Category: Medicare

The primary reason we contribute to our Thrift Savings Plan account is so that we can begin withdrawing from it at some point in the future. In addition, most of us view our TSP balance as a source of monthly income to augment our government annuity and Social Security (both of which are also paid monthly).

If we want to replace 80% of our pre-retirement income (as many financial advisers recommend), the great majority of us will fall short of that objective if we rely only on an annuity and Social Security. As a result, many retirees choose to receive TSP payments regularly.

In fact, over half of the separated employees choose a TSP withdrawal option that offers recurring income. Two income-generating withdrawal options are available: installment payments and a TSP life annuity. Installment payments can be made monthly (most common), quarterly, or annually. With installment payments, your money will stay in the TSP, where it’ll (hopefully) grow. A TSP life annuity involves withdrawing money from your TSP account and using it to buy a single premium immediate annuity (paid monthly) from MetLife; you can use all or part of your TSP balance to buy the annuity.

So, what’s the distinction between installment payments and a life annuity? Though both options allow us to collect recurring payments, the rules are significantly different. The most significant distinction is that a TSP Life Annuity is an irrevocable option, whereas installment payments can be altered frequently. Individuals who use installment payments can start and stop payments at any time and adjust the amount of the installments many times per year.

The TSP life annuity ensures that you won’t run out of money over your lifetime; you won’t have to look after your investments. But unfortunately, there’s no guarantee with installment payments, and you must watch after your withdrawals to verify that you continue receiving payments.

Both installment payments and life annuities allow you to receive payments based on a certain amount of money (level payments) or your life expectancy (increasing payments).

The Thrift Savings Plan has various calculators, including the TSP Payment and Annuity Calculator, with which we came up with the following examples. Due to the ongoing repercussions of the Thrift Plan’s new system, this calculator is no longer available on TSP’s website (as of July 2022). In our calculations (completed in April, before the new system’s implementation), we estimated that a 57-year-old retiree had $350,000 in their TSP when they started withdrawals upon retirement. We also assumed they would live to be 90 years old and that any money remaining in their TSP account would grow at a rate of 5% per year. The annuity interest rate index was 2.075% – the rate for TSP annuities in February 2022.

Level monthly payments of $1,750 would remain until death at 90, leaving a $4,244 balance in the TSP account.

Monthly benefits would begin at $1,045 and would have reached $2,247 at 90, according to the IRS life expectancy chart. As a result, $295,069 would stay in the TSP account.

A monthly annuity with a basic level payment would earn $1,394 and keep paying that amount throughout the individual’s life. At death, there would be no funds left.

A basic increasing payment annuity would have started at $998 and grown to $1,887 at 90. At death, there would be no money.

Which option is most popular among separated federal employees? Monthly payouts are significantly more common than life annuities. Separated employees appear to prefer the opportunities for continuous development and the freedom to adjust their payouts that monthly payments provide over the certainty of the Life Annuity.

According to recent research, there are 1.2 million fewer workers than before the pandemic. However, it also said that if the pre-pandemic worker growth rate had remained, there would be 3.5 million more employees in the workforce today.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

All TSP participants will need to create a new login for the new My Account after the transition in June. This one-time setup process will guide you through the steps of verifying your identification, creating a username and password, updating your contact information, and securing your account. You’ll notice a new design, additional tools, and expanded functionality to help you manage your account once you log in to My Account:

– The configurable, user-friendly homepage will provide rapid access to the information you want to see first.

– You’ll be able to see all the information for both accounts in one spot if you have both a civilian and a uniformed services account. This includes your overall total amount.

– You’ll have the option to use your device’s identification software, such as fingerprint access and facial recognition, to add an extra layer of security when you access My Account from your mobile device.

– If you need tailored assistance, you can utilize our virtual assistant, AVA, to ask account-specific inquiries and connect directly to a Thrift Line Representative for a live chat session during business hours.

The window for mutual funds

TSP participants who want more investment freedom may look into the mutual fund window. You can choose from a pool of over 5,000 mutual funds if your account fulfills specific qualifying conditions. This flexibility comes at a cost, as it does with most mutual funds:

TSP participants who do not utilize the mutual fund window pay a $55 yearly fee to ensure that using the mutual fund window does not increase TSP administration expenses.

The annual maintenance charge is $95

Distributions and withdrawals

The process for requesting a withdrawal or distribution will be more efficient and time-saving with the improvements coming in June:

– We’re providing the opportunity to use electronic signatures and submit many requests online, just like we do with other transactions.

Support choices have been expanded.

With our increased support options, you’ll have more opportunities to have your issues answered starting in June:

– On our website and in the TSP Mobile App, you’ll have 24/7 access to help through AVA, a virtual assistant (coming in June). AVA will provide a secure place for you to ask questions regarding your account and, if necessary, will link you to a live ThriftLine agent through chat during office hours.

Online transactions that are quick and easy

We’re providing new ways to perform most transactions and requests online to save you time and reduce paperwork:

– You’ll be able to request transactions, upload forms and documents, and electronically sign your name in the new My Account.

Other useful information

You’ll be able to submit beneficiary information online through a new tool in My Account or by calling the ThriftLine. There will be some modifications to the way beneficiaries are designated:

– You’ll be asked to confirm beneficiary information once a year to ensure it’s accurate.

– You can easily designate equal distribution to beneficiaries using the online option for providing beneficiary information through My Account, without having to list precise percentages unless you choose to.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Despite the necessity of focusing on day-to-day operational concerns, many firms need help to build a practical and realistic Technology Strategy. The inability to examine essential components of an IT strategy can have disastrous effects on a company’s ability to compete in the marketplace and effectively address infrastructure and data security concerns.

  Technology Leaders are well-versed in industry best practices, and their wide variety of experiences servicing customers of all sizes offers us the benefit of providing you with an informed and impartial perspective to help you find opportunities and avert catastrophes.

We are professionals in assisting loan clients in comprehending the significance of the right software, a solid and secure infrastructure, and a competent support team in achieving overall objectives. So whether you define success in terms of sales, cost savings, risk mitigation, or better company efficiency, we will happily provide a business case for each of our recommendations.

The Thrift Board has determined its objectives by considering the following five visions:

• Our procedures are executed without a hitch;

• We assist participants in making informed decisions;

• We are careful with the money contributed by participants;

• We make the FRTIB a wonderful place to work and an environment in which outstanding work may be accomplished and

• We cultivate fruitful partnerships with those with a stake in the TSP.

The Thrift Board has decided to focus on the following three goals in terms of the consequences that plan participants would experience:

• Make it easier for participants to make decisions by giving information specific to their needs;

• Investigate and put into practice any improvements in plan design and benefits policy; and

• The percentage of participants that carry out a predetermined goal due to FRTIB outreach is increased.

Concerning the achievement of another aim, the provision of services, more time is spent on the participants. The following are the four goals that fall under the participant services goal:

• Raise knowledge about how the services supplied by the TSP compare to those provided by other defined contribution plans, providers, and financial institutions;

• Work in collaboration with employment agencies and payroll offices to provide participants with more seamless service;

• Understand the requirements and expectations of participants and respond to them;

• Open up the opportunity for mutual funds. This task was finished a couple of months ago.

They also wanted the TSP to move toward a managed services strategy, another of their objectives. This shift occurred in May and June, and it needed to measure up to preserve program performance while also maintaining the participant satisfaction that the Thrift Board had set for itself.

 The TSP, as of late, has been more user-friendly and proactive than it was in its earlier days. This contrasts with how it was in its earlier days. Their strategic plan will make it possible for them to enhance the services they provide for the benefit of participants who are both employed and retired.

The Target Date Fund (TSP) employs the IRS Single Life Table to calculate life expectancy-based distributions for participants who have yet to reach the age at which they are obliged to begin receiving RMD payments when those payments commence.

 These participants are eligible to transition to the Uniform Lifetime Table once they reach the age for RMDs, which is presently 72 years old. 

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

The Internal Revenue Service (IRS) evaluates the impact of inflation and other variables each year to determine the maximum contributions for tax-advantaged retirement plans. They have been the same for some years. However, on occasion, the IRS modifies the amount that can be saved to your 401(k) and individual retirement account (IRA) to reflect the cost of living adjustments (COLAs).

The modifications for 2023 are significant. Here is all you should know about 401(k) and IRA contribution limits for 2023 and how to maximize your retirement savings.

What Is the Maximum IRA and 401(k) Contribution?

The IRS increased the annual IRA contribution cap from $6,000 to $6,500 for 2023. The contribution cap applies to all your IRAs combined, so if you have a conventional IRA and a Roth IRA, your contributions to both accounts cannot exceed $6,500. The $1,000 catch-up payment for people over 50 is not subject to COLA increases.

The 401(k) contribution cap will rise to $22,500 in 2023 from $20,500 in 2022. The Thrift Savings Plan (TSP) of the federal government, most 403(b), and some 457 plans are all subject to this contribution cap. The catch-up payment for people over 50 increased from $6,500 to $7,500.

How to Understand IRA Income Restrictions

You can frequently deduct contributions from your income if you have a conventional IRA. However, depending on your income and tax status, the ability to deduct your IRA contributions goes away if you or your spouse participate in a retirement plan at work. You can still deduct, but not fully, when your income reaches a particular threshold. You cannot deduct any IRA contributions after you have reached the top phase-out limit.

The income limitations in 2023 are:

• For single taxpayers: phase-out starts at $73,000 and ends at $83,000.
•  Married taxpayers making payments to a spouse’s workplace plan: phase-out starts at $116,000 and ends at $136,000
•  Married taxpayers who do not have a workplace plan but whose spouse does: phase-out starts at $218,000 and ends at $228,000.

You have a stronger chance of being able to deduct payments to an IRA if you have a corporate retirement plan, most likely a 401(k), which encourages you to use more than one kind of tax-advantaged retirement account.

It’s essential to note that for 2023, the income thresholds for Roth IRA contributions have also been slightly raised.

Depending on your income and tax status, you can make contributions to a Roth IRA with income phase-outs:

• Individuals or heads of households: $138,000 to $153,000
• Married couples filing jointly: $218,000 and $228,000

For Roth IRA contributions, the income phase-out range remains zero to $10,000 if you’re married and filing separately.

Limits on 401(k) and IRA contributions: Using All Available Means

There is at least one benefit to living in inflationary times if you can take advantage of the higher IRA and 401(k) contribution limits and the additional catch-up amounts for individuals over 50.

You can boost the amount you set aside if you aren’t making the maximum contribution to your retirement account. Discuss with your human resources department the possibility of having a small portion of each paycheck deposited into a 401(k) or IRA. Even though it might not seem like much now, compounded returns over the years can significantly impact the performance of your whole portfolio.

If you are eligible, another strategy is to think about funding a Health Savings Account (HSA) to benefit from those tax advantages. Your HSA can also help you cover medical expenses when utilized as a part of a retirement plan; it may even act as a backup IRA after you turn 65.

Taking charge of your overall retirement plan

Consider consulting a retirement expert to learn how to maximize your future based on the types of accounts you are eligible to contribute to. In some circumstances, a plan that utilizes a 401(k), Roth accounts, and both traditional and Roth accounts can improve the overall tax efficiency of your retirement portfolio.

You can ensure that your retirement goals align with your other financial goals by taking a holistic approach. Think about talking with a retirement expert to get their opinion on your strategy and help you stay on course.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Many retirement plans fail because of seemingly minor details that have a significant impact. This article summarizes ten such minor details listed below, then follows up with in-depth articles on each.

1. Just Show Up

The days of “putting in my time” and having a successful financial life and retirement are long gone. This is especially true of the problematic concept of the Minimum Retirement Age (MRA). You’ll need an excellent strategy to make the most of your benefits.

2. Pay Your Bills First, Then Save if You Can

No! That should be reversed. It would be best if you had a barrier to separate your way of life from your income. Throughout my career, those who came out on top created and maintained that wedge. They never lived above their means; they were always slightly below. In this manner, raises and bonuses propelled them forward.

3. Borrow for Tomorrow

Loans from your tax-deferred savings account (TSP) should be your last option. However, experts believe this practice stems from a faulty cash flow plan. Note this right now: debt is not your ally. It’s a tool, but it’s not a solution. Managing and eventually eliminating installment debt is a trait I see in financially successful people regularly.

4. Silo Save

TSP is fantastic, but it is not a strategy. The most successful retirees I’ve seen have assets in traditional plans like TSP. However, they also have money in non-retirement assets. No, I don’t mean a few thousand dollars in a savings account. Once you’ve maxed out your TSP, start putting money into a regular investment account.

5. TSP Underfunding

Please don’t roll your eyes at me. Daily, I encounter individuals who agree with me that those who maximize their contributions are in the minority. A sizeable TSP balance is required if you want to retire before age 65.

6. Lose Your Equilibrium

That one was too simple and does not refer to market fluctuations, but to your TSP allocation. You can’t just set it and forget, even if you’ve established an appropriate asset mix across your TSP’s five core funds. Now, I’m not talking about trying to steer excessively. If you’ve determined that you should have 40% of your portfolio in a C fund based on your age and risk tolerance, don’t forget to review it once a year.

7. Ineffective TSP Strategy

I can hear you sigh. Twenty percent in each core fund or a small amount in all funds (yes, including all lifecycle funds) is not a winning strategy. Neither is it entirely in C (because it’s been doing so well.). Your asset allocation should accurately reflect your ability to tolerate risk in good and bad times. It is disastrous to try to time the market or, even worse, to change your investment strategy based on “what’s happening.”

8. Don’t Forget Your Umbrella

That was a no-brainer. This doesn’t mean getting wet; it means not having enough liability insurance. Nothing can derail your retirement plans more quickly than an accident followed by an adverse judgment. Check your auto and homeowners’ insurance limits today and request a quote for an excess liability umbrella.

9. Ignore the Risk of Long-Term Care

Okay,  it’s a dull subject, and the premiums keep rising (even the Fed plan). However, it remains a problem. You must assess your resources and obligations and plan a working strategy ahead of time. Will you look for in-home care? Do you think you’ll need a facility? Right now is the time to ask the tough questions! TSP balance is not a panacea.

10. Neglect the Federal Employee Group Life Insurance Plan (FEGLI)

The FEGLI is one of the best employer plans available. However, this does not imply perfection. For example, an employer plan must charge all employees the same rates for optional coverage based on age (the unsubsidized part). That means that smokers and nonsmokers, people in good health, and those in poor health all pay the same. Consequently, these plans become significantly more expensive as we age. It’s not a joke. Shopping around and comparing private sector options can save you tens of thousands of dollars over your career. You can contribute every penny you save to your retirement.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].