Q: I’m trying to understand the effects of the RMD (at age 70) on a TSP withdrawal scheme if one is using the equal monthly payments method to draw on one’s TSP savings. Suppose one has about 150,000 in a TSP and starting at age 63 in retirement, they choose to withdraw 2 percent per year, almost guaranteeing growth of the fund to continue each year. Once the RMD kicks in, doesn’t that effectively switch the withdrawals over to a “Life-Expectancy” type of withdrawal (unless one elects to increase their withdrawals to exceed the RMD)? A: Yes, once the RMD…
Monthly Archives: June, 2011
Q: According to two articles in the Federal Times, the U.S. Treasury is now borrowing tens of billions of dollars from the CSRS and TSP to cover government obligations until the debt ceiling is raised. The article indicated that retirees would have nothing to worry about If the debt ceiling is raised. I’m planning to retire at the end of this month. After reading these two articles, I am concerned that if the debt ceiling is not raised (and according to many political pundits, this may be a real possibility given the political climate in Washington), there would be no…
Q: I am approaching 70, close to the 70.5 years of age TSP participation cutoff. I am required to make a decision on where to move my TSP money. I need info on what happens to my thrift savings money, if I choose to move the account funds to Met Life management. I need to know if the TSP fund money I transfer will earn interest. Would the transferred money need to be reinvested so as to earn money ? What are, if any, Met’s management fees? Are there other business fees? Will MET Life REQUIRE use of the IRS…
Q: I had a question in regards to the article in Federal times which is about managing risk by rebalancing accounts. I have all my TSP funds in the L2030. I am 44 and expect to retire around 2030. The article mentions to re-assess your TSP and rebalance your account regularly. Since I have all my funds in the L2030, which is diversified, would it be advisable to move the money around, especially in this market? The market appears to be unstable. Prior to investing in the L2030, I used to move my funds around based on my personal instinct,…
Q: When rebalancing my portfolio to meet asset allocation targets, should I consider retirement accounts separately from currently taxable investments, or lump them together for an overall asset allocation? I am about 12 years from retirement. A: It’s most efficient to rebalance your entire portfolio, as a whole, while positioning assets in the account where they best fit. This approach can be difficult, however, and it may be more practical for you to rebalance each account on its own. There is no “right” answer for your question. The rebalancing approach selected depends upon the methods preferred by the person responsible…
Q: I have asked this question before but now I have been told the answer I received was wrong. Could you please verify your answer? Can one who has retired and is taking a full withdrawal by monthly payments from their TSP stop the payments and have the thrift buy an annuity through Met Life? Your answer was that I could by way of Form 70. A: I’m sorry if I misread or misunderstood your earlier question. You may NOT buy a TSP annuity with a final payment after receiving monthly payments. The monthly payments are requested using form TSP-70,…
Q: I am 57 and I retired from civil service in December. I have not taken anything out of my TSP account at this time. I would like to withdraw a partial payment from my TSP account and then set up monthly payments. Will I have to pay the 10 percent penalty on the partial payment because of my age and since I have been retired for almost six months? A: Since you retired during or after the year in which you reached age 55, you will not be subject to the 10 percent early withdrawal penalty.
Three proposals to help reduce the nation’s deficit could reduce the standard of living of retirees covered by the Federal Employees Retirement System: Computing the pension benefit with the average of the highest five years of salary, instead of the highest three. Reducing cost-of-living adjustments. Increasing the employee’s share of contributions to FERS before retirement. Changes like these could affect the life you enjoy for many years after you stop working, so it is important that you understand what they mean to you. I analyzed the case of a hypothetical employee near the top of the pay scale, but the…
Q: I am 57 years old. I retired from civil service on Dec. 31, 2010. I have not taken anything out of my TSP account. I would like to withdraw a partial payment from my TSP account and then set up monthly payments. Will I have to pay the 10 percent penalty, on the partial payment, since I am now 57 years old and have been retired for almost six months? A: Since you retired during or after the year in which you reached age 55, you will not be subject to the 10 percent early withdrawal penalty.
Q: I am interested in contacting a financial planner/consultant to help me answer some CSRS questions (gross annuity and former spouse survivor benefits calculations) pertaining to a court order. Do you know where I can obtain this service? A: Try visiting www.variplan.com.