Wrapping Up

As the holidays approach and 2010 winds down, federal employees and retirees should take advantage of an opportunity to make last-minute adjustments to their investments. Those invested in the Thrift Savings Plan also have a number of deadlines to keep in mind as the year comes to a close.

The TSP has a special schedule for processing payments before Jan. 1.

Dec. 15: Participants who receive monthly payments must have requested status changes by Dec. 15.

Dec. 24: TSP will be closed. All scheduled transactions will be processed on Dec. 27.

Dec. 28: TSP will process monthly payments that are normally scheduled to be disbursed on Dec. 28, 29, 30, and 31, along with required minimum distribution payments. These transactions will be reported to the Internal Revenue Service as 2010 income.

Dec. 29-31: Withdrawals will be reported to the IRS as 2011 income.

Dec. 31: TSP will process transactions, but call centers will be closed.

TSP participants also will not be able to allocate or transfer money into the L2010 fund after 12 p.m. EST on Dec. 31. The fund will close that evening, and all investments will be transferred into the L Income fund.

Federal workers, however, have more than just a logistical incentive to get their TSP and other investments in order. The end of the year is a good time to evaluate your portfolio to ensure you are meeting your investment needs, said Ashby Daniels, financial adviser at First Command Financial Services.

For example, employees should look at their investments to determine whether they will reach their asset allocation goals and rebalance their portfolios if necessary, Daniels said. Workers should consider any life changes that have occurred -- such as proximity to retirement, marriage, divorce or sending children to college -- since the last time those types of major decisions were made. It's also important for employees to designate beneficiaries for every financial account, he added.

The end of the year also is a good time for federal employees to max out Roth IRA and traditional IRA contributions, Daniels said. Though workers have until Tax Day 2011 to do so, if they are under the limit, now is as good a time as any to make adjustments, he added.

Finally, federal employees who received raises in 2010 should put that income to work in their investments before Jan. 1 rather than keeping it as cash for daily expenses, Daniels said. If workers never see that money as part of their budgets, it won't become part of their standard-of-living expectations, he noted.