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[AginMS]

So if you did postpone taking FERS, even for 3-4 years, could you move even more into your Roth and/or draw living expenses off your tax deferred up to the 15% marginal tax rate? This would allow you to maximize the capital gains (pay 0% tax) and grow your FERS at 5% per year.

I'll be grappling with a similar decision when I turn 57 or 58. I'm still thinking through all my options.

[Lawrencewendall]

Quote:

Originally Posted by AginMS So if you did postpone taking FERS, even for 3-4 years, could you move even more into your Roth and/or draw living expenses off your tax deferred up to the 15% marginal tax rate? This would allow you to maximize the capital gains (pay 0% tax) and grow your FERS at 5% per year.

Can you elaborate? It's all in tax deferred so I don't think capital gains comes into play. It's all seen as income. Haven't read anything about deferring FERS. Will look into it. Sounds like it may be a plan. Thanks.

[AginMS]

Quote:

Originally Posted by Lawrencewendall Can you elaborate? It's all in tax deferred so I don't think capital gains comes into play. It's all seen as income. Haven't read anything about deferring FERS. Will look into it. Sounds like it may be a plan. Thanks.

I apologize, I was mixing up capital gains with retirement income. Still though, by postponing your FERS income you would have room to move more of your tax deferred into a Roth while reducing your FERS haircut over your lifetime.

Here is a link that explains deferring and postponing FERS (they are not exactly the same things).
http://m.govexec.com/pay-benefits/re...stponed/24758/

Also, there is an OPM pamphlet you can download on the subject.

[Lawrencewendall]

Quote:

Originally Posted by AginMS So if you did postpone taking FERS, even for 3-4 years, could you move even more into your Roth and/or draw living expenses off your tax deferred up to the 15% marginal tax rate? This would allow you to maximize the capital gains (pay 0% tax) and grow your FERS at 5% per year. I'll be grappling with a similar decision when I turn 57 or 58. I'm still thinking through all my options.

Good advise. Found out yesterday that FERS is not COLAed unless deferred till 62. That will free up room to move more to a ROTH AND eliminate the 30% early penalty. I could always use some of the ROTH if the the missing FERS doesn't meet the bills. Only talking 10k-15k. Thanks again!

[cnocmmz]

Quote:

Originally Posted by Lawrencewendall Been on here around a month and have learned so much in that time. Retired military (TRICARE For Life), pension (COLA adjusted), VA disability (COLA adjusted), DW getting SS disability (COLA adjusted) and currently a Fed maxed out in my pay scale (J Band) eligible to retire in 2021. Here's my plan: I will be FIRE at 57 (almost 5 years from now, Dec 2021). Income from all sources will be around 64K. I know what my current expenses are (63k) by looking at my last 3 years of spending captured in a spreadsheet. My tax deferred investments will be around 700k in 2021. I plan on converting a portion of my tax deferred every year to a ROTH. The amount converted will be the difference between my expenses (63K) and the max ceiling to stay within the 15% tax bracket (currently 88k, 75k bracket plus 13k standard deduction for married filing jointly). I estimate i can convert about 400-500k to ROTH (paying 15% taxes on it) by the time RMD kicks in. The RMD will continue to fund my ROTH until the tax deferred is gone or I am. Am I missing anything?

Overall you're looking good :-) . Myself and DW are about in the same boat. Retired Mil, (enlisted) turning 57 in July, presently a gov employee (GS12)with about 750K in assets. Majority of those assets are in tax deferred as well, and only about 100K or so in a Roth, rest in TSP, DW's 401K and an insurance annuity. The fortunate thing like you, we have a good amount of guaranteed income coming in if we walked away tomorrow (about 80K.. net), and of course at age 62-SS if I should need it. Presently planning on retiring next Dec with only 9 years with the Gov so I must defer my small (6K) annual pension until 62. We still have a mortgage and normal living bills , but overall, at 62 should be looking at 100K annually without taking investments. I guess our biggest concern will be the tax guy knocking on our door.... I need to either convert more to our Roth during retirement or not sure what else we can do??

[cnocmmz]

Quote:

Originally Posted by AginMS So if you did postpone taking FERS, even for 3-4 years, could you move even more into your Roth and/or draw living expenses off your tax deferred up to the 15% marginal tax rate? This would allow you to maximize the capital gains (pay 0% tax) and grow your FERS at 5% per year. I'll be grappling with a similar decision when I turn 57 or 58. I'm still thinking through all my options.

I think the answer is "no"! Why, because I don't think you can contribute to a Roth if you are not working? I may need to discuss with a tax investment professional next year.

[Lawrencewendall]

My understanding is that it would not be a contribution but a transfer from 401 to ROTH which has no restrictions as long as yor're willing to pay the income tax on it.