Q. I am retiring by the end of this year at the age of 56. I read in the Thrift Savings Plan where you can take a one-time withdrawal payment. Do you have to pay a penalty? Do you have to take it at the end of the year? For example, if I retire in December 2011, will I have to wait until December 2012 to take the one-time withdrawal? Can I take a withdrawal as early January or February 2012? A. Once you’ve retired, the partial withdrawal is available immediately.
Monthly Archives: August, 2011
Q. I was under the impression that I could make monthly withdrawals from the Thrift Savings Plan and change that amount every year. When I try to calculate how long my chosen amount will last, I get a message saying the amount I have chosen is less than the interest I will accrue. Why is this? Am I forced to choose an amount that is greater than what I want? A. The calculator won’t work unless the amount of your withdrawals exceeds the amount of interest that will accrue each month based on the interest assumption you entered. This is…
Q. I am under Civil Service Retirement System Offset. When I took the break in service, I withdrew my CSRS funds (about $50,000; probably $60,000 or more by now). That was in 1998, so I will have to redeposit if I want it to count toward my retirement. I will be 58 next month and am considering retiring in 2013. I have been putting $600 in my Thrift Savings Plan account every payday. I can withdraw money at 59½ and not pay penalties, but it seems like I will be double-taxed. When I withdraw the money from my TSP to pay…
Q. I stopped work in March 2009. I applied for OWCP. The Office of Workers’ Compensation Programs had paid for two back surgeries in 1989 and 1991 and continues to pay for ongoing treatment. I was denied OWCP, so I applied for disability retirement, which was approved. I am still on interim retirement pay. I withdraw some funds from my Thrift Savings Plan to cover me for the time period between OWCP and retirement. I now need to withdraw more for medical reasons. Since I am medically disabled from my federal position, as well as medically retired, what is the…
Q. I plan to take an early out (Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay) effective Aug. 31, 2011. I am under the Federal Employees Retirement System plan. At the time of my retirement, I will be 54 years old. I have read that if you retire before age 55, your withdrawal/rollover is subject to a 10 percent penalty. I have also read that any action can be postponed, but postponed to what age? 55 or 59.5? Does this mean I cannot withdraw and/or roll over to an Individual Retirement Account until I reach age 59.5? I don’t understand why I would have…
Volatile markets take their toll on many investors’ nerves, including those who are relying on their Thrift Savings Plan accounts to provide them with needed retirement income. When prices fall rapidly, as they have recently, many investors react with fear. The more prices fall, the more fearful investors become. Eventually, if prices fall enough, fear turns to panic. Somewhere along the way, many investors — usually those who have lost the most — give in to their fear and abandon their risky investments. This is an irrational response to falling prices and often does more harm than good in the…
Q. Can I cash in U.S. Savings Bonds and use the money to add to my TSP annuity through Met Life? A. No
Q. When I use the TSP annuity calculator and plug in my numbers, I get a monthly dollar amount. Is this the actual amount I will receive every month or will there be processing/management fees from Met Life taken from the shown amount? If there are additional processing/management fees, how can I find out what my real monthly amount will be prior to making my decision on purchasing annuity vs. monthly payments? A. That is the amount you should expect to receive, before taxes, each month.
As a fiduciary responsible for managing and delivering retirement plans for my clients, most of whom are or were federal employees, I am concerned about possible changes to Civil Service Retirement System and Federal Employees Retirement System formulas that are being considered as ways to reduce government spending. I urge lawmakers to be careful in their deliberations on this issue and to avoid allowing special interests and other secondary considerations to affect their decisions. It is sometimes easy to focus on the big picture while losing sight of individuals. Assuming that an effect is small for the average employee or…
Q. If I have an outstanding TSP loan balance at the time of retirement in December and it is declared a taxable distribution, will that unpaid loan preclude me from taking a one-time partial withdrawal from my TSP account the next year? A. No.