Judging by the enthusiasm I’ve seen, some Thrift Savings Plan participants clearly believe that the new Roth option will be the solution to any and all retirement income problems. The option is set for launch as early as April, with whatever benefits it might produce. TSP has promised additional details as the availability date draws closer. Right now, you can get a peek under the hood on the TSP website. The Roth TSP option will allow you make deferrals of after-tax dollars from your paycheck into the plan. If you meet the requirements, which include being at least age 59½…
Monthly Archives: February, 2012
Q: I am going to retire when I am 62 in roughly 2 1/2 years. I will receive my FERS retirement, a small retirement from North Carolina that is similar to FERS and my TSP annuity. Will any of these “retirement” payments affect my Social Security benefit that I also plan on applying for at 62? A: Income derived from your TSP will not affect your Social Security benefit.
Q: Will I be able to contribute to the Roth IRA and Roth TSP? What will be the combined limits if I can contribute to both Roths ($6,000 for each or $6,000 combined, if I’m over 50)? A: According to the TSP, your participation in the TSP’s Roth option, in itself, will not affect your eligibility to contribute to a Roth IRA.
Q: I worked for customs for 13 months and resigned about 10 years ago. I did not use any of my accrued sick leave nor did I transfer it when I left. I was recently hired by DHS/TSA part-time. Can you please tell me: 1. How do I get the unused sick leave I had when I resigned credited back to me? 2. In reference to TSP, can I start to contribute right away, along with receiving the ageny matching contributions, or do I have to wait like all new employees? 3. Is there a formula for calculating FERS retirement…
Q: Are FERS 6c retirees considered retired public safety officers by the IRS for the purposes of tax reporting? I am a retiree with 20 years of service, but under age 59 ½. Most of my career was a GS-2181 customs officer/pilot, but they changed us to 1877 air-interdiction-agent pilots just prior to my retirement. I would like to take the one-time disbursement from TSP and avoid the 10 percent penalty, but I am unsure if federal law enforcement is considered public safety officers under IRS rules. A: If you retired during or after the calendar year in which you…
Q: I’m considering retiring at the end of this year if VERA’s are offered again in my agency. I will be 54. I have two questions related to TSP withdrawls: 1. If I choose to take dollar-specified (vs. lifetime expectancy) monthly distributions from my TSP, it’s my understanding that I’ll be penalized 10 percent since I’m under 55 when I separate and since there’s not a waiver for the dollar-specified monthly payments option. Is that correct? Or is there some way to structure dollar-specified monthly distributions so as to be included in the “substantially equal payments” waiver? Would starting out…
Q: At age 59 ½ I took a withdrawal from TSP. It was not a loan. I borrow because I could at age 59 ½. I am now about to retire at a age 65. How can I get the rest of my money out of TSP? I have to take a lump sum, correct? A: You’ll have to take a full withdrawal, which can include monthly payments.
Q. Can I take the 40 percent loss I take on my Social Security, because of windfall elimination, as a retirement investment loss on my federal income tax? A. No.
Q. I am a Civil Service Retirement System employee with 33 years of service, and I plan to retire June 3. Can I roll my Thrift Savings Plan into the Voluntary Contribution Program before I retire, and will I be required to pay tax on that money? Can I later roll the VCP into an Individual Retirement Account, and is it best to go into a Roth or traditional IRA? A. You may not transfer your TSP money into the VCP.
Q. I am currently a GS-9, Step 1. So let’s say that when I retire, I would be a GS-15. How will my Thrift Savings Plan withdrawals be affected by the tax bracket based on my current 15 percent and, let’s say, 28 percent. A. Your TSP withdrawals will not be affected by your tax bracket. Your tax bracket may be affected by your TSP withdrawals, however. When you withdraw money from TSP, the amount withdrawn during the year is added to your gross income for that year. It is considered ordinary income. If you withdraw enough money to increase your total…