C, S, and I Funds in Thrift Savings Plan Grow Over 3% in March

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C, S, and I Funds in Thrift Savings Plan Grow Over 3% in March

Stocks continued to show signs of strength during the month despite indications from the Federal Reserve that they will not be cutting interest rates soon. Many Thrift Savings Plan participants have been moving funds from the G fund to the C fund of late. The S&P 500 has reached 22 all time highs so far in the first three months of the year. Quite a remarkable run for the index. Follow link to read more.  https://bit.ly/3Ua1nyo

2025 COLA Estimate for Social Security, FERS, and CSRS 

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2025 COLA Estimate for Social Security, FERS, and CSRS 

After an 8.7% COLA in 2023 and a 3.2% adjustment in 2024, the downward trend is expected to continue for Social Security’s 2025 COLA. Current estimates predict 2.4%.

Retired federal employees receiving a CSRS pension receive the same cost-of-living adjustment (COLA) as recipients of Social Security retirement benefits. It is calculated by looking at inflation numbers for the months of July, August, and September as indicated by the CPI-W index. The average of those three numbers results in the COLA. For FERS retirees, the COLA might be slightly less. Follow link to read more. https://bit.ly/3VLVdpr

TSP Issues Guidance on Upcoming Rise in Catch-Up Limits for Some 

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TSP Issues Guidance on Upcoming Rise in Catch-Up Limits for Some 

As before, investments will automatically “spill over” into catch-up status once the standard limit is reached. 

The TSP has said it will issue notices later this year to account holders who will be eligible to make additional investments beyond the normal limits starting in 2025 under the Secure 2.0 Act.

If the adjustment is more than 3%, FERS pensions are adjusted by the CSRS COLA minus 1. So in 2024, when the Social Security COLA was 3.2%, the COLA for FERS was 2.2%. Follow link to read more. https://bit.ly/3VRhTEZ

Which is Better? A Roth IRA or Roth TSP?

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Which is Better? A Roth IRA or Roth TSP?

By Carol Schmidlin

Both are tax free, however there are some differences.

How much can you put in a Roth IRA? In 2024 you can contribute $7,000 and if you are turning 50 in 2024 you can contribute $8,000. However, a Roth IRA has phase out limits based on your modified adjusted gross income (MAGI). If you are married filing jointly, they are $230,000 – $240,000. If filing single the phase out limits are $146,000 – $161,000.

You can convert $23,000 and if you are turning 50m in 2024 you can contribute a total of $30,500.

If your income is over the limit to contribute to a Roth IRA, you may be eligible for a Back-door Roth IRA. Anyone that has earned income can contribute to an IRA, then convert it to a Roth IRA. The caveat is if you have an IRA already, the new contribution will be prorated, and you will have to pay taxes. However, you can roll your IRA into TSP, then make your contribution to a traditional IRA and convert to a Roth IRA.

Here is an example of prorating:

Natalie has an IRA of $5,000 in after tax contributions.  She earns too much to contribute to a Roth IRA, so she decides she will do a Backdoor Roth IRA. Her non-Roth IRA balance is $80,000. That means 6.25% of her contributions are not taxable ($5,000 non-deductible amount/$80,000 (total non-Roth IRA balance). Follow link to read Carol’s full article. https://fedsavvy.com/wp-content/uploads/2024/04/What-is-Better-a-Roth-RSP-or-a-Roth-IRA-Revised.pdf