Roth, Retirement & Real Life: Strategies for Federal Employees and Early Retirees
Planning for retirement isn’t just about saving more—it’s about understanding the tools available to you and how to use them effectively. In this episode, we tackled the complexities of Roth IRA rules, federal employee retirement planning, and how to retire early with financial confidence. Whether you’re aiming to leave the workforce at 43 or wondering how Roth accounts work together, there’s something here for everyone.
1. Roth IRA Withdrawal Rules: Know the Penalty Exceptions
Tyler from Arlington, Virginia, brought up a common source of confusion: the 10% penalty on Roth IRA withdrawals within five years of a conversion. According to IRS Publication 590-B, taxable conversions do trigger the penalty—but what about non-taxable ones?
Joe Anderson and Big Al Clopine clarified: the 10% penalty is designed to prevent tax abuse, and it applies only to the taxable portion of conversions. Tyler was right—non-taxable conversions are not subject to the penalty. The takeaway? Understand your conversion source. If your conversion is non-taxable, you may avoid the penalty entirely.
2. Can You Contribute to Both a Roth IRA and a Roth 403(b)? Yes.
Kimberly from New York wanted to know if she could contribute to both a Roth IRA and a Roth 403(b). The answer is yes. These accounts have different contribution limits and tax rules, but they don’t overlap. In fact, Joe and Big Al emphasized how contributing to both allows for maximized tax-free retirement savings. For anyone with access to both account types—take advantage.
3. Federal Employee Retirement Planning: Roth TSP Strategies
Kate from Cleveland, a federal law enforcement employee, has a pension coming and wondered if switching from traditional to Roth TSP contributions made sense. Joe and Big Al suggested it does—especially while she’s in the 24% tax bracket.
They encouraged Kate to stay the course with her TSP contributions and Roth strategy, advising against diverting funds into a brokerage account unless needed for flexibility. With $110,000 in projected annual retirement spending, Kate’s pension and Social Security benefits put her in a strong position—especially if she manages her taxable income carefully through Roth conversions and long-term planning.
4. Retiring Early: Ricky Bobby’s Roadmap to Age 43
Ricky Bobby (yes, really) from Charlotte, North Carolina, has a bold goal: retire at 43. At age 36, he’s already saved $800,000 and is socking away $85,000 annually. He spends about $80,000 per year and wants to transition into part-time work after early retirement.
Joe and Big Al ran the numbers: with a 7% annual return, Ricky could reach $2.7 million by age 43—enough for financial independence. Their advice? Max out the 401(k), use a Roth or backdoor Roth IRA, and funnel excess savings into a taxable brokerage account for liquidity. The strategy balances long-term growth with early-access flexibility.
And of course, they reminded Ricky to make sure his plan aligns with his personal values, family needs, and career satisfaction—especially since daycare costs and future expenses will fluctuate.
5. Rapid-Fire Advice on Retirement and Investments
Throughout the episode, Joe and Big Al tackled quick questions on annuities, Roth conversions, and investment allocations. Their bottom-line advice? Don’t chase blanket solutions—build a plan that fits your situation. Whether you’re a federal employee or a freelancer, the same core principles apply: diversify your income sources, optimize your taxes, and make sure your plan is flexible enough to handle life’s curveballs.
Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.
• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
