Q. I’m 57 years old, started with the Postal Service in June 1987, bought back five years and nine months of military time. What would be the difference in benefits between retiring if a VERA is offered and retiring before a VERA is offered? Would I be penalized on my Thrift Savings Plan? Can I get the Social Security supplement? Would I be able to collect Social Security supplement either way? Mike Miles: Since you’d be retiring during or after the calendar year in which you reached age 55, you would have access to your TSP account without incurring the…
Monthly Archives: June, 2012
Q. I am a FERS employee earning $118,000 per year. My sister is a dental assistant earning about $30,000 per year. (She’s also married and lives in a state with a much lower cost of living, while I’m single.) This question involves inheritance of our parents’ retirement accounts, and I offered our salaries because our tax obligations are vastly different. Our father has a TSP account worth approximately $110,000. Our mother has a 401(k) worth approximately $90,000. Both are retired, and both are very ill with terminal cancer. We’re wondering if our parents should each convert their retirement accounts to cash…
Q. I am 62, retiring from the Postal Service after 45 years of government service and wish to take a set amount of money from my Thrift Savings Plan account on a monthly basis. If I should I pass away prior to my wife becoming age 59½ years of age, would she have to pay the 10 percent penalty? A. No, the penalty does not apply to distributions made on account of the death of the account holder.
Q. What happens to the FERS benefits and Thrift Savings Plan account if a former federal employee renounces his U.S. citizenship? A. Renouncing U.S. citizenship, on its own, does not affect the ability to maintain and manage a TSP account.
Q. Should I consider paying off the balance of my mortgage (approximately $300,000) using a full withdrawal of my Thrift Savings Plan upon retirement if the mortgage payment is more than the TSP annuity anticipated and the balance is adequate to make the payoff? A. I can’t tell you if you should, but if I were responsible for managing your retirement plan, I wouldn’t recommend it.
Q. I’m thinking about going to do a GS job after my four years is up in the military. If you go from military to GS, can you keep adding money to your TSP? A. You will begin a civilian TSP account as a civilian employee.
Q. Will it be possible to convert a normal Thrift Savings Program account to the new Roth option? I understand that the taxes due would have to be deducted, but I’m curious as to whether or not it is even possible. A. This is not allowed.
Q. My mom, who doesn’t know English, turned 70½ on Aug. 4, 2011. She has IRAs at two different places: Vanguard and Bank of America. My mom has already satisfied her 2011 Vanguard required minimum distribution before April 1, 2012, because it was her first RMD. The Vanguard 2011 RMD was calculated by Vanguard and mailed to my mom, by the way. Was she also required to take a Bank of America RMD? If so, oh no! What’s the best way to proceed? A. In general, an RMD must be calculated for each IRA, and the total RMD for all…
Q. I have about 10 percent of my TSP invested in the International Fund and about 90 percent invested in the G fund. I do not want to take payments for the International Fund because it is down so much. Can I just take payments from the G fund and wait until the International Fund recovers, or do I have to take a proportional amount form each fund? A. Any distributions will come from your investment funds proportionally. You may rebalance after the withdrawal is made, however.
Q. I am confused by your statement May 29 that the postmaster who is considering “early retirement” after 24 years would be subject to a TSP early withdrawal penalty. My understanding is that if one is 55 years of age and retires, he/she can access his/her TSP funds without a penalty. Because this person is 55½, he or she would not be subject to a penalty. The authority you cite on page 7 appears to support my understanding. Have I misread your thoughts here as written? A. You’re right. Thanks for bringing this to my attention. There was a typo in…