Q. I want to help my daughter reduce her $120,000 graduate student loan, which she will repay at 6.5 percent interest when she finishes next year. I am 58 years old, a foreign service officer, and planning to work until I am 65. Given that Thrift Savings Plan general loans are at 1.2 percent interest, I am considering asking for a $50,000 loan to help my kid jump-start payments. In your opinion, would this be wise? A. Wise is not really the issue here. It’s certainly generous. But, is it affordable? That’s really the question.
Monthly Archives: September, 2012
Q. My wife recently retired from a state position. She was informed by her human resources/benefits office that she could roll over the balance of her 401(k) into my Thrift Savings Plan. Is this accurate? A. Wrong! One spouse can’t combine their retirement plan assets with those of the other.
Q. Can a TSP residential loan be taken out to pay off a mortgage on a primary residence? A. No.
Q. My wife has 12 years of FERS service at the age of 62. She is eligible to retire. Can she withdraw the full amount from her Thrift Savings Plan without penalty? A. Yes.
Q. I recently retired from the military. I had $30,000 in the Thrift Savings Plan. I have no plans on returning to federal service. I have Roth IRAs with two other private companies, each with less than what I had in the TSP. I want to remove these from TSP and place into either a new Roth or one of my existing accounts, which makes more sense as a larger pot of money will earn me more since I can continue to contribute. This opens a new concern as the limitations of combined income and contributing to a Roth. I…
Q. I am 63 years old, in FERS, have 25 years of service, and have worked for the same agency my entire government career. Because of medical conditions, I need to retire within the next two months. I have an outstanding $20,000 loan and will not be able to repay it before retirement. I have read a lot of what might happen: 10 percent penalty, etc. But could you explain what would be the best course of action and how the outstanding loan will be treated. I would like to use part of my Thrift Savings Plan for medical bills. A. If…
Q. I am going on 72, working for the Postal Service, contributing to the Thrift Savings Plan and paying off a loan. Do I have to start the age-based withdrawal? If I do, how do I contribute and withdraw at the same time? My health is good, and I don’t feel like quitting at this time. A. You don’t have begin taking Required Minimum Distributions from your TSP account until after you’ve retired.
Q. I am a federal employee with a law enforcement (Department of Justice/Bureau of Prisons) retirement. I am planning to retire at age 51 with 23 years in my current agency, and six years and 11 months military time that has been paid back. This, along with 175 hours of sick leave, should give me a 30+ year LEO retirement. I have been told that if I wait until age 55, I can withdraw my entire Thrift Savings Plan balance during that year and do so without a penalty (before 59½ years of age) as long as I pay the…
Q. I’m 47 and plan on retiring at 56 with 34 years of service. If I open a Roth Thrift Savings Plan account, can I withdraw all of the money from the Roth account and withdraw a small monthly amount from my traditional account when I retire? The TSP website says I can make withdrawals (1) on a prorata basis between the Roth and traditional accounts or (2) you can separately transfer any portion of your Roth or traditional account to an IRA or other eligible employer plan. I wanted to withdraw all of the Roth money while my husband is still…
Many of my federal clients’ financial plans have been moving into “overfunded” territory, our periodic reviews and analyses show. This means they are planning to live beneath their means to the extent that they are taking more investment risk than necessary — or prudent — to achieve their lifetime financial goals. In most cases, this improvement in plan funding has been the result of investment performance that outpaced our expectation for the period. A quick review of the Thrift Savings Plan’s fund performance, available at www.tsp.gov, shows that domestic stocks, as represented by the C and S funds, and bonds,…