Q. What Thrift Savings Plan options are available upon retirement other than purchase of an annuity? What rules govern TSP rollovers to an IRA? A. You may leave your money in the TSP and manage it there for life; you may take one partial withdrawal; you may take a full withdrawal as a lump sum or a series of monthly payments, or some combination of these. Internal Revenue Service rules govern rollovers to an IRA. Visit www.tsp.gov for more information.
Monthly Archives: November, 2012
Q. Can I select the date my TSP monthly withdrawal is deposited to my bank account, or is it the same date for everyone? A. You can’t specify the date.
Q. I retired from the Air Force in 2004 after 30 years of service. I was rehired into the civil service ranks in November 2004 and immediately started investing into the Thrift Savings Plan’s L2020 account. I just turned 58 and plan on retiring when I hit 60, maybe 62 if my health holds up. How long should I keep my investments in the L2020 account? As I get closer to retirement date, should I move it from L2020 to one of the individual funds? A. If you’re not sure about what to do, to support you goals with a…
Q. My retirement time frame under FERS is about 2035. Prior to joining the feds, I had virtually no retirement planning. But when I joined the feds at age 33, I started making diligent contributions to the Thrift Savings Plan. Six years later, my TSP account has hit a $110,000 balance. This year, I started a Roth IRA with a $5,000 contribution. I am married, and our income just slid slightly below the adjusted gross income ceiling for Roth IRA contributions, mostly because I contributed $17,000 into the traditional TSP. As I look now to the Roth TSP, I am considering for the…
Q. I have a Thrift Savings Plan account, and I have a retirement annuity with a company other than MetLife from previous employment. Can the two be merged into the MetLife program, or do I have to take my TSP account to the other annuity when I retire? Am I correct in assuming that if I place my TSP either way, there will not be a tax penalty, since it will be put directly into an annuity? A. Merging the two is probably not possible. You can either continue your TSP account, use the money to buy a TSP annuity…
Q. I’m a Postal Service employee who is very close to his retirement date. I was told that withdrawing 4 percent of my Thrift Savings Plan savings per year would last for a lifetime? Is this true? What if I die two years after I begin to draw and my benefits are left for my daughter who is only 38 now? Will she receive the money for a lifetime also? Or will she be paid only the balance? A. You can’t be sure that a 4 percent annual withdrawal rate will be safe. It depends upon a number of factors, including…
Q. I’m 60 years old and receiving a full Thrift Savings Plan annuity at set monthly payments. For 2013, I want to increase the payments using Form TSP 73 to cover anticipated expenses for a family wedding. The following year, I want to again submit TSP 73 to significantly lower my payment for 2014, as I will have some anticipated income and won’t need the extra money. Other than the $50 minimal monthly withdrawal amount, are there any dollar restrictions in setting the monthly withdrawal amounts year to year? A. Just to be clear, you are receiving automatic monthly payments from your…
Q. I just completed six years of service in the Army. I have been making contributions since I enlisted thanks to my supervisor at the time. I would like to know: what the penalty is for an early withdrawal. Also, will I be penalized for transferring it over to another retirement plan? A. The early withdrawal penalty is 10 percent of gains withdrawn, when it applies. You may roll your Thrift Savings Plan balance into an IRA or other qualified retirement plan to avoid the penalty and current taxation. Of course, you may leave your money in the TSP and…
Q. Does a Vanguard Roth decrease the elective amount that I can place in the Thrift Savings Plan? This year, I have already maxed my Vanguard Roth to $5,000. Can I only place $12,000 into TSP, or can I still contribute the total $17,000 to TSP? I understand that if I contribute $5,000 to the Roth TSP, I can only place $12000 into the regular TSP. Does the Roth TSP preclude from using the Vanguard Roth? A. The amount you contribute to a Roth IRA does not affect the amount you may contribute to the TSP, but your income might…
Q. I have been vested in the Thrift Savings Plan for nearly 14 years and I am very concerned about a stock market collapse. I have moved everything to the G Fund. However, hyperinflation will consume the purchasing power of the dollar. Why doesn’t TSP have an investment alternative targeting precious metals, similar to various private sector investment companies? A. Because the Federal Reserve Thrift Investment Board, which makes those decisions, hasn’t included one. You should note that it is possible to produce an inflation-hedged portfolio by diversifying your account among the existing five TSP funds.