Monthly Archives: September, 2012

TSP, IRA and taxes

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Q. I know I can move my money in the Thrift Savings Plan to an IRA (I’m retired) and pay no taxes doing so. But can I move my TSP to an IRA outside of the U.S. and still not pay any taxes during the transfer? A. An IRA as established by the U.S. tax code outside the U.S.? I’m not sure how that is even possible.

Avoiding penalty on TSP withdrawal

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Q. I’m retiring from the military at age 52 after 30 years of service. As I understand things, I can’t withdraw my Thrift Savings Plan funds without a penalty until age 59½ (except as an annuity or equal payments based on life expectancy). What if I go to work for the government as a civilian until age 55? Then, could I withdraw the whole amount without penalty? Is there a certain length of time I must spend as a civilian federal worker?  What if I only worked for the government for three months during the year I turned 55? Is that…

L2020

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Q. I am looking for some feedback on information received from a financial adviser. I have been in the L2020 fund. The financial adviser is primarily for military and federal employees. He indicated that the L2020 fund currently has 60 percent in stocks (C, S and I funds) and 40 percent in fixed income (G and F funds).  He had suggested conducting an interfund transfer to allocate 65 percent to stocks and 35 percent to fixed income.  The formula would be 25 percent C, 20 percent S and 20 percent I funds, equaling 65 percent.  The second equation would be to put…

TSP to Roth IRA

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Q. I plan to retire in nine years (at 63). I have $176,000 in the Thrift Savings Plan. I add the maximum to the TSP every year ($22,500) and will continue that until I retire. Then, my strategy, once retired, is to withdraw a monthly income from my TSP, and I will then start adding that money to a Roth IRA (e.g., a Vanguard fund) until I max out the Roth for both my husband and me. My thought is that I am getting a tax break by adding the max to the TSP during my high-income years as a…

'Restarting' on TSP vesting

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Q. I have been working for the federal government for just over two years. I am planning on moving in the next few months. I have applied to federal jobs, as well as private-sector jobs and have, so far, heard back from the private-sector jobs. I read that the Thrift Savings Plan is vested at three years and that employees are entitled to retirement benefits after five years. If I were to leave the federal system at this point, would I be able to return to the system in the future and “restart,” as it were, at my two-year mark?…

F Fund

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Q. I am 61 and have $200,000 in the Thrift Savings Plan. I’m in process of transferring another $240,000 from an outside discount brokerage firm to my TSP. I would like to transfer all of the $240,000 to the F Fund. With interest rates possibly remaining low for another few years, is this a good move? When interest rates rise, how much will the F fund shares decrease? The bonds it holds are short and intermediate, so I’m assuming it won’t lose as much as if it held long-term bonds, but I’m not clear on how much I could lose. I’m trying to move…

VCP

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Q. I am a CSRS employee who plans on retiring in 2013. I want to open a Voluntary Contribution Program account and deposit after-tax money in that account, and then, at retirement, transfer the deposit into Roth TSP, and any earnings into traditional TSP. Is that allowed? A. No. You’ll have to use a Roth IRA for the after-tax portion of the VCP account.

Life-expectancy payments vs. fixed-dollar payments

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Q. I am a FERS retiree who must begin taking my required minimum distribution in 2013. I am contemplating receiving monthly payments based on my expected life expectancy, but I need to know whether an initial decision to do so locks me forever, or whether, say in 2014 or 2015, I can change to monthly withdrawals based on an amount set annually. If the Thrift Savings Plan allows the later switch, are there barriers to my later going back to monthly payments based on life expectancy? A. You may change from life-expectancy payments to fixed-dollar payments one time only. You may…

Death benefits

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Q. I plan to choose an annuity for my Thrift Savings Plan savings that will pay my spouse half if I die. What happens to the balance of my money in TSP if we both should die shortly after the annuity is activated? A. If you select and pay for the cash refund option, any unrecovered premium will be paid to your beneficiary(ies) as a death benefit. If you do not purchase the cash refund option, then annuity payments stop and no death benefit is paid.

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