Monthly Archives: February, 2011

TSP withdrawal

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Q: I am a CSRS employee with 36 years of service and will turn 55 in October 2011. If I withdraw all my TSP funds, will I incur the 10 percent penalty tax? I do not plan to retire for a couple of years. A: You may only withdraw your funds for a demonstrated financial hardship and you will incur the early withdrawal penalty.

Choosing a TSP fund

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Q: I’ve retired from the post office (CSRS) but haven’t decided just what to do with my TSP. Just to keep it safe, I’ve left all of it in the G-Fund. Do you think I should move it to one of the L-Funds. I probably won’t touch it for another year or two. A: Not until you know what to do with it, which is what a good investment adviser is for. How you prudently invest your money will depend upon a number of important variables including your age, your marital status, your health, where you live, your current and…

TSP investments

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Q: My wife and I are retired from the Air Force. I am 50 and plan on working until I am at least 62 or 63 or until at least 65. How should I set up my TSP? A: Based on what little I know about you, and assuming that your TSP account is your only investment account, I suggest the following allocation: C = 45%, S = 20%, I = 25%, G = 3%, F = 7%.

RMD for TSP

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Q: I am a FERS employee who will be retiring in the year in which I will turn 70½, which will be in 2012. I am having difficulty understanding the timing requirements for withdrawing the RMD from my TSP account. I would like my first RMD to be a partial withdrawal from TSP of the lump sum required to be withdrawn; this would be followed by monthly payments starting a year later. Under the scenario above, would I have to take a RMD for the year 2012? Or does the RMD requirement start in 2013, the year after the year…

Too many workers focus on one aspect of retirement

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While the media, investment industry and far too many investors are obsessed with the upside potential of how much this or that investment might return, the truth is that maximizing rates of return is not the primary goal of a prudent retirement plan. If you want to maximize the standard of living that can be supported by your resources in retirement, focus on controlling risk and neutralizing threats. That’s because downside surprises tend to do more damage to retirement cash flow than upside surprises do to improve it. Threats to your retirement plan abound. Whether you’re still working or already…

TSP withdrawals

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Q: I plan to retire under FERS at the end of the year. My wife and I want to pay off our house with some of my TSP savings so we won’t have to worry about our mortgage. I was planning to take out about $6,000 a month until the mortgage is paid and then reducing the monthly amount to $1,000 or less after that. I wanted to do it this way because the tax burden would be about the same as if I was still employed. Is this a plausible plan and would I be able to do this…

TSP transfers from 401(k) accounts

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Q: My wife and I are both 56 and planning to retire in the next couple of years. Is it possible for my wife to transfer her Army nonappropriated fund employee 401(k) funds into my Thrift Savings Plan account? I called the TSP office regarding TSP transfers from 401(k) accounts. The TSP office said I can only transfer my 401(k) funds to my TSP account. My wife cannot transfer her private sector job 401(k) funds 401(k) funds to my TSP accounts A: That question has been answered numerous times in the archive. The fact is that retirement plan accounts are…

Federal medical retirement questions

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Q: I am a federal law enforcement officer (10 years+), and was injured at work. As a result of my injury, I may have to accept a medical retirement. I have not bought back my military service time. Is there any benefit to buying my military time back if I receive a medical retirement? Also, what happens to my TSP? What happens to my federal health insurance? Will I receive my Social Security immediately? A: Because you are covered by FERS, if you apply for disability retirement you will also have to apply for Social Security disability benefits, otherwise your…

TSP penalties

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Q: If I retire from active duty military service at the age of 42 after 20 years of service, can I withdraw from my TSP without tax penalties? Can I withdraw from my TSP after the age of 59½ with no tax penalties? A: Unless you use the money to buy a life annuity, take the money as a series of Substantially Equal Periodic Payments under IRS rules, or meet one of the other specific exceptions, you’ll have to pay the penalty for withdrawals taken before your reach age 59½.

Thrift Savings Plan

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Q: A retired USPS employee friend of mine told me that he was hit with a penalty because he started withdrawing money from his TSP account at the age of 60 instead of his retirement age of 62. Is this true? A: No.

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