#23 – Draw Down, Suspension, Roth Dump

Draw down, suspension, and ROTH dump all on today’s Fednobabble.com. This is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com.

Welcome. I’m Cassie Knight and we’re here to answer your questions on today’s Fenobabble.

I’m Kevin Jones. And let’s take a look at question number one. If I draw money from Social Security, almost make Social Security sound like a bank. If I draw it from the Social Security bank, how much money will he take away from my retirement? If I draw money from Social Security, how much money will they take away from my retirement?

None. I mean, when when when when you say retirement, if we’re talking about pension to take away from my pension, the answer is none, that they don’t affect other.

However, if they’re talking about a special retirement supplement, which they may be, then Social Security, they don’t take money away from your retirement. So they don’t take money specifically from your special retirement supplement. Well, if they’re drawing money from Social Security, they wouldn’t be eligible for the special retirement.

That’s TRICARE. So that’s right. Retirement supplement. Yeah, some special retirement supplement is only two sixty two and Social Security is only after sixty two and after. So those are they could take it away from your TSP, your Social Security. Right. They don’t have an effect on each other. Now if you are a reemployed annuity then that’s a whole nother ballgame.

But we’re not going to get into that because the very few people and it confuse that point. Yeah. OK, so there is there’s an easy one that we can just say it doesn’t it doesn’t take any money away from your retirement. OK, no.

OK, sounds good. All right. Question number two then. Should I suspend FEHB if I have Champ V a and I think that should be a capital A, but anyways, why don’t you Cassie if you would explain what Champ A is.

OK, ChampVA, is medical coverage for the spouse or dependent of a I wouldn’t say an employee, but of someone who is receiving VA benefits. So if they have separated from military service or got out on a disability or something like that and they have benefits, then their spouse or dependent children can have Chamba. That’s that’s what they pay.

So should you suspend FEHB? Not suspending FEHB can be done if you have TRICARE or champ VA. So it can for regular first employees.

A lot of I hear first place that I can suspend it. Well yeah. If you have TRICARE or VA and there’s, there’s others. But when it comes to this regular first employees just can’t, you can’t just suspend FEHB, but in this case you can work.

And if they have Medicare, Medicare Part C. Right. Which rarely do people like that.

Yeah, there are exceptions. However, when you have FEHB and you have VA, you can suspend it whether you should or not. It’s a different story. Right. That’s that’s always a good question. Can you. Yes. No, there’s an answer there. But should you. That’s completely different.

Exactly. You know, I don’t know what the VA coverage looks like in this person’s particular area or anything like that as far as, you know what those limitations are and if it that’s a good idea or not, the bottom line is, yes, they can suspend it. But if they should suspend it, I don’t know. I can’t answer this person’s specific information. The. Said specific questions. There you go. You know the details of their situation, but that’s why it’s very encouraged to check out, you know, go to Fednobabble.com and submit some information.

So that way it doesn’t. That one does. It depends on wrong button there. But yes.

And just let us connect you with one of our advisors and our trusted network. So that way we can get you these questions answered specifically for your situation and also get you some numbers to based off of whether it’s a good idea or not financially as well.

You got to kind of kind of really just with not only with this decision, but with a whole bunch of others. Take a look at the whole list, the whole thing. Looking at these one by one doesn’t do you any good answering this one by one because one one benefit affects another one which dominoes to another one, which dominoes through another one. And so it’s important to take a look at the bigger picture. And just one note.

My aunt called me the other day. Yeah. And she was a federal employee for about 12 years and she also had some reserve service and her husband’s a federal employee and he’s been in he’s still in service and he’s looking at actually doing an immediate retirement here in a few years. And she was like, OK, so what happens when he retires? Do I get anything? And how do I buy back my military service and had all of these different questions?

I was like, slow down. And I’m like, we have to take a look at this. Like, OK, here’s what that’s going to, you know, that she was like, well, what if we move out of state and we we do all this? And she just had a ton of questions. I said, OK, one thing at a time.

First off, here’s how we would buy back your military service, because even though you’ve separated, you can still buy back your military service. Right. And I’ll email you the process for that. And then if he does take a job out of state, then this is how it affects his high three. But then you also have to think about these other factors, too, like what is that look like for how much you can contribute to your TSP and what does that look like for yourself or your spouse benefit?

Because that could be different and you don’t elect that until you’re actually retiring. And, you know, we just had to really strategize all of these different things. And I was very good. You have to think about you are getting a pension because she was like, I’m not retiring, so I don’t get a pension from the government. And I was like, do you have than five years of service? She’s like, yeah, I have 12.

So OK, then you actually do. Right. You have to think about what that looks like. So you get the pension. He’s got his. What does that look like for you guys, for FEHB, for your TSP because she’s like we’re going to lose X amount of dollars in his income. Now I said, yeah but are you really losing that or can you contribute that to your TSP and gain on that? Because then you’re earning money through your percentages and the growth and everything.

So are you really losing that? And this is the kind of things that people don’t really look at. I said stop focusing on what he is, the income that is going to lose because it may put you in a position to where you can later on set yourself up in a better financial situation. Good.

I love that. So I think people really have to consider every single piece of their benefit, not just what’s happening with this benefit or that benefit. Yeah, let’s hope they all work together and let’s figure out what that what that bigger picture looks looks like.

That’s a great example. And one. So I’m going to add one more thing to that, if I could, that you made me think of. So that was a great example of you got to look at everything all together. But I would also add that not only should a federal employee look at the bigger picture, but so should their spouse, because the spouse is going to have different questions.

They’re looking at it from a different perspective. They and honestly, I know it’s just I hadn’t thought about this before and I don’t know why I hadn’t. But the spouses of federal employees should be watching Fenobabble as well so that you can learn about this. This is a great way to trickle knowledge for your spouse so they can get introduced to this. Yeah. Should they also come to a go to a workshop or things like that? I think they should.

But this is a great introduction. If they were able to watch these these shows here to get introduced to all the complicated things that are going on and try to and start asking the questions. Now, rather than at the end saying, well, why didn’t we do that in the first place? Well, what about this? Let’s start let’s figure that out as a couple now. Absolutely.

And I being the spouse of a federal employee, I understand what those different perspectives are. You don’t understand any of their benefits. Right. And so if you are a spouse of a federal employee and you have questions, please submit them and find out what it is that you don’t understand. So we can really help you have an understanding. And as a matter of fact, that was one of my reasons for starting in this specific role, was as a federal spouse myself, I had taken a class and I thought, oh, my goodness, people need to know about this.

Right?

Right. They simply don’t understand all of these different benefits. I mean, I don’t know how many other federal employees and spouses that I had talked to. And they said we do. We get what? We get a special… We get a spousal benefit at retirement. I mean, they didn’t even know that part. Right. And I thought, I want to educate not only federal employees, but their spouses as well as it’s important for us to understand how that’s going to financially affect us later on.

Yep, absolutely. It’s yeah, OK. We could go on and on about that. I think that’s great. And so true. All right. That’s question number two. Question number three, how about putting all TSP from here on out into my Roth TSP? So this person, I think just from one of one of my workshops learned about the Roth PSP and was all excited and said, what if I took and obviously you cannot take money that you put into your traditional TSP already and move it into the Rothfuss, but you can’t do that.

But from this point on, should I just so, so I can avoid taxes? Can I just put it all into my Roth TSP from this point on? What do you think Cassie?

I mean, you can I really wish I did you a help. OK, let me back up. Did you help them understand that their contributions might be Roth but their match will not be right.

So I’ll match goes into the traditional anyway, so it actually doesn’t all go into Roth no matter what exactly.

But it does help when you have different buckets of money that you can pull from whether it’s taxable or nontaxable. Is Roth the best solution if you’re looking at nontaxable money? That depends, right. How old are you? How much are you looking at contributing? Is there a, you know, an index policy like an index universal life policy or something like that that could be more beneficial for you if you’re looking at non taxable income? Right. So I really think that this is one of those it depends scenarios.

And you have to really talk with divisor about it.

Yep. This is this is a huge one for an advisor. I and I can’t stress this enough. If you do this right, it is possible to save thousands, tens of thousands of dollars in taxes that you can use yourself.

That’s right there. That is if if you get some help and do this right, that is tens of thousands of dollars. And I totally butchered the way I said that. But that a federal employee could use in retirement for for people to just pass that up and say, you know what, I’m just going to guess. And they get it wrong. I’m thinking, oh, my goodness, especially when you know, again, go to Fednobabble.com, sign up, get Cassie’s report, talk to one of the advisors and our trust network.

They’ll talk about this kind of stuff and it’s free. No cost, no obligation. And you can talk about and get this kind of advice on it. Oh, my goodness, that’s huge. For later on in retirement.

I have other solutions for you. And like I said, it just depends on your situation, what buckets of money you have elsewhere and what your benefits look like. And really, the bottom line is, what benefits do you have? Where where are those? And then let’s move on from there to create the picture that you need and want in retirement. So, yeah.

So if you would please take the information you have, take the channel here, like it, subscribe, follow it, whatever it takes, and then of course share it with your spouse, share with your co-workers, share with everyone and just say you’ve got to go learn this because this can happen an. This information can have a huge effect on you and retirement for good or bad, depending on how you do it. That’s right. That’s right. And so take action, you know, and just remember that no action is still taking action so you can choose to not do anything or you can choose to go to Fednobabble.com and request a report from us.

We’ll get you in touch with one of our advisors from our trusted network to get you that report and make sure that you’re answering all of their questions. And just so we’re clear, we are making sure that these folks can help you with anything that you need. OK, first off, they’re going to get you the report. No cost, no obligation right there to get the information for you. They’re going to get you that report and then see if there’s any continued help that the that they can serve you with, that they can help you with, because ultimately you can’t do anything until you find out where you’re starting from.

So let’s help you figure that out. Go to Fenobabble dot com and check us out. Thank you.

OK, thanks. Take care, everyone. See you next time. To get Cassie’s comprehensive report on your federal retirement benefits. At no cost, no obligation and no sales pitch. Go to Fednobabble.com while you’re there, submit a question for them to answer on the show.