Federal Diary Live With Stephen Barr Washington Post Staff Writer Wednesday, Nov. 14, 2001; Apex EST
At a time aback Wall Street stocks are on the roller coaster, do you charge admonition for the Austerity Accumulation Plan’s “open season” that starts this week? Do you accept questions about planning for retirement?
Paul A. Yurachek, a certified banking planner, will booty questions and comments at apex Nov. 14 during a appropriate copy of Federal Diary Live, which is hosted by Stephen Barr, The Post’s Federal Diary columnist.
Yurachek is a cofounder of Dennis M. Gurtz and Associates, a assay of American Express Banking Advisors Inc., in Bethesda, Md. Yurachek began his able career as an Internal Revenue Annual agent. He afterwards formed for an accounting close afore allowance anatomy Gurtz and Associates in backward 1982. Yurachek accustomed his bachelor’s bulk from the College of William and Mary and a law bulk from George Mason University. He has been accepted to practice afore several courts, including the U.S. Tax Court and the Supreme Court. He speaks on banking and tax planning to abundant federal agencies and able organizations, including the FBI, the Federal Executive Institute and the American Society of Association Executives. In 1991, he served as admiral of the National Capital Chapter of the All-embracing Association for Banking Planning.
The Federal Diary cavalcade appears in The Post Sunday through Friday. Steve Barr takes it alive at apex each Wednesday to analyze capacity of absorption to federal advisers and retirees.
The archetype follows.
Editor’s Note: Washingtonpost.com moderators absorb beat control over Alive Online discussions and accept the best accordant questions for guests and hosts; guests and hosts can abatement to acknowledgment questions.
Stephen Barr: Paul, acknowledgment for authoritative time for us today. As you know, the bazaar has rebounded to pre-Sept. 11 levels in contempo weeks. Still, abounding companies address that their third-quarter balance are activity to abatement abbreviate of Wall Street’s expectations. As you additionally know, abounding TSP participants are heavily invested in the C Fund, the accepted banal basis fund, which has been a also-ran in contempo months. What should a TSP broker accede aback aggravating to appraise this roller-coaster market?
Once again, a appropriate acknowledgment for administration your insights with us.
Paul A. Yurachek: You should not be aggravating to appraise the bazaar but should be aggravating to actuate aback you will absorb the money. If it is a continued time from now what happens today is about irrelevant. If it is anon that you will be spending it , afresh you should apparently be added bourgeois in your approach. bethink you consistently charge leave yourself time to balance afore you charge the money.
Takoma Park, Md.: What abroad can I do? I started as a GS-5, and the minute I could invest, I did. Now I’m a GS-9-5, accept been socking abroad the best acceptable aback 1992, and as I’m adolescent (34 on Monday!) I am absolutely invested in the C Fund. I additionally accept some IRA’s that are languishing, some appropriate banal as well, I’m bent to unload my acclaim agenda debt — I consistently pay at atomic bifold the accounts charges, usually more, and alive on accepting my mortgage aggregation to accord me a lower allotment rate. I’m a acceptable customer, on time, added appear arch type. Nine-year-old car in accomplished condition, that array of thing. Any suggestions? (No, I don’t accept any added added money to put into the IRAs. I go out to banquet maybe three times a year, new cine two times a year (for the kids), austerity abundance clothes afore they were chic, etc.)
Paul A. Yurachek: You are accomplishing a abundant job already. You assume to be on top of things. Although you accept a continued appellation time horizon, you adeptness accede abetment off from 100 percent c-fund to conceivably 70-80 percent with the activity to G. This gives you a shock cushion if the markets about-face adjoin us as they accept the aftermost eighteen months.
Buffalo, N.Y.: I apprehend to retire in about 4 years (or eventually if aboriginal retirements are offered). Which would be the smartest armamentarium to advance my TSP in, because what is activity on in the world? I am in CSRS and put the max bulk in and currently put 50 percent in the C Armamentarium and 50 percent in the G Fund.
Paul A. Yurachek: Refer to my aboriginal answer. It all depends on aback you will be spending the money and what anatomy of payout you will take. If you leave it invested at the TSP afresh conceivably article like 60 percent C and 40 percent G would accomplish senses. If you plan to buy an annuity, afresh I would get it all to G a year afore I plan to acquirement the annuity. Of course, all the aloft is abased on what added assets you adeptness accept alive for you.
Burke, Va.: Any admonition for a distinct TSP broker with no dependents? I’m anxious that the C Armamentarium will not be in the atramentous afresh for months and am because alive my money around.
Paul A. Yurachek: Distinct and what age? also, the c armamentarium was “in the black” aftermost ages and is on its way to accomplishing it afresh this month. You charge to be actual accurate about aggravating to time the market. Accepting out is easy. Aback you will get aback in? I frequently get the answer” aback it goes aback up” This is backwards investing. You appetite to buy low and advertise high.
Springfield, Va.: I’ve heard that ample cap basis funds like the C Armamentarium are acceptable investments, and that babyish cap basis funds like the S Armamentarium should be abhorred because they don’t do as able-bodied as actively managed babyish cap funds. Accept you any thoughts on this? Thank you.
Paul A. Yurachek: I accede with your statement. I adulation the C,F, and G funds as they are affable adjoin indexation. The S&I funds accept historically underperformed managed funds. Thus, if you accept added money to invest, I would acclaim application managed babyish cap and all-embracing funds. If this is the abandoned advance money you have, afresh a little should be in anniversary of these funds.
Washington, D.C.: Aback one retires and chooses to cycle over their TSP into a alternate fund, can that alternate armamentarium be a tax-free fund? Thank you.
Paul A. Yurachek: It can but should not. Any money that comes out of an IRA isd absolutely taxable, behindhand of he advance from alpha it came.
Arlington, Va.: Please explain TSP C Armamentarium “shares” that we allegedly are purchasing via article alleged dollar bulk averaging. Aback we are never told how abounding shares we own and aback the bulk of a C armamentarium “share” varies, it is actual ambagious to me. How do we apperceive aggregate is actuality counted adequately etc.? What happens aback you borrow money from your C armamentarium accompanying to “shares” and advantageous it aback also? THANKS!
Paul A. Yurachek: You do not acquirement shares but rather a allotment affairs in the fund. Thus, a dollar invested today buys a above allotment than six months ago because the armamentarium is down. Aback you borrow, you borrow dollars, not shares and you accord dollars not shares. As for fairness, at some point you accept to accept some bulk of trust. Aback the Austerity Board is overseen by Congress, I would not anguish too abundant about it.
Ft. Lauderdale, Fla.: I am 59 years of age and appetite to apperceive the best way to assure my austerity accumulation (under FERS). I accept already absent about $10,000 this year. Thank you.
Paul A. Yurachek: Seemy antecedent answers — Assure it from what? It all depends on aback you are activity to absorb it. The safest armamentarium is G and it’s ante are low and apparently branch lower. Thus, you assure the dollars but are not adequate adjoin inflation. The best acknowledgment is to alter amidst the funds so that article is consistently activity up and conversely, article will additionally be activity down.
Silver Spring, Md.: I am 25 and allotment activity insurance. What is your assessment of Variable Activity Insurance?
Paul A. Yurachek: For addition as adolescent as 25, I would about consistently acclaim that you use appellation allowance rather than application your allowance as an advance vehicle.
Washington, D.C.: I am 60 and one bisected years old and accept been with the federal government about bristles and one bisected years. I adeptness retire at 62 and 8 months, or 65 or 67 — I’m not abiding — apparently afterwards than sooner. I appetite to access the TSP and accord the maximum. How can I get best balance afterwards annoying and affective funds about in these economically ambiguous times with such a abbreviate lifespan in the TSP? Should I aloof put it all in the F Armamentarium and leave it alone? Should I abstain the C Fund? What’s the best and best simple way to handle this? Thanks.
Paul A. Yurachek: I would tend to put conceivably 60 percent in the G Fund, 20 percent in C and 20 percent in F. This is a actual adamantine catechism accustomed your ambiguity about aback you will charge the money. If you aloof don’t appetite to worry, use G. The F Armamentarium is at accident now because ante are so low. Aback the government begins borrowing money to accounts the airlines, NYC etc, ante will acceleration and F will fall.
Atlanta, Ga.: I am 41 years old, I plan to assignment until I am 62, I currently accept $71,000 in my TSP, I advance 11 percent into the C Armamentarium and currently I accept the afterward allocations: G: 30 percent, F: 30 percent and C: 40 percent. What should my allocations be?
Paul A. Yurachek: At 41, I would accept at atomic 65-70 percent in C and the draft in G or a aggregate of G and F.
Arlington, Va.: Accustomed this week’s alike blast in New York, and the draft that delivers to airline companies, will there be a ripple to the TSP? In added words, how abundant is the C Armamentarium afflicted by such alfresco events? I apperceive you said beforehand to avoid accepted events, but the bazaar doesn’t.
Paul A. Yurachek: The C Armamentarium is in the S&P and I don’t apperceive every aggregation that’s in it. Actually, airline stocks accept recovered able-bodied in the aftermost two days. You are apparently activity into too abundant abyss in aggravating to bulk out what aftereffect assertive contest accept on apparatus of the S&P.
Middletown, Md.: Should we re-finance our home if we accept had our mortgage over three years?
Paul A. Yurachek: The catechism is not how continued you accept had the mortgage. The simple acknowledgment is : What does it bulk to refinance? How abundant do I save a month? How abounding months afore I breach even? If the acknowledgment is beneath than the time you intend to breach in the house, afresh it apparently makes sense. If the breach alike aeon is best than the aeon you intend to stay, afresh don’t do it?
Marietta, Ga.: I am acceptable for retirement with 28 years annual and still low brand GS7. I appetite and charge to retire due to ancestors affliction but we cannot alive on what we would accept advancing in. I invested backward in TSP and backward in the G Fund. I am not a gambler. Is it too backward to alter my options?
Paul A. Yurachek: This is a boxy one. It is not too backward as you could reallocate the money aural the TSP and afresh booty a payout based on your activity expectancy. The accident actuality is that it would arch south on you and you could get beneath one year than the antecedent year. If you accept in the allotment of the banal bazaar over time, I would set it up at 60 percent C and 40 percent G and booty a payout over activity expectancy. You charge about admit that there is accident complex here.
Arlington, Va.: Conceivably this would be a acceptable time to admonish TSP contributors that the best addition goes up in January to 7 percent (CSRS) and 12 percent (FERS), and that to booty advantage of the new, college banned you charge book a new acclamation anatomy TSP-1 during the accessible season.
Paul A. Yurachek: Remember- Accessible division is now. You can access your contributions to 7 percent CSRS and 12 percent FERS. If you can acquiesce it, do it!
Crystal City, Va.: I’m a adequately new government agent (1 year aing month) and abandoned enrolled in TSP this year and am advance 11% of my salary. I’m 30 years old, married, a babyish on the way, a home buyer and accept basal acclaim agenda debt. Also, I accept abundant law academy loans (they’re appointed to be paid-off in 20 years) so added advance seems out of the question. How should I be allocating my TSP funds? I’m attractive for abiding gains. Thanks.
Paul A. Yurachek: You should be heavily abounding to the C fund. I would go 80 percent C and 20 percent G. Also, my son is a advocate attractive to backpack here. Do you accept any jobs for him?
Washington, D.C.: I am over 50 and accept that beneath the new tax law I can advance added money into the TSP as a “catch up”. Do you apperceive how I do this? At my bacon I would be over the absolute if I invested at the best percentage. Thank you.
Paul A. Yurachek: The new tax law allows individuals over 50 to advance an added $1,000 aing year into a 401(k). However, the TSP has to alter the plan to acquiesce it and, as of now, I do not accept they have. You should antechamber for it.
McLean, Va.: If I cycle over my TSP to an IRA aback I retire, what is the aing affair to the G Armamentarium I can acquisition alfresco the TSP?
Paul A. Yurachek: Abundant question. There is no carbon of the G Armamentarium in the alfresco world. It is a absolutely altered advance in that it gives you the allotment of boilerplate bonds afterwards any accident to principal.
Alexandria, Va.: I’m a woman, age-old 51, bedmate age 53. I am a Foreign Annual administrator and will retire in two years. I achievement to not blow my TSP money for about 10 years afterwards I retire; at that time it should be about $800,000 or so. Accomplishment question: as my bedmate is earlier than I, should I get a survivor annuity, or should I booty the best payments and buy activity allowance on myself to accord my bedmate assets if I predecease him? (Family history: women about alive until high 80’s, aboriginal 90’s.) Is there a “step up” affection such that if I got a survivor benefit, but my bedmate dies first, would my accomplishment footfall up to the full, distinct bulk or would it abide at the 50 percent to survivor level?
Paul A. Yurachek: I anticipate you should booty the survivor annuity. Reasons: If you don’t and your H is on your bloom insurance, he loses it; The bulk of the survivor annual is pre-tax. Thus it abandoned costs you 2/3 of the declared 10 percent. There is a footfall up. If your survivor predeceases you, your alimony switches aback to that of a distinct person. There are added affidavit but these are the capital considerations.
Chantilly, Va.: My wife and I are retired, both CSRS. I accept 100 percent C Armamentarium , and she has 75 percent C and 25 percent G Fund. Should we bond out on the C Armamentarium and stop our present losses?
Paul A. Yurachek: Aback will you absorb the money? If the time anatomy is added than bristles years afresh I would go 60 percent C, 40 percent G and let it ride. If beneath 5 years I would about-face the aloft number.
Hi Dad: I’ve heard that advance in one’s daughter’s apparel is a aces idea. Any thoughts on this? If you agree, I’ll be assured a assay soon. Acceptable luck today! Emily
Paul A. Yurachek: This is from my daughter, Emily. Wardrobes are depreciating assets and not acceptable investments. But for her, annihilation is OK.
North of Town: Paul, my wife is planning to leave government anon to breach home and accession a ancestors (at atomic for a few years). She is covered by FERS and will accept about eight years of service. We are debating what to do with her TSP account. We apperceive that she has the advantage of abrogation it in the TSP or rolling it over into an IRA. Our catechism apropos the abandonment advantage for essentially according alternate payments based on activity expectancy. Our compassionate is that by electing this adjustment of withdrawal, we would not accept to pay any tax amends for aboriginal abandonment (e.g., above-mentioned to attaining age 59-1/2). How do we go about artful what that would construe to in agreement of a account payment? Does this complex the acquirement of an annuity? Does the money abide to acquire a acknowledgment while it is actuality fatigued down? Is activity assumption based on her activity abandoned or are there survivor options? We accept lots of questions. Bottom band is we anticipate we will charge to abjure the money and don’t appetite to pay a amends to do so. Our retirement approaching is defended with my own TSP. Acknowledgment for any admonition you can offer!
Paul A. Yurachek: Start by activity to TSP.gov. There is a abundance of admonition there. The abundant payments charge aftermost at atomic 60 months and end afterwards age 59 1/2. There would be no penalty. The money does acquire as continued as you do not acquirement the annuity. the adolescent you are, the abate the payments. I would be accurate because the payments adeptness be so low that they aloof get absent in the shuffle. You can use her activity abandoned or assorted collective and survivor options.
Alexandria, Va.: This is the woman anxious with the survivor annual catechism again. I anticipate your acknowledgment referred to the survivor annual from the basal pension, not to the accomplishment which could be purchased with the TSP money. Can you affirm that the TSP annuities additionally accept the addition feature? Thanks.
Paul A. Yurachek: The TSP does not accept a footfall up option. The accomplishment is anchored unless you accept the bulk of active feature. I do not like the affection because, the bulk annual is aloof too abundant for my liking.
Somewhere, USA: Hi, I am 25 and new to the federal government. I accept yet to advance in any retirement program. The arduous admeasurement of it all makes it alarming for addition new to the government like me. Can you accomplish suggestions for area I can do assay on the altered funds? With accessible division alpha tomorrow, I’d absolutely like to get complex in this, but am balked by it all.
Paul A. Yurachek: Go to TSP.gov. Afresh accomplish a accommodation and alive with it. They are not irrevocable. You can change your balances about whenever you appetite and your addition allocation every six months during accessible season. Don’t get bent up in aeroemism by analysis. Aloof do it as they say in the Nike commercials.
Fairfax, Va.: I aloof apprehend your acknowledgment advertence that bodies like me who are over fifty can’t do the t up payments in TSP because the plan has not been amended. I’ve been told, however, that we can access the bulk we put in a accepted IRA in 2002 and additionally do t up payments on top of that. Is this true? If I am over 50, what is the absolute bulk I can accord to my IRA in 2002 and beyond?
Paul A. Yurachek: I accept it is $3,000 for the IRA in 2002, added an added $500 catch-up.
Washington, D.C.: How does/would the catch-up-over-50 assignment if your 12 percent would put you over the max? Thanks.
Paul A. Yurachek: If there is one, the t up is on top of the limit. Thus aing year if accustomed you could accord $12,000.
Bethesda, Md.: Afterwards account Stephen’s cavalcade today, I went to employeeexpresss.com to access my TSP addition to 12 percent and it was not an option. I currently accord 11 percent (under FERS). Did I alter the column? Thanks.
Paul A. Yurachek: No- It starts tomorrow.
Alexandria, Va.: With the allotment aloft to 12 percent, has the dollar amount aloft as well? I accept the dollar absolute is $11,000, is that correct?
Paul A. Yurachek: Yes
Atlantic City, N.J.: I am a FERS agent who will apparently retire aural the aing bristles years. Could you accord your assessment on the assorted choices accessible to me, e.g. annuity, agglomeration sum, IRA rollover?
Paul A. Yurachek: It depends on who you are. If you are an investor, a rollover may accomplish sense. Agglomeration sum usually after-effects in advantageous taxes afore they charge to. Bethink — Taxes are like accomplished wines, they should not be paid afore their time. The accomplishment makes faculty for addition who aloof wants a paycheck and doesn’t appetite to anguish about the investments. It makes a lot of faculty for distinct bodies with no brood or dependents.
Hyattsville, Md: I am backward aing year. Is there a way to alteration the TSP in 2 to 4 according amounts to an IRA? I can’t adjudge whether to leave it or alteration all.
Paul A. Yurachek: I accept that it is an all or annihilation accord but that may be alteration starting 1/1. Go to TSP.gov to acquisition out.
Stephen Barr: Paul, I’m aggravating to reflect a grab bag of questions that accept appear in — all focused on the catechism of best in the TSP program. Some TSP participants are balked that their retirement affairs does not action as abounding alternatives as best private-sector 401(k) plans. According to one abstraction that I’ve read, the boilerplate 401(k) has at atomic 10 options. Our questioners point to several advance funds that are currently abiding amid 6 percent and 11 percent on contributions. Accustomed what we apperceive about the markets over the aftermost year, are these questioners appropriate — does TSP charge to augment its advance options?
Paul A. Yurachek: Frankly, I anticipate 5 is enough. Over time you accept the best of Growth and assets Stocks (C), Growth stocks (S), All-embracing stocks (I), Bonds (F) and s abiding amount Fund(G). Bodies appetite added options to drive themselves nuts.
Arlington, Va.: Thank you so abundant for all of your smart, complete admonition today. I’m a 26-year-old federal agent and accept been accidental to the TSP aback I was aboriginal acceptable bristles years ago. I accept 100 percent in the C-fund, which has been appealing boxy this accomplished 1 1/2 years, but as my Dad says, I’m aloof affairs stocks on auction appropriate now (he’s additionally the aforementioned actuality who told me to put as abundant into TSP as anon as I could or abroad I was giving money abroad — astute man!).
Paul A. Yurachek: Dads are consistently right. I agree.
Sterling, Va.: Sir, my wife afresh anesthetized away. I am 43 with a 4-year-old son. We accept a rental acreage and I don’t apperceive what to do with it. We accept 20 years larboard on an 8 percent mortgage. The rental assets currently is a ablution with the fees, etc. Should I pay it off (we accept a mortgage on our own home as well) and accumulate the rental funds advancing in, advertise it (little to no profit), or refinance and accumulate it — afresh with the rental income? Abounding thanks.
Paul A. Yurachek: Boxy question. If you pay it off, your clamminess is angry up in the house. If you don’t pay it off and authority it, you accept the obligation. This is absolutely abased on your assets and adeptness to cope with the accent of a rental property.
Stephen Barr: Once again, we’ve run out of time today. Acknowledgment to all of you who beatific questions and e-mails for this altercation group. A big acknowledgment to Paul Yurachek for giving us new means to attending at the TSP and our advance decisions. See all of you aback actuality at apex aing Wednesday. There will be no appropriate theme, aloof the accepted chargeless for all.
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