Insight by NITP, Inc

(1) Voluntary Contribution Program (2) Backdoor Roth

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Insight by NITP, Inc

July 23, 2018 – Host Bob Leins, CPA® welcomes Tammy Flanagan, Senior Benefits Director at NITP, to talk about the Voluntary Contribution Program (VCP) and Backdoor Roth.

  • VCP available only to CSRS and CSRS-Offset employees.
  • Backdoor Roth available to all Federal employees.
  • VCP allows such employees to contribute funds that can equal up to 10 percent of the total basic pay they have earned in Federal service toward their own retirement.
  • CSRS employees who want to participate in this program must establish an account by completing an applicationto make voluntary contributions (no later than while their retirement application is being processed by OPM).
  • Steps for putting the monies into other retirement investment vehicles, such as traditional and Roth IRAs.
  • The VCP is a way to enhance your retirement income.  In OPM’s brochure “Retirement Facts 10,” the Civil Service Retirement System offers this explanation: “At retirement, each $100 in your voluntary contributions account (including interest earned) will provide an annual annuity of $7 a year, plus 20 cents for each full year you are over age 55 at the time you retire.”  However, it is also possible to withdraw all voluntary contributions at any time before receiving this annuity.
  • Click to view the reference document also available on the NITP website.

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