Q. At the beginning of a pay period, an employee’s military orders begin. But in the middle of the pay period, it will be the 60th day after paying off a Thrift Savings Plan loan. If the employee wants to initiate a new TSP loan, what should the employee do? The orders are for several months. A. The employee cannot take a loan from his/her civilian account if the employee is in nonpay status with respect to his/her civilian employment while performing military service. However, the employee may be eligible to request a TSP loan from his/her uniformed services account.
Monthly Archives: July, 2012
Q. I think I have heard that the Thrift Savings Plan annuity rate index for calculating monthly annuity amounts is tied to the 10-year treasury rate. For the past five months, the annuity rate has held at 2.125 percent while the 10-year treasury rate has fallen substantially below this. Can you help me understand the relationship between the two rates? Is there a “floor” in the annuity rate agreement with MetLife? A. The TSP annuity rate index is an eight-week moving average of the 10-year interest rate swaps, which are published by the Federal Reserve in statistical release H.15. You can find…
Q. If I receive a Voluntary Early Retirement Authority from the U.S. Postal Service, can I take a lump-sum withdrawal from my Thrift Savings Plan without paying a penalty? I am 57 years old with 27 years of service. A. Yes.
Q. Can I continue to make biweekly contributions to my Thrift Savings Plan account if I make a partial withdrawal from my account? I am 60 years old. Also, can I withdraw these funds at any time or at a certain time of year? A. Yes, and you may request your age-based in-service withdrawal at any time.
Q. I recently read your article, “Prepare now for possible hike in pension contribution.” 1. Can you respond with your thoughts regarding how proposed pension hikes would or would not affect federal employees with less than five years of service as of Jan. 1, 2013) who are subject to the 2.3 percentage-point increase signed into law by President Obama this winter? 2. How would the possible hike in pension contribution affect a CSRS employee who has over 41 years and 11 months of service? A. 1. With about half the increase I modeled for my article, I’d expect about the…
Q. I retired from active duty in December 2011. I accepted an appointment to a government service position in October 2011 and established a FERS Thrift Savings Plan account. I did not move any of my TSP account balance accumulated during my time on active duty into my FERS TSP account, so I currently have two accounts. Am I eligible to take out a loan against the TSP account balance still residing in my [previously] active-duty account? If not, can I transfer all or part of my [previously] active-duty account into my FERS TSP account with the goal of taking…
Q. I just separated from the military and have an outstanding loan. I recently mailed in the “intent not to repay” form. How long will it take for the Thrift Savings Plan to claim a taxable distribution and close out the loan? Also, if the entire sum of the loan was accrued in a tax-free combat zone, will they still tax the remaining balance? A. I checked with the TSP, and it should take one to two weeks for TSP to declare a taxable distribution once it receives an “intent not to repay” notice. Only the outstanding loan principal and…
Q. I’m thinking of retiring at age 66 (I am FERS). How do I access my Thrift Savings Plan without any penalties or taxes? Is there a limit of withdrawal per month? A. Because of your age at retirement, your TSP withdrawals will not be subject to the early withdrawal penalty. They will be subject to income tax, however, unless you roll the withdrawal over to another tax-deferred account.
Q. When the Philadelphia Naval Shipyard closed in 1995, I withdrew all $29,000 of my CSRS money. I had 16 years of service time at the shipyard. After years of working in the private sector, I have now worked six years (two temporary, four permanent) for the government under FERS. I was told I would have to pay back $61,000 or I would owe $35 a month when I retired (to keep my health insurance.) I do not have $61,000. I have $31,000 in my Thrift Savings Plan account. I am 64 years old and my body is worn out…
Q. I have a loan of $6,000 on my Thrift Savings Plan with 20 payments left. I am 60. If I make an age-based in-service complete withdrawal of my TSP, what happens to my loan and the payments I am making? Do I have to keep making the payments and then wait until I separate from service to receive it, or will it become a taxable disbursement and end my payments? A. Your loan repayment obligation continues until the loan is repaid or you fail to make the required payments and the balance due is declared a taxable distribution.