Monthly Archives: December, 2012

Q. I am a retired government worker who has contributed the maximum amount to the Thrift Savings Plan. After being retired for several years, I transferred the TSP to a traditional IRA. If I convert the traditional IRA to a Roth IRA, how do I figure my “basis” in the IRA to determine the amount that is taxable? A. If the only thing you ever put into the IRA was your traditional TSP assets, then the account has no tax basis and is all taxable upon distribution (or conversion). If you have contributed nondeductible or other after-tax money to the…

Q. For tax purposes, is it better to take a monthly payment which will result in depletion in less than 10 years, or make it go longer than 10 years? Say, an amount of $250,000. A. It’s impossible to say, for sure. The best you can do is make some assumptions about the variables involved and run pro-forma tax returns for the next 10+ years. It might be a good idea to just take what you’ll need.

Q. I am a CSRS employee with less than eight years left until retirement with a Thrift Savings Plan balance of over $200,000. Should I move all of my money to a “safe” fund for the next six months or so until this fiscal cliff mess is cleared up? Looking not to lose money this time, so which fund is the smartest to move my TSP funds to? A. When was the last time it seemed safe to invest? There’s no such time. That’s the problem with timing out of the markets: You then have to time back in or…

Q. I am concerned about the fiscal cliff. Should I borrow from my Thrift Savings Plan to cover future bills? I have about one month of savings, but beyond that, my family will not make it. I can always pay it back in full if a bargain is reached. Just not sure what to do. A. It doesn’t sound like you have a choice.

Q. I am 46 with 22 years of service, and have been told that I will soon receive a letter of directed reassignment to a job in my same grade far outside my commuting area. When the letter arrives, if I should decline to move to the new position, what are my options for drawing retirement? How about insurance? Severance pay? What about my 401(k) in the Thrift Savings Plan? My performance ratings are not an issue. A. Mike: Your circumstances will not affect the usual rules that apply to your TSP account. As long as you remain employed, you will be…

Building and managing a Thrift Savings Plan account is like mining for coal. It takes expertise, ability and the right tools to do the job right and safely. If you don’t know what you’re doing, going to the store for more dynamite probably isn’t going to help you be more successful, and will probably just get you into trouble. In the case of your TSP account, if you know what you’re doing, you should realize that you don’t need more investment options to do the job right. You already have what you need to do the job the TSP was…

Q. My husband and I are both retiring soon, he under FERS and me under CSRS. His income will be made up mostly of Social Security, while mine will be mostly CSRS. A full annuity for him would cost $425 a month. Does it make sense to elect this annuity given the cost? Would a term life insurance policy be a better alternative? I need to put the paperwork in this week. A. There is no universal answer to this question, but if in doubt, the safe bet is to elect the full survivor benefit for your spouse. To answer this question properly would take…

Q. I’m pretty pleased with the Thrift Savings Plan returns and would like to know if I can deposit any after-tax money into the TSP. If I have a $100,000 in a CD, can I withdraw those funds (and pay the taxes) and deposit them into my current TSP account? A. No, but you may transfer your 401(k) assets into your TSP account if all of the money in it is taxable upon withdrawal. Use Form TSP-60 and follow the instructions there.

Q. If I have both a traditional and a Roth TSP, can I elect to have all of my contributions (6 percent) go to the Roth account, and still receive the 5 percent matching contributions (FERS employee) that I have been receiving? Is there a required minimum of my contributions that must go to the traditional account? A. The matching formula applies to all of your deferral contributions, Roth or traditional.