Q: I owe back taxes to the IRS. Is there any way to transfer the money from my TSP balance back to the government? Most of the balance I have in my TSP account is the amount that was matching funds from the government. I just want to give it back to satisfy my tax debt and start all over again, and be square with the IRS. Can this be done? A: Not that I know of. You’ll have to either take a loan or a withdrawal and pay any taxes due before sending the money to the Treasury.
Monthly Archives: January, 2011
With the new year, change has come to the Thrift Savings Plan’s lifestyle funds, or L funds. One fund, L 2010, has been retired. Another, L 2050, is set to become available at the end of this month. The L funds are a set of five investment funds that are professionally designed with different asset allocations of TSP’s five underlying funds — the C, S, I, F and G funds. The allocations are automatically adjusted in relation to how soon an investor will retire. TSP recommends that you select the L Fund with a maturity date that most closely matches…
Q: I am a federal firefighter under CSRS Special Retirement due to retire in November of 2011 at age 50. At what age will I be able to collect on my TSP retirement? A: While you can access your TSP account any time after you retire, you’ll be subject to the early withdrawal penalty rules until you reach age 59 1/2, unless you qualify for one of the exceptions. See page 4 of the tax notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf for details.
Q: If you chose the monthly payments option on withdrawing your TSP, can you also take a one-time lump-sum payment? A: Once you’ve initiated monthly payments, which are considered a form of full withdrawal, you can’t take a partial withdrawal.
Q: I plan on retiring in 2015 from the Postal Service at the age of 56, with 31 years of service. I am FERS and will have about $400,000 in my Thrift Savings Plan account. Would it be wise to withdraw this money at the time of retirement to pay off my mortgage, son’s school loans and all remaining bills? This way, I will have no expenses and could live strictly off my Postal Service retirement and the Social Security Supplement. If I understand it correctly, I wouldn’t be charge a penalty because I would reach my minimum retirement age…
Q: I will retire shortly from the U.S. Postal Service. My question is about withdrawing my money from my TSP account. My husband, who is already retired, and I went to see a financial adviser about retirement planning. I just turned 62 in December and my husband is 66. The financial adviser said we should take all my money out of my TSP account and hand it over to him. He would then invest it for us. Some would go into buying an immediate annuity which would give us an income of $1,000 for the next 10 years. Then he…
Q: Based on your answers to previous questions, if I retire at age 58 (my MRA is 56) with 15 years service, I can start receiving payment immediately. Why is it my Human Resources folks and the printed literature I read says I have to wait until I’m 59.5? A: The exceptions to the early withdrawal penalty are listed in the section titled “Additional 10% penalty tax if you are under age 59 /12” on page 4 of the TSP tax notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf.
Q: I’m retired from a government job. I want to roll my thrift savings into an IRA. However, I need a new roof on my house and I don’t have the cash I need and don’t want to put the cost on a credit card. Can I take a partial withdrawal from my thrift account to cover the repair, and then roll the rest of the money from the account into an IRA without penalty, since I took a distribution from the thrift plan first? A: Yes, as long as you haven’t already taken a partial withdrawal from your TSP…
Q: My husband just retired on Dec. 31 from the U.S. Postal Service and has a TSP loan balance. He’s 60 and will turn 61 on March 11. Should we pay off the loan, or should we choose not to pay and declare a taxable distribution? How much tax penalty with there be if we declare a taxable distribution? A: If in doubt, he should repay the loan. If he doesn’t repay it, there will be no early withdrawal penalty – only income tax.
Q: I will be 70 in February and realize I have until April 2012 to make my decision about how to distribute my funds. But I am doing my best trying to make a good decision. I am a CSRS retiree, single, no dependents, and have slightly less than $100,000, so not a huge amount. I spoke with a bank, and their advice was to withdraw the whole sum and roll it over into an IRA, which would be a Mutual Fund with a management fee of 1.6 percent. My thinking is that it would be better to take a…