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We have had a tremendous amount of questions from Federal Employees about participating in ROTHs, whether it be in the TSP or the private sector using a ROTH IRA.
Tax planning is a critical component of your financial plan so we want to make sure that we are getting the fundamentals correct. Let’s start by discussing definitions so we understand what the rules of each are.
This is your money that you are investing in your retirement account. To make a contribution to a retirement account, you and your spouse must have earned income.
Money earned from paid work. This includes wages, salaries, tips —whatever monies come from active employment. Perhaps even more importantly, what does not count as earned income? Retirement income like:
Those are amongst the top disqualifying earned income sources for Federal Employees when it comes to determining contributions to retirement accounts.
If you are trying to find precise, clear information, you want to really narrow down the question that you are asking and more importantly, why you are asking.
In this case, we believe that Kim is trying to find the definite rules for ROTH contribution limits from earned income. In that case, we would trust few sources.
The definitive source for answering income qualifications for contributions to a retirement account will always be the Internal Revenue Service.
Now, reading tax code is not always “fun” for people but we will say that the IRS has made tremendous strides in updating their website to be more user friendly and at least provide helpful context to understanding the tax codes.
IRAHELP.com offers another great source for retirement qualifications. This is a private sector page hosted by Ed Slott. Slott provides in-depth information about retirement accounts and taxation.
Your retirement planning is too important for guess work. As a Federal Employee you have unique benefits and really want to ensure that you take time to get good, quality information and ask questions.
“Hello, I am a retired 58 yr old federal employee that retired after 34 years of service. My wife and I are looking at buying a trailer and horse camping
“Mr. Shilanski, Social Security Survivors Benefit question. I am under the FERS program and I plan to retire late this calendar year. I am 65 yrs old. I will have
I worked for the federal govt for 11 years. I was born in 1960 January. I was 56 at the time of separation. Need to know if postponement to a
At age 59 1/2, I would like to use a TSP one time withdrawal to pay off a mortgage then eventually transfer the balance to a IRA when I retire
Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.
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