For federal government employees under CSRS or CSRS Offset, the Voluntary Contributions Program (VCP) allows you to set aside extra money for retirement. Contributions to the program are after-tax money and you can contribute up to 10% of all of the base pay you’ve earned over your entire CSRS career. You must be still working to take advantage of this special benefit or separated from service butnot retired.
As an example, if you have worked for 20 years and your average base pay during this time was $70,000, your aggregate total salary is $1,400,000. Of course, your base pay will have changed over the years, but for this example we will assume the base pay did not change.
Under the VCP, you can contribute up to $140,000 (10% of $1,400,000), either as a lump sum or over a period of time.
The VCP was originally established to allow CSRS employees to set aside more money in order to buy a higher pension.; and you can use the VCP this way.
But here is the unique part of the program – you can also max fund a Roth IRA. For those of you who think you make too much money to fund a Roth IRA, this is a fantastic option. The income limits do not applywhen you transfer to a Roth IRA from the VCP. All growth in the Roth IRA is tax free and there are no required minimum distributions.
Very few people have heard about the VCP, let alone the ability to max fund a Roth IRA. If you are a current CSRS government employee, or know someone who is, contact us so you can learn how to take advantage of this government program.
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