Monthly Archives: July, 2010

TSP withdrawal

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Q: I will reach age 70 ½ on March 31, 2011.  I understand that I must begin withdrawal from my Thrift Savings Plan [and rounded over IRA] by January 2012.  I plan to continue to work in my present position for the federal government after January 2012 up until April 2013. 1. Am I required to begin to withdraw my combined TSP/IRA in January 2012, or may I delay withdrawing these funds until I stop working in April 2013? 2. What law, directive, statue says so? 3. If I am required to begin withdrawal in January 2012 but continue working…

Refunded income tax

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Q: I retired with a Federal Employees Retirement System Thrift Savings Plan account and am 60 years old. I would like to make a partial withdrawal and understand it will be taxed 20 percent by the federal government. At the end of the year, they will send a 1099 form to be used for federal income filing. I still have two children in college and am currently paying for that. Will I be able to recoup some of the income tax paid from my withdrawal if all works out on my federal tax form (education credits)? Or is this tax…

TSP website helpful

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Q: I have a question about withdrawing money from my Thrift Savings Plan account. I would like to know as many details as possible, to include penalties and how long it takes to receive my funds, as well as if I’m allowed to deposit a lump sum in the future to make up for what I took out. A: You’ll find the information your looking for at http://www.tsp.gov.

Transferring funds to CSRS

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Q: I am a federal employee with a fairly complicated work history. The Office of Personnel Management tells me that to obtain full credit for all of my time served, I owe approximately $60,000 in deposits and redeposits. It’s worth it to me to pay that amount, because it means the difference between 34 years of service and about 20 years of service if I were to retire now. I just turned 59 1/2.  What I would like to do is withdraw the money from my Thrift Savings Plan account and send it directly to OPM to pay off my…

Spread TSP over its five funds

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Q: I’ve been in civil service for 4 1/2 years. I’ve been in Thrift Savings Plan for about 3 years. I have my TSP invested 100 percent in the I Fund. I intend to work maybe another 10 years. I was thinking about putting 35 percent in the S Fund, 35 percent in the C Fund and the rest in the I Fund. The percentages are not set in stone but I am thinking about investing in the S Fund and the C Fund. Any suggestions? A: I can’t provide specific investment advice through this forum — it would be…

Analyzing TSP performance

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Q: I’ve been participating in the Thrift Savings Plan since the late 1990s and am trying to learn how much of my current balance is made up of contributions and how much is based on earnings. TSP will only provide the various contribution category totals (mine, agency matching and agency basic) with the associated earnings included. I would like the earnings broken out so I can see my account’s performance over the years. Is there a way to calculate this without going back through more than a decade of statements? A: No.

Retirement income needs different for everyone

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Q: I have always heard/read that to live at the same standard in retirement, you would need to have approximately 80 percent of your salary when you retire. Although I think I know the answer to my question, I would like to hear your response. My question is: Is it the annual gross pay minus my TSP contribution that I take home to live on, or my annual gross pay before I take out the TSP contribution that one would use for the 80 percent calculation?  For example, I am over 50, so I take out the maximum $16,500 plus…

Does using TSP to pay off loan exempt one from taxes?

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Q: First question: My wife and I are both in the Thrift Savings Plan, and we intend to retire in nine years. I heard somewhere that if I used my TSP funds to pay off my home loan and land loan that it will not be taxed. Is this true? I am under the GL scale and will have 31 years of federal service and four years of military service at age 57. My wife works for the Postal Service and will have 20-plus years of service at age 55. My second question is, if I decide not to withdraw…

Ponzi schemes, other scams target federal employees

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The recent revelation that 260 federal employees and annuitants and their families may have lost some $34 million to a crooked investment manager is a loud and clear wake-up call. Wayne McLeod and his firm, Federal Employees Benefit Group, are accused by the Securities and Exchange Commission of defrauding a group of investors, many of them federal law enforcement personnel, in an apparent Ponzi scheme. According to the SEC McLeod admitted perpetrating the scheme to investigators before taking his own life. While this story is shocking and sad, it is also instructive. I met McLeod at a seminar several years…

Law enforcement officers and TSP withdrawal

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Q: At the end of 2010, I’ll be retiring at the age of 50, with 23 years in federal law enforcement. I will need to take a withdrawal from my Thrift Savings Plan upon retirement. According to my agency, in order to prevent being assessed a 10 percent penalty for early withdrawal, I need to set up my TSP payments under the 72t rules (i.e. substantial equal periodic payments until after the age of 59½). However, according to IRS Publication 575, Pensions and Annuities, as I understand it, law enforcement officers are exempt from the 10 percent penalty for early…

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