Search USAA

Looking for Answers about Retirement Planning?

Shop now at USAA
Choose a category
Most Recent Questions
Recent Question:
Inherited IRA Distribution Passive Income?
Recent Question:
What is the best way to start a retirement fund?
Recent Question:
Roth contribution limit
Recent Question:
Should I stop my 401K if my company has stopped matching contributions?
Recent Question:
What type of life insurance should I have for my wife?
Questions with Most Recent Answers
Question:
What is the best way to start a retirement fund?
Question:
Roth contribution limit
Question:
Should I stop my 401K if my company has stopped matching contributions?
Question:
What type of life insurance should I have for my wife?
Question:
Is taking out a personal loan a smart decision when trying to get out of credit card debt?
See all USAA Questions and Answers > Financial Advice Community Q & A

Customer Questions & Answers for
Retirement Planning

Customer Questions & Answers:
209 Questions
 | 
209 Answers
Product Details

Questions & Answers for Retirement Planning

Question

How can I transfer a 401k plan from my previous employer to either my 401k with my new employer, or into an IRA with USAA?

While I was at my previous job I decided to get into their 401k plan. I am 24 years old so thought it would be good to start saving sooner rather than later. I recently changed companies and jobs, and was wondering if there was a way I could move the 401k into an IRA offered here at USAA, or transfer it into my 401k at my new job, to continue to build on what I have already started. Thank you.

-Kyle
Asked 2 years, 7 months ago
by Maples
Kansas City, MO
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thanks for your question, Kyle! I’m totally on board with your idea of starting your retirement saving sooner rather than later!

So, can you roll your old plan into an IRA? Yes.

Can you roll your old plan into your new plan? Probably – but it depends on whether or not your new plan allows rollovers into it. More and more plans are offering that option these days so there’s a good chance you can do that if you wish. You’ll need to check with your current plan provider to find out.

Assuming your current plan accepts rollovers, all you would need to do is decide which way you want to go and then request distribution paperwork from your old plan. On that paperwork, you will direct them to either roll the funds to an IRA or to your new plan. Both can be done without any tax implications.

Which is the better approach? It depends. I encourage you to review the blog post I wrote on the subject of Old Retirement Plans for a review of some of the popular reasons people will choose each path. With that said, if the balance is fairly small it may make the most sense to just roll it to your new plan (again, if it allows) since doing so may make it easier to manage the funds than leaving them as a small IRA.

If you would like to discuss this further, I encourage you to contact our team of salaried Financial Advisors at 800-771-9960. They can gather some additional information from you and help you decide what is best.

Thanks again for your question and best of luck to you!

Scott
answered 2 years, 7 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

I have retired from the AF and still have my TSP. My wife is older than me and also has her own TSP.

Because my wife will retire before me can I roll my TSP into hers?
Asked 2 years, 8 months ago
by sy55
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thank you for your question and thank you both for your service to our country!

Unfortunately, the IRS does not permit spouses to merge each other’s retirement plans into one so each of your plans will have remain in your respective names. Will keeping them separate have a significant impact on your retirement plans? If so, have you considered reallocating your current retirement contributions to put more money into her plan? In 2011, TSP participants are generally permitted to contribute a maximum of $16,500 of their pay to the plan ($22,000 if age 50 or older). Perhaps allocating more to your wife’s plan would help?

I can’t tell from the information provide here where you stand relative to your formalizing your retirement plan, but it you haven’t done that yet, this might be a good opportunity to do so. If you decide to do so and could use some assistance, we have a several resources available here at USAA to help you.

First we have our Online Retirement Center on usaa.com. There you will find a treasure trove of retirement planning materials including two online retirement planning calculators to help you with this. One is a little more basic and does not require as much input. The other is a little more involved but allows you to be more detailed. Both will help you frame up your retirement goal and give you an idea of where you stand relative to being able to accomplish it. You can find them by scrolling down and looking in the “Planners and Calculators” section on the right side of the page (login is required to complete them).

If you prefer a human touch to this process, we also have a team of salaried CERTIFIED FINANCIAL PLANNER™ professionals who – for a fee – can help you with this as well. Please check out our Financial Planning services page on usaa.com for more information or call 800-771-9960.

I hope this helps!

Thanks again for your question and best of luck to you!

Scott
answered 2 years, 8 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

Should I be saving for retirement even though I have debt, and what amount and type of investment should I have?

I am 26, working full time at a low paying job, making ends meet, and taking graduate classes that I pay out of pocket for. I live very cheaply and by a budget, but may only have 200 dollars left at the end of the month for savings/loan payments/retirement/investments. I have been saving that money to pay for my grad classes, but i feel that maybe I should be saving for retirement too. I have 20K in student loans, owe 10K on a car (to my mom) and have a small 6K in a general savings account. What type of investment should I make for retirement (if any) and how much do you think is reasonable given my small income? I thought about mutual funds, IRAs etc, but don't know enough about them, and I don't want something I have to pay a great deal in fees. I don't know anyone who can tell me this for free, and I can't afford paying anyone to help. Please offer suggestions as they will be very much appreciated. Thank you.
Asked 2 years, 8 months ago
by flowerchild4
St. Louis, MO
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
First, please allow me to commend you on what you’ve done financially so far! I’ve spoken with a lot of 36 or 46 year olds that don’t have $6,000 in the bank so, well done!

Now as for what to do next, it’s hard to say for sure but you could certainly start some retirement savings like you are thinking; perhaps into something like a Roth IRA. Assuming you are a single tax filer making under $107,000 per year, the IRS allows you contribute 100% of your income up to $5,000 per year. IRS Publication 590 has the details on what’s allowed and how they work. Even though you don’t currently have enough money left over each month to fund an IRA to the maximum, anything you save should be helpful later. You’ll just want to make sure you don’t cut yourself short each month from a cash flow perspective.

Since I don’t know enough about your situation to solidly recommend this approach, I encourage you to contact our team of salaried Financial Advisors at 800-771-9960 to discuss your situation and see if this makes sense. They will be able to gather some additional information from you and help you decide what to do. They can also help you decide what types of investments to use. Best of all – it won’t cost you a dime to get their help! It’s just one of the benefits of USAA membership.

Thank you for your question and keep up the great work!

Scott
answered 2 years, 8 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

Where to go from here?

I turn 50 this year, feel like I final got to a point that I am saving correctly. I would like to retired around 58. I have approx $75K in TSP, and contributing to TSP Catch-up now that I am turning 50. That is $845 bi weekly, I have about $70K sitting in a savings account, $60K in mutual funds that I add $400 monthly to automatically. About $27K in Stocks. Drawing military retirement and current job pays $75K annually. Housing cost are paid by my employer and I have No bills. I know I can save better but not sure where to turn, any advice.
 | Army
Retired
Asked 2 years, 8 months ago
by Frank2784
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thank you for your question. I’m happy to hear that things are coming together for you from a savings perspective.

My first thought on where you should go from here would be to suggest that you do some number-crunching around your desired retirement goal. Essentially, what you’ll need to do is figure out how much you need to put away (and what it needs to earn) in order to make your retirement goal at age 58 a reality. To help frame this up, I like to use an analogy of building a house that I think works well for explaining the retirement planning process.

If you wanted to build a house, you would probably start with some design drawings and some blueprints first, right? You wouldn’t just have building materials show up at the construction site before you knew what you were building and what you needed. Well the same logic works with retirement planning. The different savings vehicles like the TSP, mutual funds, stocks, etc. are the construction materials for your retirement goal, but you really need a plan to pull them together and learn how much of each you need.

A good first step for you might be to check out one of our online Retirement Calculators to see where you stand relative to your retirement goal. These tools are great for getting a directionally correct idea of where you stand. Next, I encourage you to take a look at this Retirement Savings video I recently recorded. It should give you a basic idea of how to approach retirement planning. Finally, if you have further questions after taking these steps, you can always contact our team of salaried Financial Advisors at 800-771-9960 to discuss more planning strategies and investments to accomplish them.

In the end, I think it’s great that you are saving and investing for your retirement and I think the answers to your questions lie in crunching the numbers as I’ve outlined.

Thanks again for your question and Happy Retirement Planning!

Scott
answered 2 years, 8 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

I moved my TSP account to the G fund. Did I do the right thing?

I am 50 and close to retirement. I moved my TSP from the L2020 to the G Fund. What is your advice? Thanks.
Asked 2 years, 8 months ago
by Guyg
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
In a word – MAYBE.

It really depends on your overall plans for retirement and whether or not the return potential of the G Fund for your TSP dollars is enough to allow you to retire as you wish. Unfortunately, I don’t have enough information here to answer that question with any conviction, but I do have a few resources I can suggest to help you figure it out. Specifically, I suggest the following:

• Online Retirement Calculators – A good first step could be to do some number crunching with one of our online Retirement Calculators to see where you stand relative to your retirement goal. These tools are great for getting a directionally correct idea of where you stand.

• Retirement Savings Video – I encourage you to take a look at this Retirement Savings video I recently recorded. It should give you a basic idea of how to approach retirement planning.

• Salaried Advisors – Finally, if you have further questions after taking these steps, you can always contact our team of salaried Financial Advisors at 800-771-9960 to discuss more planning strategies and investments to accomplish them.

I hope these additional resources and ideas are helpful for you and I wish you all the best.

Thank again for your question!
answered 2 years, 8 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

What to do with my 401k?

I am 64, retired and drawing both Social Security and a pension. I also have a company sponsored 401k. I would like to take the money in the 401k and invest it in a tax-deferred holding, to begin drawing money from the account after my wife and I are both over 65, (She is 60) when our tax rates should be lower. What do you suggest?
 | Marine Corps
Separated
 | 
Texas
Asked 2 years, 8 months ago
by skipjack47
Texas
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thank you for your question.

As I see it, there are at least 2 pieces of good news as it relates to what to do with your old 401(k).

1. You don’t plan on using it for 5 years, so you should have time to ride out the market ups and downs of any portion you invest in that way.

2. Keeping the funds tax-deferred shouldn’t be a problem because you can simply roll them to an IRA to accomplish this. Of course this assumes that moving the funds from your old plan is your best bet (sometimes it makes more sense to leave the funds in the old plan). Please see my blog post on Old Retirement Plans for more insight on the pros and cons of rollovers.

As for what type of investment or savings to use once you roll the funds, that’s a bit more complicated. I honestly would need more information about your overall situation, future plans, and risk tolerance to give you a specific recommendation on that. But just because I can’t gather that information here doesn’t mean you are out of luck. We actually have a team salaried Financial Advisors at USAA that can help you with this. They can be reached at 800-771-9960 and will be able to gather the necessary information from you to make specific recommendations.

I realize I wasn’t able to give you a definitive answer here but I hope these points are at least helpful.

Thanks again for your question and best of luck to you!
answered 2 years, 8 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

I am 50 and will be retiring in 4 years how should i be invested in the TSP?

I will be retiring in 4 years and need advice as to how to invest in my TSP. I just moved my money to the G fund? I am making max contributions. I will be moving my money to USAA when I retire. Thanks.
 | Marine Corps
Separated
Asked 2 years, 8 months ago
by Guyg
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
I am happy to hear that you are maxing out your contributions to your Thrift Savings Plan (TSP). Remember that beginning at age 50, you can now defer up to $22,000 per year, rather than $16,500 per year for those under age 50.

As far as how it should be invested, I would need more information from you to make a recommendation. While we generally see individuals becoming more conservative as they near their retirement date, this may or may not make sense for you. Factors such as your goals and objectives, risk tolerance, and other existing investments will play a role in your TSP allocation.

The good news is that we have salaried Financial Advisors standing by to gather the necessary information from you in order to make a recommendation that fits your goals and objectives. They can be reached at 800-771-9960, so please give them a call.

Thanks for your question and best of luck to you!
answered 2 years, 8 months ago
by akasafac
0points
0out of 0found this answer helpful.
Question

Should I change my TSP fund allocation?

As of this writing I have $160,000 in my TSP fund (I am sure it will be much less tomorrow after today's downturn). All of the money is in the S fund. I am 39 years old and plan on retiring at 54 years old. What should I do with that money?
Should I:
1) Transfer it do the F fund and ride out the downturn.
2) Leave it alone.
3) Transfer it to a more diversified L fund.

I am also putting in the max $16,500 each year, plus the 5% match of my employer. Does it make more sense to just put in 5% to keep the matching and use the rest to pay off credit card debt while the economy slides?
Asked 2 years, 8 months ago
by Darren K
San Diego
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
This is a great question that I’m sure is on the minds of many, so thank you for asking it!

There is a lot to talk about here but before I get into the details, I’ll give you a hint about my answer to your question with the following two points:

1. Making big moves with your portfolio just because the market makes a big move down is usually a bad idea.

2. Having all of your investments in a single stock fund doesn’t provide the level of diversification I would typically like to see in a portfolio.

Now with that as a backdrop, I’d like to offer some high level thoughts on portfolio allocations and reallocations during volatile market conditions before I get to my specific answer to your question.

MARKET TIMING
First, let’s look at the concept of market timing. Generally speaking, it’s not a good idea to try to time the market and shift one’s entire portfolio back and forth from an aggressive mix to a conservative mix just because losses are occurring in the portfolio (or because one thinks they might). Study after study has shown that market-timing doesn’t work well as a portfolio management strategy for the average investor.

PORTFOLIO SHIFTING
Another not-so-good investing idea is making major portfolio shifts when the markets are swinging as wildly as they have been. This is especially true with a long time horizon like yours. Such volatility makes it very easy for a retail investor using mutual funds or company-sponsored retirement plans to get caught on the wrong side of a market move. In other words, extreme volatility makes it easier to unintentionally sell on a down day and buy on an up day – the exact opposite of what one should do with an investment portfolio. This doesn’t mean that one should continue down a bad path if they are already on one, it just means that getting off that path needs to be done carefully.

CONCLUSIONS
Since your first alternative of transferring to a more conservative fund to ride out the downturn essentially equates to market timing, I would certainly take it off the table. Making such a major allocation shift should typically only be done as the result of a change in goals, time frame, or risk tolerance; not because of an extreme event in the market.

With this alternative eliminated, I would say your answer probably lies somewhere between alternatives two and three; leave it alone or switch to a more diversified portfolio. Which is better for you? That again depends on your goals, time frame and risk tolerance. Generally speaking I think it’s a good idea to get your portfolio more diversified but you’re going to have to be careful doing that in this market; perhaps it’s something you should do over time. To discuss your specific situation in more depth and get additional direction, I encourage you to contact our team of salaried Financial Advisors at 800-771-9960.

Finally, it is important to make one more point here. That is, neither I, nor any “market expert” can say for sure which strategy will work out best for you. There’s just no way to know in advance. In my experience though, having an extreme reaction and making a major move with your portfolio typically isn’t a good idea.

I hope this is helpful!

Thanks again for your question and best of luck to you!

Scott
answered 2 years, 8 months ago
by Roth Conversion
+4points
4out of 4found this answer helpful.
Question

My last day at work is next Saturday, I have a 401K I would like to cash out and move to USAA, how can I do this without penalty?

1. I am retired Military
2. I have worked for this company about six years.
3. I have been contributing to my 401 K since 2005
4. I am 55 years old
5. My 401 K has lost about 10,000.00 in 2 weeks.
6. I want to salvage what is left.
7. I want to put this money in a USAA account and have it work for me.
 | Marine Corps
Retired
 | 
Alexandria
Asked 2 years, 8 months ago
by 5805usmc
Alexandria
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Congratulations on your (REALLY) soon-to-be retired status!

To move your 401(k) to USAA without taxes or penalties, you will want to initiate a direct rollover of your plan balance into an IRA. Fortunately, the process for doing this is really pretty simple.

1. Open an IRA with USAA if you don’t already have one (or want a separate one). This can be done either online by visiting the IRA Section of usaa.com or by contacting our team of salaried Financial Advisors at 800-771-9960. Though not an IRS requirement, occasionally investors will choose to keep their rollover dollars in a separate IRA especially if their other IRA accounts contain a mix of pre- and after-tax dollars.

2. Request withdrawal paperwork from your former plan sponsor and select the option for a direct rollover to an IRA.

3. Provide your IRA account information on the form as well as the other required information. The required information for rollovers to USAA can be found on our Direct Rollover Instructions.

Please note that rolling a 401(k) Plan to an IRA requires that all investments be liquidated and cash be transferred. In a volatile market, this could result in the portfolio getting sold at a low point and the owner having no control over the timing of the transaction. If this is a concern, it is sometimes best to liquidate the holdings prior to submitting the paperwork.

So, that’s how you would go about rolling your plan to USAA but an additional (and very important) question is whether or not doing so is a good idea. Sometimes it will make sense to roll the funds over but sometimes it will make more sense to leave it where it is.

To get an idea of the things to consider when making this decision, I encourage you to take a look at this Old Retirement Plans blog post I wrote on the subject. In it, I have outlined some of the most popular reasons why people choose the rollover path and also why some choose to leave the funds alone. Hopefully this post will give you some good ideas for making the decision in your situation.

If you decide to go through with your initial plan to roll the funds to an IRA with USAA, I encourage you to contact our team of salaried Financial Advisors at 800-771-9960. They can help you with account opening as well as give you ideas on appropriate investments for your situation.

Thank you for your question and best of luck in your retirement!

Scott
answered 2 years, 8 months ago
by Roth Conversion
+1point
1out of 1found this answer helpful.
Question

Hello Scott, Does the IRS limit of $16.5K for 401ks include employer match and discretionary additions?

In other words, I contribute 8% with my employer matching 4% and and additional 7% discretionary at the end of the year for a total of 19%. Last year that came to about $15.5k. I'd like to up my percentage to 10% but that will take me over the limit, if the total is what is considered the limit. Additionally, if I do go over the limit, what happens to the excess? Taxed? Returned? Reinvested in a non-401K account? Thanks.
Asked 2 years, 8 months ago
by ibeowolf
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
This is a great question which illustrates how confusing it can be to try and maximize your pre-tax deferrals when most employers have you set aside funds on a percentage basis while the IRS limit is in the form of dollars! Based upon the information you shared in your question, it looks like your compensation is approximately $81,600 ($15,500 divided by 19%......your 8% pre-tax plus your employer’s 4% match plus the 7% discretionary). The only thing I’m uncertain about from your questions is whether the 7% figure is an after-tax contribution from you or an additional contribution from your employer (either way it doesn’t count toward the $16,500 employee pre-tax limit, but will impact a part of my answer later on). You then asked what would happen if you increase your pre-tax deferral from 8% to 10%.

The answer is nothing! The $16,500 employee deferral limit ($22,000 if you’re age 50 or older) is for the pre-tax employee portion only and excludes any employer match and after-tax employee portion (if available). What this means for you specifically is (assuming that you are under age 50) you can actually set aside up to $16,500 from your pay on a tax-deferred basis. Any employer match over and above this amount would also be on a tax-deferred basis.

Beyond this amount, the water becomes a bit murky. Some employer plans allow for additional after-tax employee contributions over and above this amount. You will need to check with your employer/plan administrator to see if your particular plan allows for such additional contributions.

Going back to your specific example, if the 7% discretionary amount is coming from you on an after-tax basis, this means that you are personally setting aside 15% of your pay (8% pre-tax and 7% after-tax) and are considering increasing the pre-tax amount by 2%. Based upon your compensation of approximately $81,600, a 10% pre-tax contribution would only be $8,160. Why not change the 7% after-tax portion over to pre-tax? That would still only be $13,872 against a maximum of $16,500.

If on the other hand, the 7% discretionary amount is part of your employer’s contribution, you then have even more room to go before you reach the $16,500 maximum for employee pre-tax deferrals.

I hope that this helps make some sense out of a complex process and gives you something to think about. As you can see, it is easy to get turned around when dealing with this topic. This is why we recommend our members seek counsel from their CPA or Tax Advisor when dealing with retirement plans to ensure that no special circumstances are in play for your specific situation.

Thank you for your question and best of luck to you!
answered 2 years, 7 months ago
by akasafac
0points
0out of 0found this answer helpful.