To roll over or not to roll over? That's the question. Hi Floyd Shilanski here with Plan Your Federal Retirement, this time of the year, with taxes being filed and all the craziness going on, we get a lot of questions about Floyd if I retire this yearwith should i do with my TSP, many times when we have other federal workers, not only do they have a TSP, but spouse may have a 401 K plan as well. Do you leave it with the employer, do you leave it in TSP, or do you make
changes? All these things are determined by how are you at managing your money and the TSP. We love it to accumulate dollars is one of the lowest costing vehicles to do that, and it comes down to your paycheck, which I really like a lot. Same way with 401 K plans. Now, with 401 K plans, you have some other options. Not only might you have a mutual fund in the stock, you may also have an annuity tucked in there as well. How do you do
those things? One of the things that you always want to consider, whether it's a TSP or 401 K plan, is never take distribution of the check you want to do a transfer, all right, if you go to move to an IRA in the TSP, transfer it to an traditional IRA, as well as a 401 K plan, whether it's Fidelity or Schwab or Lincoln or Equitable or Vanguard, all right, you never want to do what is referred to as a rollover,
why? Because, when you roll over from a retirement plan, the plan administrator, whether it's black product at TSP or Vanguard or Schwab or Fidelity or whomever they're required by law to withhold 20% and send it to the IRS. Now, real quick story, years and years and years ago, when I was doing this, we had an individual retire from an oil company, right, very large, 401 K plan. We signed all the documents, and she says, I'll take care of it fine. We instructed her that we need to
have it transferred, right? She went on holiday, and when you roll something over, you have 60 days to redeposit the funds, so she went on and she took off, and then she then it got rejected for some reason, it always happens and answer this question, didn't check the right block, and the money was sitting there and sent to her in a check. When the money came to her on the 58th day, all right, she realized she had the check.
Well, two things, and I'm going to fictitiously say we rolled over $100,000 she got a check for 80, why'd she get a check for an 80? The required they, being the fund administrator, to send 20% to the IRS so she had $80,000 we could put into her new IRA, avoid or delay paid income taxes on it, but she
still had to pay taxes on the $20,000. This is complicated sometimes, to us or to a good advisor, it's simple, we do this constantly all the time however, for the first time, person retiring, moving things around, make sure you're getting competent advice, what you don't want to do is get a surprise tax bill, or surprise you thought you had $100,000 but you only have 80, and now you have to come up with $20,000 to replace
it. Floyd Shilanski with Plan Your Federal Retirement, if you have more questions, talk to a competent advisor, or check a box on YouTube, and we'll be happy to answer your questions, till next time.