Q. I am 56 years old and plan on retiring in October with 35 years of service. I am a civil service employee. Can I make yearly withdrawals from my Thrift Savings Plan with only taxes to pay on it? Or would I be better off taking all of it out and putting it into a bank account? I will need it for the next three years to make my house payment? A. You may not make yearly withdrawals from your TSP, but you could move your money into the G Fund and then set up monthly payments that are…
Monthly Archives: July, 2012
Q. I am 69 and have annuities and some IRAs. When I bought them, I assumed that I would need them when I retired. Fortunately, my luck has made it possible that I do not need to start getting these annuities at 70½. How can I save this money for my daughter to inherit without paying taxes? A. Are the annuities qualified or nonqualified?
Q. Once I’m retired and don’t touch my Thrift Savings Plan and just let it stay in the L2020 fund, would I still be able to apply for the lump sum at a much later date? A. Yes.
Q. I recently turned 59½. I want to do the following with my retirement account, which the Thrift Savings Plan does not allow: I want to be able to withdraw small amounts of funds from time to time from my retirement account, generally limited to a portion of the gains earned by the account. TSP allows a one-time in-service withdrawal. I want to have the ability to make transfers between funds. TSP limits transfers to two per month, but if the first is into equities and the second is into the G Fund, effectively that means only one transfer into equities a month.…
Q. I plan on retiring in 2014 with 30 years of service at age 57½. Can I withdraw my Thrift Savings Plan without penalty? A. Once you retire, yes.
Q. I am planning on retiring at age 56½. I am a CSRS employee. If I take my Thrift Savings Plan balance and roll it over to an IRA, can I start withdrawing it immediately, or do I have to wait until I am 59½ years old? A. The rules are different for IRAs than they are for the TSP. Under the scenario you propose, you will be exempt from the early withdrawal penalty for distributions taken from your TSP account because you retired during or after the year in which you will reach age 55. There is no similar…
Q. I plan on retiring next year at age 59½ as a FERS retiree. Can I withdraw all of my Thrift Savings Plan savings as a lump-sum payment? If so, what are my tax liabilities? A. Yes, you may withdraw your TSP savings as a lump sum following separation from service. You will report the withdrawn amount as ordinary income on your tax return for the year. The amount of your tax liability will depend upon the details of tax return. Your withdrawal will be subject to 20 percent mandatory withholding against your tax liability. See https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for more information.
Q. I am a 55-year-old postal worker of 27 years who has a work-related medical problem. Last year, I was let go on “no work available status” and have been on workers’ compensation since. I have applied for postal disability and am waiting to see what happens with that. So far, I’ve received no letter of separation nor postal job offer. Will I be able to access my Thrift Savings Plan without penalty if I become separated from the Postal Service and am granted disability retirement? A. The answer depends upon your specific circumstances. If you separate from service during the…
Q. I am 64 years old and retiring from the federal government with over 33 years of service. I am CSRS Offset. I applied for Social Security to begin in September. I do not need my Thrift Savings Plan money now. Should I leave it where it is, or roll over to an IRA? I have all of my money in the L 2020 fund. If I leave it where it is, should I move the money into another fund(s)? A. You should leave your money in the TSP for as long as possible. There is no better retirement investment environment. How…
You may be wondering whether it’s worth it to contribute an extra $50 per pay period to your Thrift Savings Plan account. Particularly when you’re in the early stages of your career and have many other needs competing for your paycheck, it can be difficult to choose between spending and saving a little more toward a retirement that is many years away. Our culture tends to send conflicting messages on the issue. On one hand, relentless ads beg you to spend every penny you have on products and services. Even our political leaders from time to time endorse consumer spending…