Monthly Archives: April, 2012

Early retirement

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Q. I am a 54-year-old letter carrier with 24 years postal and nine years military. According to Senate bill S.1789, will I be eligible for early retirement? What about the Social Security supplement? How does this affect my Thrift Savings Plan? Can I get that also? A. You will have access to your TSP account for retirement income as soon as you separate from service. You will be subject to the early withdrawal penalty until you reach age 59½ unless you qualify for one of the exceptions listed on page 4 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. Note that one of the…

Basic TSP retirement options

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Q. I will be retiring (CSRS) at the end of this year. I understand there are several options available with my account. However, I haven’t been able to find any clear/accurate information. Can I take it out as a lump sum? (Is there a negative to this?) As a retiree, can I leave it in place? (One article seemed to state that if a person does this, they receive a small monthly check of some sort.) A. You’ll find the information you need here: https://www.tsp.gov/planparticipation/withdrawals/accountOptions.shtml.

TSP Snapshot

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Q. What is the difference between “Year-to-date” and “Last 12 months” in the TSP Snapshot? A. Year-to-date covers the period from the last Jan. 1 to the present. Last 12 months covers the most recent 12-month period.

Splitting catch-up contributions

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Q. I will become a 49-year-old federal employee this August. I currently contribute the Internal Revenue Service maximum of $17,000 annually to the Thrift Savings Program via bi-weekly payroll deductions. I plan to begin making catch-up contributions Jan. 1, 2013. Once the Roth TSP is available, can I designate beginning Jan. 1, 2013 catch-up contributions to the Roth TSP while maintaining the IRS maximum contributions to the Traditional TSP? A. You may split your pay deferral, including your catch-up contributions, between the traditional and the Roth TSP accounts.

Employer contributions and Roth TSP

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Q. I haven’t seen any discussion on the employer contribution portion as it relates to the new Roth Thrift Savings Plan option. Is their contribution also part of the Roth TSP, or will it continue to be placed in the regular TSP? A. Employer contributions will flow into the traditional TSP.

TSP into IRA?

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Q. I have $200,000 in my Thrift Savings Plan and have just been approved for disability retirement from federal service. I’ll be separated from the agency in mid-May. I am 55 years old. I am not sure whether to roll my TSP into an IRA. I don’t want to start withdrawals from my TSP, but I don’t want to pay an investment firm big brokerage fees to manage an IRA. I have no debt but have a daughter in high school for another year. What should I do with my TSP? A. Keep it and manage it for as long…

Record of TSP basis contributions

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Q. I retired from the Department of the Interior on Dec. 31, 1997, and left my Thrift Savings Plan intact until 2003, when I rolled it into a traditional IRA. On the paperwork for the rollover transaction, I find no reference to TSP contributions versus TSP account balance.  As I approach age 70½ next year, I realize that I need to know what my contribution (or basis) was. I have filed with the Internal Revenue Service for a tax extension in the hope that I can retrieve contribution/basis info from TSP archives and accurately represent the TSP account in my total IRA…

TSP dividends

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Q. TSP explains in its brochure that dividends are already incorporated into the share price. This seems illogical to me, as I believe the definition of a dividend is a cash payout of a certain stock share price at a certain time of the year. Does the Thrift Savings Plan definition mean that the share price of the S, C or I Fund is artificially inflated? A. No, it means the dividends that are paid by the stocks owned by the funds are retained by the fund and increase the net asset value of the fund. The share price reflects…

No 'magic number' target for retirement savings

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The latest fad in retirement planning is to know your “number” — the amount of money you’ll need to have saved in order to retire. Is there really such a magic number for your retirement? If there is, can it be determined? If so, how much should you be willing to pay to find it? These are the kinds of questions you should ask every time someone pitches a financial service or product. Think of determining such a number for the value of your retirement savings portfolio as shooting an arrow from a bow. You’re standing in an exposed hilltop field,…