Monthly Archives: December, 2011

Q: A few years ago, I applied for an early withdrawal from my SP, specifically a hardship loan. Ten percent was taken right off the top, and I reported the early withdrawal on that year’s taxes. Two years later, the IRS says I owe them another 10 percent, plus a $1,000 penalty plus interest. If I had that kind of money, I wouldn’t have asked for a hardship. Does it even matter that I borrowed against my TSP for hardship reasons? Is there another way to borrow against your TSP (early) without going broke? A: You took a hardship withdrawal,…

Q: In the late 1990s, I invested money in a Franklin Templeton T-Roth IRA and a Hartford Variable Annuity investment. I would like to bring these investments into my TSP account. I understand TSP will begin to offer Roth options in the second quarter of 2012. Would I simply be able to roll over my Franklin T-Roth accounts into Roth accounts offered by TSP? And how would this relate to the $17,000 ceiling on TSP investments for 2012? From my limited understanding regarding variable annuity investments, it sounds like I would need to liquidate these accounts in order to move…

Q: I am 62 with 22 years of federal service. Recently, my agency offered a buyout. I was thinking about taking the buyout and retiring.  Here is my reason for not doing so.   I have been reading horror stories regarding OPM’s incompetency regarding our annuity checks. Some people have been waiting as long as a year.  They cannot get any response from OPM. Since the third leg of my retirement TSP has lost so much money, I would have to drain it in order to survive. Should I stay or go? I also will have surgery in early 2012 and…

Q: I’ve been a federal firefighter for over 10 years. Our retirement is forced at age 57. According to my last TSP balance, I have just over $60,000. Not much considering 10 years worth of contributing. Doing the math and adjusting for economy, in another 10 years, I will have less than $120,000 for 20 years of service for retirement. How do I know I’m putting my funds in the right retirement fund? Right now, I have 100 percent going into the L2030 with 100 percent of future allocations going in the same. I just know I’m missing out on…

Q: I worked 20 years for the postal service, from 1984 to 2004. I was 49 when I resigned. My Thrift Savings Plan money has remained untouched. I am 56 now, my MRA. Will I be subject to the 10 percent penalty tax, if I ask for monthly payments for a period of 10 years to start now? If yes, how can I receive my TSP money now without the penalty tax? A: You’ll only avoid the penalty if your payments meet the IRS definition of Substantially Equal Periodic Payments. The rules for these payments can be complex and you…

Q: I am 51 and will retire from federal law enforcement after 24 years of service. Will I have to pay the 10 percent penalty for early withdrawal?  I was always told the federal hazardous duty act exempted me from the provision. A: It is my understanding that the exemption applies only to withdrawals from a defined benefit pension plan, and not to withdrawals from defined contribution plans like the TSP. Check with a CPA to be sure before you proceed.

Q: I am a retired Army reservist since July 2011. I was called to active duty in support of OEF in August 2006 until May 2011. Before my active-duty orders ended, I took out a loan from my TSP account. The loan has not been repaid, and I have separated from the service. If I elect not to repay the loan, will I be subject to the 10 percent early withdrawal penalty or am I eligible for relief from the penalty since I was a reservist called to duty for more than 179 days after Sep. 11, 2001? A: There…