Do You Have to Pay Taxes (Again?) on Your Federal Retirement?

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[@randyscrafts8575]

I've officially retired 5 months ago and still haven't gotten paid. If it keeps going like this I won't have any income to pay taxes on.....😂😂😂

[@MrMaziar58]

Same here for almost two years been waiting!

[@vinceordonez5878]

Same here. Did you asked OPM when are you getting paid?

[@larrymcdonald5219]

Don’t worry, it took me seven months to get my full retirement check and they got all the taxes and then some! 😂😂

[@prestonrobert2625]

@@larrymcdonald5219 thank you I am like others on the group w bench

[@arleenm7367]

In April I received almost $3000 back from the IRS for last years taxes. If you claim a standard deduction (it's $12,950 in 2022) you also get an extra $1400 if you're over 65. Also, consider buying a new electric car - the EV tax credit is $7500 for a full electric or $2000 for an electric-hybrid. It has to be a new car though. Also be aware that OPM and TSP don't automatically take out state taxes. You have to change that on your page on their website if you live in a state that taxes pensions.

[@PlanYourFederalBenefits]

Thank you for sharing.

[@barano9729]

Absolutely. The IRS wants some of your fers pension and anything in your tsp that’s taxable. The state you live in might also want a piece too.

[@leonardhusser5167]

I find your page very helpful and informative

[@PlanYourFederalBenefits]

I appreciate that!

[@ronhughes4851]

Great information, thank you.👍👍👍👍

[@PlanYourFederalBenefits]

Glad it was helpful!

[@sbluhrs106]

Exactly, the tiny amount that you paid in was already taxed isn't taxed, but it is so minuscule that it doesn't make any real dollar difference.

[@jaredcharland624]

FRAE is a rip off, wish I could opt out of the pension and put that into the TSP

[@dmoon9037]

5:00 along the lines of being conservative in planning, in addition to the 85% taxability factor, one could also give oneself a 20-25% haircut on estimated SS benefit (which is by the conservative Congress Does Nothing To Fix SS(tm) assumption)

[@michaelvadney5803]

Figuring out when it makes sense to take that tax whack now with a Roth or just pay for regular withdrawals every year is the question for me. Thanks Dallen!

[@aaront936]

How old are you and what is your tax bracket? What state do you live in? What state are you going to retire in? These are the key things you need to figure out if roth is going to make sense.

[@terryneal5569]

I am contributing a mix, most to my Roth tsp.

[@michaelvadney5803]

60 years old, 24% fed bracket

[@windellhutchinson6897]

I was converting my traditional IRA to a Roth IRA because my income is too high to make direct contributions, and I won't get the deduction. However, I stopped doing the conversion because I was under the understanding that you couldn't make the conversion anymore. Plus, I don't want to have to pay taxes on my withdrawals in the future on money that I already paid taxes on. I can understand paying it on the growth only. So, should I start putting money in a Traditional IRA knowing I will be taxed on my money twice? Should I find another way of saving money outside of the IRA? Would I have to stop contributing to the Traditional IRA at age 70? I'm in my 60s now. Please have a segment on this topic for people not eligible for the IRA tax deduction.

[@mikethompson4854]

Do they automatically take out Federal and State tax ? Can you choose not to have tax taken out and pay the tax latter during tax filing ? Trying to figure out for medical insurance payment amount since that is what I am waiting to have enough to pay it and retire.

[@billh4285]

Very good video!

[@PlanYourFederalBenefits]

Glad you liked it!

[@michellecummings5598]

how do retirement friendly states do this when they say no tax on social security or pension

[@davidgilbert6531]

I was disability retirement and so my question is how do I make my tax low currently still on disability retirement and I am 58 .what is my strategy

[@pipes2308]

If I leave my Job just before 3 years, how do I get back what I put into FERS retirement?

[@Angels9104]

On my statements, it shows my Roth balance and on the right side it tells me what my non taxable Roth balance is. This is less than what my Roth balance is by $2,610. I started making Roth contributions in November 2016. Why are they holding that amount from me?

[@s.c.6367]

I still have not gotten any response to the fact that I cannot create a new login on my TSP account after spending 45 hours plus on the phone with the helpline. Not good

[@Wild1995]

That sucks. I HATE the new TSP site. Typical government in that its over busy and difficult to navigate. I hate it

[@Kep19901]

I have a question for you. is it smarter to do 5% roth tsp, then max out a roth ira on the side? 6k annually? obviously the ideal thing would be to max out both, however I can't afford that. thanks for all you help and videos. yes, I have already watched your 2 part series on ira vs tsp, and read the article on your website.

[@hustlengrind8833]

That’s optimal

[@PlanYourFederalBenefits]

Thank you for watching! Feel free to submit your question here: hawsfederaladvisors.com/question-submission-page/ This is where we get topics for future videos.

[@Kep19901]

@@PlanYourFederalBenefits yup, already submitted 👍

[@carlosquestell5107]

I retired a year ago and I'm considering paying off a $40k loan. Should be I pay all at once or pay half one year and the other half next year?

[@PlanYourFederalBenefits]

Feel free to submit your question here: app.hawsfederaladvisors.com/question-submission This is where we get topics for future videos.

[@danieljustdaniel9550]

so being retiree i can take some or all of my traditional TSP and put in it thr Roth. want they deduct taxes when you switch over?

[@sscrew3806]

Yes, you will have to pay the taxes when you convert to a Roth. Search "back door roth"

[@erickarnell]

An annual Roth conversion is a pretty normal thing for an accountant to work out with you. Working out how much you can convert each year to minimize future tax liability.

[@lisasullivan9712]

I really appreciate your channel. As a FED who plans to retire in about 5 years I do have a significant amount in the traditional TSP. I was thinking of delaying SS till 70 and drawing down my TSP aggressively in the first 8-10 years. So can I have multiple Roth accounts? I already have an older one in my private Vanguard. Regarding Roth drawdowns do I have to wait 5 years from each deposit I make into it?

[@erickarnell]

I also plan to use FERS and TSP until I take SS at 70. Higher SS makes for a softer landing in the unlikely event of running out of TSP.

[@mapgnome]

I have been thinking about that same strategy, but I have not figured out how having several years of zero Social Security income (from the time I retire until I apply for SS) will affect the calculation of the SS payment. If I were to retire at 58 and wait until I am 70 to apply for SS, that gives me 12 years of zero SS income. I have not figured out how to make that calculation yet, but I can’t believe that won’t affect the SS payment at 70. Then again, I may not understand how the SS payment is correctly calculated. I thought SSA looked at your income for the last 35 years once you apply. Have you been able to roughly figure that out?

[@billh4285]

@@mapgnome It's not the last 35 years, it's the high 35 years so delaying won't affect the amount. You can verify this by doing your own research.

[@billh4285]

I plan on doing the same thing. The taxes should be lower for the conversion since the income will be lower.

[@mapgnome]

@@billh4285 Well that's a relief. Thank you for clearing that up, much appreciated.

[@cameroncunningham204]

I have roughly 19 years left before I retire..I’ve planned my retirement so that my last 3-5 years of work will be in a high cost of living state so I can take advantage of the high 3 and my locality, combine that with living in a low cost state such as TN, (my home state) which does not tax pension and/or social security income and you will come out far ahead than most others after retirement

[@terryneal5569]

How does a "high cost of living state" benefit you?

[@cameroncunningham204]

@@terryneal5569 When you pension is calculated it takes into account the locality (city/state) in which you are currently working Example, if I work my final 3-5 years in Los Angeles, CA which has a high cost of living as compared to Nashville, TN… my high 3 (which in general is your final 3 years of working) is calculated based on the locality that I’m at, So I can finish out my career in a hiigh cost area, have my pension calculated based on that area, retire, and move back to my home state This is common practice for a lot of FEDS who lived/worked their entire life in the Northeast and relocate Southern states

[@DeniseW618]

Locality pay has nothing to do with cost of living. It has to do with average incomes in the area. That is the reason Houston has relatively high locality pay. It does (or didn’t used to) cost a lot to live there, but since there is a disproportionate amount of Aerospace engineers and other high pay earners there, they have a higher locality pay than it would be if it was based on cost of living. Conversely, Los Angeles has a cost of living that is out of this world, but since San Bernardino and Riverside counties (and a small county at the border of Mexico that’s on the south end of San Diego County), that drives down locality pay for LA. If you look at LA’s locality pay, it appears very good, but it’s difficult to make ends meet here. You’re way better off, financially speaking, living in Houston. If you can survive living in LA for your last 3 years before retirement, you could live like a king if you moved to Tennessee or somewhere like that in retirement.

[@cameroncunningham204]

@@DeniseW618 What are you talking about…locality pay which is calculated using bureau of labor statistics data is a factor in cost of living otherwise it’s not included and opm would not publish locality rates for the various states/metropolitan areas in the country I strongly suggest you read and research the methodology used because your statement is completely nonsensical

[@ericzenk6970]

@@cameroncunningham204 the trade off is you have to be able to move to the high cost area, sell your existing home or rent it, then either sell the home in a high cost area and buy the cheap place in TN after only 3 years in that high cost area. Housing markets are fical at best so there's a risk unless you rent it assuming good renters. And all the moving expenses UNLESS your organization is going to let you telework at the high cost area, which in that case OPM has changed that law that governs locality pay limited to where the organization headquarters is located. Each option has its benefits and draw backs. I have an Army pension/annuity the equivalent of a GS13 over 23 years, my VA disability pension, current GS job, 5 years until I qualify for an immediate FERS umreduced retirement, social security deferred until I reach 70, and my TSP, ROTH and traditional IRA so my wife and I will be fine. I've moved 23 times throughout my military and civilian careers, been in 49 of the 50 st a states, 3 combat deployments, and visited 17 countries so moving for us is not something we're looking to do unless we down size from our current home. Again to each his or her own. Good luck with your move and retirement. What part of TN are you moving to? My parents retired from Wisconsin to Crossville, TN and love it there.

[@davidgilbert6531]

I also don't have TSP or anything like that. just savings.