CPA v Financial Planner etc. for Federal Retirees

L1: CPA v Financial Planner etc. for Federal RetireesThis is a continuation of the topic does the 72T rule apply to the TSP, Thrift Savings Plan for federal retirees under the FERS retirement system. As a 51 year oldlaw enforcement officersoon to be retiree I am able to retire under the age of 55 and collect a pension and have the ability to roll over my TSP into an IRA. Now it gets a bit confusing for me and individuals in my category. We have been told that it may not be wise to roll over the TSP into an IRA by ourselves. That there are a variety of hidden administrative fees and other associated fees. That it would behoove us to have some type of planner whohas a background in the federal retirement systems in that financial advisors in the private sector are not aware of benefits that are available to us in planning our IRA.So my question is what type of planner do you think best suits my needs? I understand this may be a touchy subject but I could really use some suggestions. For example, I have decided that I do need someone to help me with the roll over and with the subsequent 72T distribution withdrawals and of course what stocks to invest in etc… I understand that a CPA may not have a handle on the current financial markets and a financial planner may not have a handle on complex tax issues and do I really need someone who specializes in my FERS retirement system to effect the roll over and the rest as discussed here?Another question is is it better to pay someone by the hour or provide them with a percentage fee based on my TSP balance?I do realize I am all over the place but this entire process is very confusing to me.Any suggestions will be greatly appreciated.Thanks.Jim2008-11-12 14:38, By: jim, IP: [24.168.115.68]
L2: CPA v Financial Planner etc. for Federal RetireesI suggest that you post your query at www.457.comAs specialized as this website is for SEPP 72-T situations, that website is even more specialized in the area of your situation.There are very few financial planners and/or CPAs who have any knowledge in this area.I would findan expertwho is “fee for service”, and he will be well worth his fee, and should know the answers without much research. I would never consider paying a fee based upon the size of the account in this situation because the answers are the same regardless of how much is involved.2008-11-12 15:51, By: dlzallestaxes, IP: [96.245.168.66]

L2: CPA v Financial Planner etc. for Federal RetireesDid you mean, www.457.com ? I couldn’t find anything at www.457.net Did anyone else? Just curious. Tks.2008-11-12 16:06, By: action, IP: [71.56.191.195]

L2: CPA v Financial Planner etc. for Federal RetireesMy mistake — poor memory. I just went back and edited the correction to my initial posting.2008-11-12 16:11, By: dlzallestaxes, IP: [96.245.168.66]

L2: CPA v Financial Planner etc. for Federal RetireesI am not familiar with the 457 site, and it may be very broad and cover more than 457 plan issues, but just for the record, the TSP is a qualified defined contribution plan, and a 457 plan is non qualified, so there are numerous tax differences between the two.2008-11-12 16:58, By: Alan S., IP: [24.116.165.60]

L2: CPA v Financial Planner etc. for Federal RetireesI’ll address your concerns tomorrow since I’m at the break for my Certified Financial Planner (CFP) class on Estate Planning and I just noticed there were some new posts on the TSP subject.Jim2008-11-12 17:06, By: Jim, IP: [70.167.81.119]

L2: CPA v Financial Planner etc. for Federal RetireesI was indicating that site primarily because the “experts” and participants on that site are knowledgeable about “government plans”, and there might be some consultants who could answer the questions better than those on our 72-Tsite.2008-11-12 17:14, By: dlzallestaxes, IP: [96.245.168.66]

L2: CPA v Financial Planner etc. for Federal RetireesGood afternoon Jim:I recommend that you look in the phone book under “Financial Planners” and find a “Registered Investment Advisor” firm.You can also ask your friends for recommendations because I’m sure you will find more than one person who is already working with someone and they will be happy to make a recommendation. Your problem is finding someone who knows the different investment options that will work best with your Rollover IRA from the TSP, and Financial Planners have the best knowledge in this arena. CPA’s are valuable but their focus is generally on taxes and tax-related issues, such as 72(t) distributions, and generally they are not as knowledgeable in the investment arena.Based on your age and length of service, I suspect the value of your TSP is probably well under $300k, and probably closer to $100k or less. Depending on the size of the account you may be able to use a fee-based account, or you may use a commission account. Your planner will determine the best approach for you when you sit down with him / her. Remember, whether you end upusing fee-basedor acommission situation, this is just the method used to compensate the planner for their services. Before you sign anything, the planner will layout the costs for your specific plan.I’m glad you decided not to take the TSP annuity option. I just completed a plan for a friend and former FERS employee who thought she was going to take the annuity. I compared 4 commercial plans, one of which was the same company TSP would have used, and all 4 beat the TSP annuity. So don’t fall into the typical trap of thinking “the government will give you the best deal,” because they just don’t. I have 15 years experience proving this point.Good luck.Jim2008-11-13 10:52, By: Jim, IP: [70.167.81.119]

L2: CPA v Financial Planner etc. for Federal RetireesThe benefits of a 72t planmay be applied to any pre-tax Defined Contribution Plan and this includes the TSP which is a section 401(a) plan. A rollover distribution to an IRA is not required. Assuming the TSP allows you to effectuate the required 72t plan withdrawals and you are comfortable with the de minimis cost structure of theTSP Iwould advise you to continue to use the TSP as your product provider.Having said that, you may want to consult with a 72t specialistto help you calculate the required withdrawals.Peace and Hope,Joel L. Frank 2008-11-13 13:55, By: Joel, IP: [24.187.33.126]

L2: CPA v Financial Planner etc. for Federal RetireesI would like to thank all who posted here. They have been all very informative responses and it is difficult to respond without having the ability to see all of the responsesin one page when posting a reply. Jim, by next year I should have somewhere in the low $300,000s in my TSP( I switched to the G Fund in the beginning of 2008 and did not take a big hit) so if I use the 1% fee cost it will cost me $3,000 per year for who knows how long to have someone organize the roll over, do the 72T distributions, manage the IRA, trading, buying etc…and monitor the IRA account year long. I don’t know if that is a high cost to pay in the long run but that is one of the offers given to us. On the other hand as another poster pointed out as well, it may be cheaper to pay via the fee base method. The only downside to that is will a person charging a fee, monitor the IRA throughout the year in the event changes need to be made? As you can tell financing and investment strategies are not my strong points.Regarding the IRA v TSP early distributions there is still an ongoing debate in my officeas to which vehicle he or she will be using to obtain the early withdrawals.I am still leaning to the IRA roll over as it has many advantages to the TSP as you and other posters have pointed out. I am sure to have more questions. I am still going through some of the other responses more carefully. Thanks again for your time and advice.Jim2008-11-13 14:44, By: jim, IP: [24.168.115.68]