer for substantial gains and flexibility.

Best of luck!

[74vetguy]

Thanks all for the input. If I stay with TSP, I am almost certain I will go with the life expectancy method.

However I do like the ability that an outside firms has of me being able to get "additional money" if I need it for some unexpected reasone, where I don't belived TSP does, except with a loan.

Again thanks for the input.

[Birchtree]

vetgut,

Anytime you open a taxable account you will come out ahead in the long run. You are looking at 15% tax rates on capital gains and dividends that are qualified. Also there are no limits on a nontraditional IRA - you only pay taxes on the earnings when you withdraw. My goal is to be 95% tax free.

[clester]

If you need more than the tsp calculated life expectancy amount (Minimum distribution) you will want to transfer your TSP to an IRA and use the 72t formula. Go to www.72t.net (http://www.72t.net) and you can use their calculator. There are 3 methods than you can use and avoid the 10% penalty. Minimum distribution, amoritization, and annuitization. Using the amoritization method you will see you can use up to 120% of the 5 yr treasury note I think. Anyway the calculator has that info. One big draw back is that you can't change the amount you choose until age 59 1/2. So if the amount is 2,000 per month, it stays that way until 59 1/2.

[74vetguy]

Again thanks. The 72t.net forum has some interesting info in it.

It was very hard to come back to work this week after having last week off. Went fishing in Wisconsin. It is just a beautiful thing to be on the water at 6am, cup of coffee listening to the loons. Oh and fishing of course.

Hopfully that is going to be my "lilly pad"!

[GGal]

I'm planning a trip to upper Michigan next summer! Photos look beautiful. I'm going to Mackinaw city, Mackinac Island, T. Falls and Picture Rocks. Any other suggestions welcome.

GGal

[Show-me]

I'm planning a trip to upper Michigan next summer! Photos look beautiful. I'm going to Mackinaw city, Mackinac Island, T. Falls and Picture Rocks. Any other suggestions welcome.

GGal

Bug spray................ lots of big, huge, mosquito kill'n bug spray. :cool: :D

[Scout333]

Also, safari hats with mosquito netting! If it doesn't keep you from getting bit it covers up the big red bumps!:D

[Wolverine]

I'm planning a trip to upper Michigan next summer! Photos look beautiful. I'm going to Mackinaw city, Mackinac Island, T. Falls and Picture Rocks. Any other suggestions welcome.

GGal

Well, since my Stage name here is....Wolverine....guess where I am from? lol A Nickname given to the State of Michigan.

You mention 4 of the bigger points of interest already. Which are all good places to see and all. The Soo Locks also would be good.

All depends on how much time you are going to have also. Much to see of course in the upper part of Michigan. One day in each of those 4 you mention can take up a good full day. Pictured Rocks area you would maybe want to spend more time.

I always like to take the boats from St. Ignace on the north side of the Mackinac Bridge over to Mackinaw Island. Was able to drive across the bridge twice then. LOL

Looks like you have plenty of time to plan this trip very well.

Enjoy the planning and the trip.

[GGal]

Hey Wolf! Thanks for your help. Here is my tentative itenerary - feel free to make suggestions for changes:

Saturday, land at Traverse City, drive up coast, stop in Harbor Springs at antique shops, catch Ferry (I thought at Mackinaw City, but you thing the north side would be best?_) to Macknac Island - spend Saturday nite, Sun nite, and Monday nite at the Iroquois Hotel. Sunday and Monday explore the island, shop, horse back ride. Tuesday drive to Newberry and check into a hotel, then go visit the T (long word) Falls. Wednesday morning drive to Munising and take the cruise of the Pictured Rocks, spend Wednesday nite back at Newberry. Thursday drive to Mackinaw City and check into a hotel on the beach, spend Friday and Saturday playing on beach and exploring the city. Late Saturday drive back to Traverse City and spend the nite. Sunday fly back to Atlanta.

This will be in June or July next year.

Any other ideas? Anything I should not miss?

Thanks
GGAL

[Wolverine]

Hey Wolf! Thanks for your help. Here is my tentative itenerary - feel free to make suggestions for changes:

Saturday, land at Traverse City, drive up coast, stop in Harbor Springs at antique shops, catch Ferry (I thought at Mackinaw City, but you thing the north side would be best?_) to Macknac Island - spend Saturday nite, Sun nite, and Monday nite at the Iroquois Hotel. Sunday and Monday explore the island, shop, horse back ride. Tuesday drive to Newberry and check into a hotel, then go visit the T (long word) Falls. Wednesday morning drive to Munising and take the cruise of the Pictured Rocks, spend Wednesday nite back at Newberry. Thursday drive to Mackinaw City and check into a hotel on the beach, spend Friday and Saturday playing on beach and exploring the city. Late Saturday drive back to Traverse City and spend the nite. Sunday fly back to Atlanta.

This will be in June or July next year.

Any other ideas? Anything I should not miss?

Thanks
GGAL

Looks like you are packed and ready to go already. LOL

Your plan looks great for it being a week trip. Your doing quite a bit and yet not too crammed and all.

Sometimes flying into Traverse City that time of year, can be busy with planes and if they can't land because of that, they force the passengers to Parachute into the Airport. So, be prepared for that. LOL

Considering at what time you get into Traverse City, a drive out to Old Misssion Pt is something to do also. But, that could cram your time getting to Harbor Springs. The up the coast to Harbor Springs is good. Make sure going out of Harbor Springs you continue along the coast and up to Cross Village which is a nice drive also. Then from there cross over on into Mackinaw City.

Since you are already going across the bridge, Mackinaw City is fine for the boat trip over to the Island and how you have things planned out. My north side St Ignace thing was really only about how I have done it when only doing the Island thing. You will be doing the bridge drive twice since you are going further up and all.

Sometimes the boats out of Mackinaw City can't get all the way over on their own power and they force the passengers to get out and Push. So be prepared for that. LOL

Spending that much time on the Island will give you a good look at it all for sure. Fudge is the thing as you probably already know. Eat and enjoy.
Not sure how going into the Grand Hotel on the Island works if you are not a guest there. Years ago you could as a visitor roam the Hotel. You will find out I am sure when you get there.

The Upper Peninsula part of your trip you have planned out well with the time frame and all also. You will enjoy all that with the Falls and Pictured Rocks. Then you get back to Mackinaw City for some fun and relax stuff.

Sounds good to me.

Your bags are packed and you are good to go now.

Enjoy.

[Wolverine]

GeorgiaGal,

Oh, I almost forgot.

When you do the Horse thing on the Island in the Carriages if you do, don't sit in the front seat directly behind the horses. If they Fart, which one did when we did it, it ain't good. LOL

[GGal]

It must have been a male horse. Girls don't do those things.

[Wolverine]

LOL

Well, both Horses were Girls and the one who Broke Wind was named Lily I think. Not sure though. LOL

Girls do it all time. Denial won't work. LOL

[jkat1966]

I am also a LEO, so I have looked into our situation quite a bit. We are under the same rules in this case as ATCs and Firefighters.

Rolling over will not solve the problem of the 10% penalty. If you retire before the year in which you turn 55, you will not be able to avoid the penalty if you touch it before 59.5., unless you use the life expectancy scenario, buy an annuity (bad move) or go with the 72t (which will be the same roughly as the TSP life expectancy as it is calculated approximately the same way)

And if you decide on taking the payments based on life expectancy, you can change to any other method of withdrawal at 59.5.

Will you really need to access your TSP at 52 though?

In that you get your basic benefit and SS security supplement, you might already have what you need, along with a part time job. Also, many are not aware that the SS supplement is not affected by other earnings until you turn 55, at which time is will be reduced just as Social Security is affected by personal earning.

Finally, if you do need to draw on our TSP account to live when you retire at 52, then you might really look at your situation and see if you are really at the point that you can retire at 52. You want to consider putting ofj your retirement a couple more years, and go out at 55. Also, you only have to work until the first week of January in the year in which you turn 55 to retire without the penalties. Depending on when your EOD is, this could be as little as 24 months.

Also, for every year after 20, you will get an additional 1% per year added to your basic benefit. If you work until 55, this could put you at around 42% of you hi-3, plus your hi-3 is higher due to the extra time in service.

Unless you have a dynamite job waiting for you outside of fed service, it might be strongly to your advantage to put up with your job for just a bit longer for substantial gains and flexibility.

Best of luck!

Good Advice about sticking it out for 5 more years. I'm also a LEO, but I work for the BOP, and I really don't think I can stand 5 additional years of dealing with inmates. At 50 I will have 22 years of dealing with Federal inmates, and 5 more seems like an eternity!!

[gavinman]

I have a few years to go but at this point I was planning on getting out at 50 or 53 also (LEO also). It looks like the only to do it will be to start fully funding a ROTH then I can take out at least what I put in it penalty free. The pension reform act allows local LE to take their benefits at 50 without a penalty. If all the federal law enforcement associations band together we should be able to get that to apply to federal also and the TSP. It's going to take some lobbying though.

[jkat1966]

I read on our union website that the union is starting to push congress to do away with the 10% penalty for LEO's that retire at 50. Let's hope it makes its way through before we retire!!!

[Rick]

Just pay the 10% penalty!
I am a ATC FERS, I will retire @50 witk 600K in TSP 10% for 9 years (until 59 1/2) is well worth it to keep control of my money that I worked hard to amass. I will not turn over my money to Edward Jones or any other broker to lose for me.

[Rick]

$600,000 at 5% Interest =
$3000 month or $36,000 Year
for 36 Years
$36,000 x 10 Years = 360,000
10% penalty = $36,000
$36,000 is cheap to allow me control of my money.
Edward Jones wants 2.5% of my $600,000 plus .5% each year to manage my money.
Thats 2.5 plus .5 for 10 years = 7.5% for Edward Jones to manage my money just the first 10 years!

[TSPinWV]

Edward Jones wants 2.5% of my $600,000 plus .5% each year to manage my money. Thats 2.5 plus .5 for 10 years = 7.5% for Edward Jones to manage my money just the first 10 years!

Are you comfortable with managing your own investments? On-line trading can be significantly cheaper, especially if you are going to be very active with your buying and selling. The competition is up, which works to our benefit, and many brokerages are offering more and better technical analysis tools as well.

You can compare brokers here: http://www.smartmoney.com/brokers/ :toung:

[Rick]

Lets see... I have been managing my own money in the TSP for 24 years and have amassed over 600K.....Yes I am very comfortable managing my own money. What I am uncomfortable with is handing over my hard earned cash to someone that is just looking for a quick buck at my expense. We all should look hard at just what we are doing to try and escape the 10% penalty... A bird in the Hand is worth......................

[Birchtree]

Rick,

Welcome to the power club membership - there are several on this board that are in your accumulated wealth status. We'll watch to see how a heavy hitter manages his funds and the thought processes that are inherrent in making those important decisions.

[clester]

$600,000 at 5% Interest =
$3000 month or $36,000 Year
for 36 Years
$36,000 x 10 Years = 360,000
10% penalty = $36,000
$36,000 is cheap to allow me control of my money.
Edward Jones wants 2.5% of my $600,000 plus .5% each year to manage my money.
Thats 2.5 plus .5 for 10 years = 7.5% for Edward Jones to manage my money just the first 10 years!
Have you thought about leaving your money in TSP and taking monthly payments based on 72t amoritization rules? I'm also ATC and will retire next year at 49. What are your plans for your funds?

[Rick]

For those of you that are just starting out investing in the TSP, Keep at it, do not take out any TSP loans, invest in the C-S and I funds and after 25 years you too will have a large nest egg to take into retirement. The toughest decision you will make is how to get your money out of the TSP! It is not a simple decision so forgive us that struggle with this decision, and post so many Q&A's on the subject..

[Rick]

Clester
I cant help but think this is my money.. and I want control of it. So I probably will keep the money in the TSP funds and take monthly payments over 30 years.
Yes that includes paying the 10% penalty from 50 to 59 1/2.