Retirement Planning

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Strategies for Roth conversion? Delay pension?

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kedward777		#1 Posted : Saturday, December 5, 2020 9:24:06 AM(UTC)
Rank: Member Groups: Registered Joined: 3/10/2014(UTC) Posts: 29		Hello, I am married, with 37 years FERS service, age 56. We have $200k cash in savings and $150k in ROTH ira's and $28k in HSA. We have 750k in TSP 401k. My FERS pension will be around $54k yearly. My SRS will be around 20k. My SSA at 62 will be around 24k, with my older wife's SSA around 10k at 62 (or at 66.5 around 17k). Strategy 1. Not that I would, but if I retire at 57: $54k pension + $20k SRS + $10k wife's SSA = $84k which then puts us right around the 12% tax bracket. I figure $84k MINUS the deductions of $30k (married standard + HSA contribution) would drop us to $54k+/- taxable income --which then would allow us to either withdrawal up to $30k from TSP and/or to transfer to our ROTH ira at the 12% tax rate. I think the above strategy would allow us to live well (we own our home, zero debt), and minimize taxes on the tsp funds, BUT my heirs would be stuck with a tax bill. PROBLEM I TRYING TO SOLVE: Ideally, I would like to get as much out of the TSP 401k and into a roth as I can to make it easier on my heirs, yet in a way that makes sense financially to me. Maybe I just bite the bullet early, and transfer large chunks of the TSP 401k to roth? Since I have cash on hand, is here any option to defer the pension payout to later? I know I can delay SSA, but not SRS. Any ideas? Thank you! Edited by user Saturday, December 5, 2020 9:26:17 AM(UTC) \| Reason: Not specified


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roger.d		#2 Posted : Saturday, December 5, 2020 5:59:24 PM(UTC)
Rank: Senior Member Groups: Registered Joined: 8/25/2016(UTC) Posts: 5,140 Location: Midwest Thanks: 137 times Was thanked: 972 time(s) in 790 post(s)		I believe your only option is to convert an amount to take you to the level of taxes you want to pay based upon the pension/SRS/SSA you listed. You don't have an option to reduce your income. "if" you didn't meet the criteria for a full pension (30yrs/MRA, 20yrs/age 60, 5yrs/62) you could do a postponed pension until you meet the times to avoid the 5%/yr penalty. During that time you could to the Roth conversions. BUT, you qualify for a full pension. I can not find anything about postponing a pension under this criteria. Also, if you could "postpone" the pension, you would not be eligible for FEHB. Until you start receiving the pension. Except you could carry COBRA coverage for 18 months. That is expensive and may not make financial sense. You might want to consider transferring most/all of your TSP to a traditional IRA. This will avoid the hassle of getting your spouse's signature notarized every time you want to make a change to your withdrawals. I don't believe you can make a transfer from a traditional TSP to a Roth IRA. You would have to go tTSP to tIRA, then convert to a Roth IRA. Good luck.
		Those who are, know those who are not. If you think they are after you, what did you do wrong?


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