Q: In 2006, my financial adviser convinced me to take a one-time within-service Thrift Savings Plan withdrawal and roll it into an Individual Retirement Account for purposes of stretching the IRA withdrawals. My money was invested in a variety of funds within the American Funds group (all front-end loaded). Of course, my funds were decimated in 2007 and 2008, and I have yet to recover. Can I roll my IRA funds back into the TSP after having exercised the withdrawal? I am trying to rectify what I have come to believe was a serious error in judgment. I am 65…
Monthly Archives: February, 2010
Q: I retired three years ago at age 56 with 33 years of civilian service in the Civil Service Retirement System. I elected to take my Thrift Savings Plan contributions and roll them over to a qualified program. I began drawing off my investment in the fall of 2008. After talking to our tax adviser this year, I learned that I was penalized for early withdrawal in 2008 and will be again in 2009 because I will not be 59 1/2 until June of this year. After attending a retirement seminar several years ago, I was informed that because I was…
Q: I’m retirement eligible and in the Federal Employees Retirement System. I’m 60 years old and, after having paid for my military years, I’m two months away from 40 years of service. Does my Thrift Savings Plan account continue to draw interest as I receive my annuities? A: Your TSP account continues to produce the returns that accrue to the funds in which it is invested.
Q: I was told that if you withdraw money from your Thrift Savings Plan account, you are subject to a 20 percent fee and then also subject to pay taxes on the money as income at the end of the year. A: There is no fee to withdraw from your TSP account. Under certain circumstances, there will be a tax deposit withheld from your withdrawn amount, which will be credited against your tax bill for the year.
Q: I consider myself very good at saving money for and with my family as well as managing my family’s budget. We have a young toddler, and my wife and I are still building our family. I am 34, have been with FERS (active employee) since I was 33, and I have four years of active military time I am almost done buying back. I have my wife saving a little more than 11 percent of her incoming from teaching school (company doesn’t match), and I save 15 percent per paycheck (20 percent if you count my federal match). I…
Q: What are the options of drawing out money from my Thrift Savings Plan when I retire? Can I draw monthly payments without buying an annuity and leave the majority invested? A: You have a number of options for withdrawing the money, including partial and full withdrawals. The details are explained in the materials available here. You may elect monthly withdrawals, which are a form of full withdrawal, without buying an annuity, and continue to invest the remaining account value as you choose.
Some observers of the investment markets have deemed 2000 through 2009 a “lost decade” since the most widely recognized gauges of stock market performance — the Dow Jones Industrial Average and the Standard & Poor’s 500 Index — produced losses over the period. The Thrift Savings Plan’s proxy for the S&P 500 Index, the C Fund, produced a loss of about 10 percent between its closing values at the ends of 1999 and 2009. This decade is characterized to have caused the ruin of, or at least a significant setback to, the retirement plans of scores of workers, including many TSP…
Q: I am being removed from my civil service position because I am ineligible for a security clearance. I’m 53 with 10-plus years of service. Can I withdraw my TSP funds? I’m aware of the tax penalty. A: After you separate from service, you’ll be able to withdraw your vested balance.
Q: I had to retire from federal service because of medical reasons, and I was granted the medical retirement in 2009. I had to withdraw all my TSP funds in order to survive. I was 57 years old and I had 20 years of time, however, I did buy back three years so it should have been considered 23 years of federal service employment. Can someone tell me what to expect with my 2009 income taxes, such as penalties and taxes? A: Your federal service record has no impact on the taxation or penalties imposed on TSP withdrawals. The money you have withdrawn…
Q: I retired in March 2008 (civilian with DODDS under FERS). I need to take an RMD this year as I am 70.5 years old in December 2010. I received the Form TSP-70. I am a bit disappointed that the government has the option of taking an annuity on the form ( I don’t think they even mention the annuity is with MetLife Insurance) without telling you in a brochure (from MetLife, maybe) how much MetLife’s administrative fee, surrender charges, and other pertinent costs are. Is there a good non-biased site to go to to determine which is better (depending on circumstances), TSP…