Is a Command Financial Specialist a substitute for an accountant?

[AllYourBass]

Forgive my ignorance on this topic, for I, like Jon Snow, know nothing. This topic follows hours of researching around via Google, AirWarriors topics, calling the NAS Pensacola FFSC and talking to an investment firm.

The backstory: At my last job before joining the Navy, I was able to save up about $13K in a 401(k). While I'm waiting in A-Pool for IFS to start, I figured I'd try and get some retirement planning out of the way and move that 401(k) to a better option. Based on my research here and elsewhere, the common recommendation seems to be to roll it over into a Roth IRA, which would be my first priority over other options like the Thrift Savings Plan.

That said, I don't know how to get there from Point A. I narrowed it down to Vanguard and Fidelity, and after calling Vanguard this morning, I was made aware of how much I don't know about this stuff. For example, I learned that adding the $13K from the 401(k) to my salary would bump me to the next tax bracket, and that there are other ways to go about rolling over funds that may help deal with that; to that end, the representative recommended I get in touch with an accountant. I've always just done my own taxes with TurboTax because it was simple enough for a single student to do.

The question: Before I begin the research into how I go about finding/choosing/hiring an accountant, is this the kind of stuff the Navy can help me plan via a Command Financial Specialist, or is this the kind of stuff I should be taking care of on my own via an accountant?

 

[wlawr005]

I wouldn't go so far to say that a CFC is an accountant. Strictly speaking, a CFC is an Officer/enlisted person who advises member of their command as a collateral duty. An accountant had a degree in finance, accounting, etc.

The best person to ask this question would be your............wait for it..............CFC.

 

[Flash]

I know a few CFC's that would recommend you let it all ride on black, that is what the one in my squadron did with some wardroom funds (it was approved by the wardroom).

So yeah, I would find a real financial advisor or an accountant. Edward Jones and Raymond James both usually do well in surveys for financial advice firms, I have not had first hand experience with either though.

 

[Brett327]

The best person to ask this question would be your............wait for it..............CFC.

I concur with Flash... in that I would NOT ask my CFC. They're really not qualified to give advice on such things.

 

[AllYourBass]

Thank you all for the advice. My initial nagging concern was that the CFC might be more interested in guiding me toward the TSP as a simple option (or a Navy-beneficial option) rather than toward what works best for my specific situation. I hadn't really considered whether they might just not be qualified to advise on the topic. I'll start looking into finding my very own bloodsucking, reassuring tax guy.

 

[Spekkio]

The CFC can tell you about TSP, USAA's car buying service, and hand out a budget sheet if you are in crushing debt before referring you to further help. It's catered toward helping a young, junior enlisted servicemember manage his check book. He is not formally trained by the Navy to give investment advice.

AFAIK, you can't roll funds into TSP even if you wanted to. However, I will note that TSP has outperformed my USAA mutual funds by double thanks to its miniscule fees and they now allow you to invest $17.5k/year into a Roth IRA via TSP vice the $5500 max elsewhere. I'm in the process of shifting my USAA funds to Vanguard, but TSP is a good "fire and forget" option. It's not a scam that benefits the Navy, and you'd probably need a good financial advisor to help you invest in a way to beat it if you didn't major in it yourself in college. If you want to get more detailed then seek another investment company/options, but be warned that eventually you won't have time for it.

Finally, be aware that even if you move up tax brackets, you only pay the higher rate on the amount within that bracket. So you at most would pay the higher rate on the $13k, not all of your salary. Whether it will cost you more to make it a Roth IRA and pay taxes now or leave it traditional and pay taxes at retirement doesn't require an accountant, just some multiplication.

 

[Tycho_Brohe]

AFAIK, you can't roll funds into TSP even if you wanted to. However, I will note that TSP has outperformed my USAA mutual funds by double thanks to its miniscule fees and they now allow you to invest $17.5k/year into a Roth IRA vice the $5500 max elsewhere. I'm in the process of shifting my USAA funds to Vanguard, but TSP is a good "fire and forget" option.

I'm pretty sure the $17.5k you mentioned is for the Roth TSP option, not a Roth IRA.

 

[Spekkio]

Yes that is exactly what I meant.

 

[Renegade One]

I concur with Flash... in that I would NOT ask my CFC. They're really not qualified to give advice on such things.

Me too...

My initial nagging concern was that the CFC might be more interested in guiding me toward the TSP as a simple option (or a Navy-beneficial option) rather than toward what works best for my specific situation. I hadn't really considered whether they might just not be qualified to advise on the topic. I'll start looking into finding my very own bloodsucking, reassuring tax guy.

Your CFC, other than perhaps being well-intentioned, probably has no interest at all. Not like he/she gets any sort of commission from the activity. Sort of like asking your unit Legal Officer to help you beat a manslaughter charge.
Which brings us back to the "blood suckers"…probably your best advisors, although…if we can be honest?... not much blood to be sucked from your account.
My advice: [Caveat: I ain't no CFC either…] Are ALL of your Student Loans, credit card accounts and/or car payments (motorcycle, boat, or whatever…) fully paid off? If not…do THAT first. It's the best investment you can make.

 

[zippy]

Forgive my ignorance on this topic, for I, like Jon Snow, know nothing. This topic follows hours of researching around via Google, AirWarriors topics, calling the NAS Pensacola FFSC and talking to an investment firm.

The backstory: At my last job before joining the Navy, I was able to save up about $13K in a 401(k). While I'm waiting in A-Pool for IFS to start, I figured I'd try and get some retirement planning out of the way and move that 401(k) to a better option. Based on my research here and elsewhere, the common recommendation seems to be to roll it over into a Roth IRA, which would be my first priority over other options like the Thrift Savings Plan.

That said, I don't know how to get there from Point A. I narrowed it down to Vanguard and Fidelity, and after calling Vanguard this morning, I was made aware of how much I don't know about this stuff. For example, I learned that adding the $13K from the 401(k) to my salary would bump me to the next tax bracket, and that there are other ways to go about rolling over funds that may help deal with that; to that end, the representative recommended I get in touch with an accountant. I've always just done my own taxes with TurboTax because it was simple enough for a single student to do.

The question: Before I begin the research into how I go about finding/choosing/hiring an accountant, is this the kind of stuff the Navy can help me plan via a Command Financial Specialist, or is this the kind of stuff I should be taking care of on my own via an accountant?

There should be an option to roll your old 401k directly to your new institution without it ever touching your personal accounts. Doing it that way will not cause you any early withdrawl penalties and not count it as income for the year the way it would if you cashed out the 401k and then deposit it into a New IRA etc.

 

[Spekkio]

I did some math and realized:
-To fully pay for my kids' projected college costs, I need to have $1million, or invest $17k/year at an average 8% return.

-To retire at 72 and continue earning $100k/year for 18 years (which probably won't go far in 2055), including best-case scenario of military retirement and social security still existing (I'm not retiring to the stix after all that), I need to have another $1 million. If both those go away I need $2 mil.

Soo yea. Long way to go. Nothing worse than saying sweet I have all this money in an IRA to realize you barely have a year's worth of living expenses.

 

[Spekkio]

There should be an option to roll your old 401k directly to your new institution without it ever touching your personal accounts. Doing it that way will not cause you any early withdrawl penalties and not count it as income for the year the way it would if you cashed out the 401k and then deposit it into a New IRA etc.

I think he was asking about rolling a traditional 401k into a Roth option, which is where the taxes against his income would come in.

 

[WLcQB10]

I currently am a Financial Consultant, looking at OCS in Supply because of my investment experience. You need to talk to a Financial Advisor or a Financial Consultant. There are a lot of different things that can be done and it varies depending on the service you want. You can go with certain firms that suggest B and C shares or other firms who use A shares for Mutual funds or you could do ETFs and stocks. Basically, what you can do is unlimited but you could face tax issues. Hopefully this helps. If you want to PM me and I can give you general advice.

 

[AllYourBass]

...TSP is a good "fire and forget" option. It's not a scam that benefits the Navy, and you'd probably need a good financial advisor to help you invest in a way to beat it if you didn't major in it yourself in college. If you want to get more detailed then seek another investment company/options, but be warned that eventually you won't have time for it.

I'm all about fire and forget in this case...I don't want be hands-on with my retirement fund until I have a better idea about how all this crap works. That said, I was hoping for a fire-and-forget approach to let the money do something generally positive on its own. Roth IRA seems like a safe bet for now.

...Which brings us back to the "blood suckers"…probably your best advisors, although…if we can be honest?... not much blood to be sucked from your account. My advice: [Caveat: I ain't no CFC either…] Are ALL of your Student Loans, credit card accounts and/or car payments (motorcycle, boat, or whatever…) fully paid off? If not…do THAT first. It's the best investment you can make.

Haha, point taken I'd just like to get some of this stuff squared away and start learning about it before I have more money to be dealing with. Once I have something established, I can worry about moving it around later in life as I start to learn about better options with experience and time to help me. As for debt: I've never carried any in my life. Managed to pay my way through school and such thanks to some great private sector opportunities. I've got a used car payment (thanks USAA) with a .09% APR and an aggressive timeframe that will result in a total of ~$200 interest, but that's well within my budget. Other than that, I make zero interest payments.

I think he was asking about rolling a traditional 401k into a Roth option, which is where the taxes against his income would come in.

Yeah, that's what I'm talking about. My current concern is moving the 401(k) I already have to a better place. I haven't put much thought into what I should be doing with future income, but the general scheme I have worked out is, "Contribute whatever I can to a Roth IRA and contribute the remainder of what I'm willing to commit to a TSP." Basic scheme, didn't put weeks of thought into it. Will be looking into it further.

 

[villanelle]

Figure it out on your own, for free. You pay an advisor either via a flat fee or, worse, via higher expenses which go to his commission. The Boggleheads Guide to Investing is a solid book, fairly easy to understand, and tells you pretty much everything a basic investor needs to know, especially if you are okay with being very hands off and just setting up some basic, solid investments which you invest in automatically. It isn't going to address TSP, but it's a great primer on the basics.