Q. My TSP question is based on an earlier answer you gave someone else: “A life annuity means that payments continue, on an accrual basis, until the annuitant’s death, unless a survivor benefit option is elected at the time of purchase.” When I die, are the funds remaining in my TSP inheritable by my adult child? If not, why should I leave it in the TSP not knowing when I will die? If yes, can the funds remaining in my TSP be rolled into an IRA or TSP that my adult child owns? A. If you use the funds in…
Monthly Archives: March, 2011
Q. I have been retired from the Postal Service for about 10 years. I made a poor choice when I withdrew all my funds from the TSP. I have about $13,000 of it left in an IRA that is only earning about 1 percent. Is there a similar savings plan that one can invest in, in the private sector. That is a plan that has the various investment options, without the equal employer investment? A. Yes; an IRA at a discount broker using index funds similar to those available in the TSP. Simply transfer the assets from your current IRA…
Q. Excellent article by Mr. Miles on reducing risk by diversification of your TSP portfolio. The missing factor though is, what is a good diversification of the five funds in regards to time until retirement or time until the money is needed? Comments would be appreciated although they are simply comments with no inherent liability. A. While shorter time horizons tend to benefit from more conservative (bond and cash heavy) allocations, there is no allocation rule of thumb that is safe for every investor. This is because allocation selection should be dependent upon cash flow and terminal value needs, as…
Q. I was divorced in 2010 and my ex-wife got my whole TSP awarded to her, almost $50,000. Can I get any tax credit on my return for this? A.I’m not sure, but I doubt it since you never paid tax on the TSP funds in the first place. You should consult a CPA for specific guidance.
Q. I am planning retirement, as a FERS law enforcement officer, at age 56, with 26 years of service. If I take a specified dollar monthly amount from my TSP at the time of separation, which is not based on life expectancy, it is my understanding that it will not be subject to the early withdrawal penalty of 10 percent. However, must I continue to take this same payment as a specifically equal periodic payment (SEPP) until I turn 59 1/2, or may I change the monthly amount that is being withdrawn at the end of the year, without causing…
Q. In the March 7 issue of Federal Times, on page 20, there appears the PersonalAdvisor. Part of the feature shows a TSP Snapshot, which has the following entry: Individual funds C Fund March 3 $16.15 Year-to-date 6.18% Last 12 months 21.34% Question: Am I really receiving a 21.34 percent return for funds in the C Fund” for the last 12 months? I am able to get only 1 percent to 2 percent return on a CD for a year. The 21.34 percent just seems too good to be true! Am I misinterpreting what I see? A. The calculated rate…
Q.I have heard that friends are having more taken out for federal tax on their IRA or annuity accounts. Mine did not. Does that mean I’ll owe money next April? I thought all the Bush tax cuts were extended. A. Withholding and the actual tax you wind up owing are two different things. I can’t tell you whether or not you’ll owe money in April, but the more you contribute during the year, the less likely you are to have to pay later.
Q. I understand that the thrift annuity payment is for life — does that mean until death? As a FERS retiree, will my Social Security annuity be reduced based on how much I have in my retirement fund (frozen CSRS) and/or thrift account? A. Is this a trick question? Yes, a life annuity means that payments continue, on a accrual basis, until the annuitant’s death, unless a survivor benefit option is elected at the time of purchase. In that case, the payments continue until the survivor dies, if later. Your Social Security benefit might be reduced by the Windfall Elimination…
Q: In the March 7th issue of Federal Times, on Page 20, there appears a TSP SNAPSHOT which has the following entry: Individual funds C Fund March 3 $16.15 Year-to-date 6.18% Last 12 months 21.34% Am I really receiving a 21.34 percent return for funds in the “C Fund” for the last 12 months? I am able to get only 1% to 2% return on a CD for a year. The 21.34 percent just seems too good to be true! Am I misinterpreting what I see? A: The calculated rate of return was correct. Remember that this rate of return…
Q: I understand that the Thrift annuity payment is for life. Does that mean until death? As a FERS retiree, will my Social Security annuity be reduced based on how much I have in my retirement fund (frozen CSRS) and/or Thrift account? A: Is this a trick question? Yes, a life annuity means that payments continue, on an accrual basis, until the annuitant’s death, unless a survivor benefit option is elected at the time of purchase. In that case, the payments continue until the survivor dies, if later. Your Social Security benefit might be reduced by the Windfall Elimination Provision…