Next to being a rich young man or woman, the best thing is being a rich (as in more than financially comfortable) old man or woman. For federal workers, it is easier than most. Still, some effort is required.

In addition to a guaranteed (we hope) inflation-indexed annuity for life, federal and postal workers have the Thrift Savings Plan. Many experts consider it the best employer-sponsored 401k plan in the business.

The majority of current feds are under the FERS retirement program. They can get a 5 percent matching contribution (can you say free, tax-deferred pay raise) if they contribute at least 5 percent themselves. Overall, most people can put in another 5 percent, which, while not matched, is tax-deferred. Good deal.

For the 2014 year, the C-fund (S&P 500) return was 14.06 percent. The S-fund (small cap stocks) returned 6.74 percent. The F-fund (bonds) returned a surprisingly good 6.52 percent (thanks to low interest rates) and the Treasury securities G-fund was up 2.12 percent. Only the I-fund (international stocks) was a loser being down 1.19 percent. The lifecycle L- funds returned anywhere from 3.81 percent to 7.38 percent.

Now in addition to the TSP, federal investors (in most cases) can also invest in a Roth IRA. Roths are funded with after-tax dollars. That’s the bad news. The overwhelmingly good news is that once you start withdrawing your Roth it is tax free. If you put in $100,000 and it grows to $1 million, or more, you get $1 million (or more) tax-free.

While most people know that the Roth option exists, many don’t understand exactly what it is or does. It is also possible to transfer money into a Roth account. But how, and more importantly, why? What are the pros and cons.

Today at 10 a.m. EST, the For Your Benefit radio hour will be devoted to the mysteries of the Roth IRA. Tax expert Bob Leins and guests will talk about how the Roth program works, especially its relationship to the TSP. If you do it right (and the stock market cooperates) many mid-career and new feds could be tax-free millionaires when they retire.

Check out the show. You can listen live at www.federalnewsradio.com or, in the D.C. area, you also have the option of listening on 1500 AM. The show will also be archived if you miss it, or want to recommend it to a friend. Listen, learn and, maybe, lay the groundwork for a very, very secure and comfortable retirement.

NEARLY USELESS FACTOID:

Compiled by Michael O’Connell

Mr. Monopoly, the mascot of the Monopoly board game, was originally known as Rich Uncle Pennybags.

Source: Monopoly Wikia

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