Q. I retired on disability in March 2007. I turned 58 on May 15. What tax rate will I have to pay at 59½ years of age, and what penalty would I pay for withdrawing before then? A. The rules can be complex, depending upon your circumstances. I suggest that you read the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf and then I’ll answer any remaining questions you may have.
Yearly Archives: 2012
Q. My wife and I pulled our retirement in about 1994 or later and invested. The market didn’t help it grow, given the lost decade and other downturns in the economy. I had previously converted mine to a Roth (bad idea). Now I’m 63 and hoping to retire in three to five years unless something worse happens in the next two fiscal years. My wife is nine years younger. We deposited our retirement pulled from other employers into the Thrift Savings Plan, which in both cases is probably larger than if we had kept our federal retirement where it was.…
Q. I will retire this year at age 70 and will request one on the following: 1.) monthly payments for 10 years or more, or 2.) monthly payments based on the Internal Revenue Service’s life expectancy table. My withholding rate will be the same as if I were married with three children but at what tax percentage? Let’s say my annual payout is $10,000. What is my annual tax liability as it pertains to Thrift Savings Plan payments? Will I be paying less than 10 percent? A. The default withholding rate is not fixed and will depend upon the amount of the distribution. You…
Q. If I move an amount into the G Fund and set up a monthly withdraw equivalent to it, can I leave the remaining amount in a different fund and, if needed, move it around also? A. Your withdrawals will be taken proportionately from each of the funds held in your Thrift Savings Plan account at the time the withdrawal is processed.
Q. I am 56 years old and plan on retiring in October with 35 years of service. I am a civil service employee. Can I make yearly withdrawals from my Thrift Savings Plan with only taxes to pay on it? Or would I be better off taking all of it out and putting it into a bank account? I will need it for the next three years to make my house payment? A. You may not make yearly withdrawals from your TSP, but you could move your money into the G Fund and then set up monthly payments that are…
Q. I am 69 and have annuities and some IRAs. When I bought them, I assumed that I would need them when I retired. Fortunately, my luck has made it possible that I do not need to start getting these annuities at 70½. How can I save this money for my daughter to inherit without paying taxes? A. Are the annuities qualified or nonqualified?
Q. Once I’m retired and don’t touch my Thrift Savings Plan and just let it stay in the L2020 fund, would I still be able to apply for the lump sum at a much later date? A. Yes.
Q. I recently turned 59½. I want to do the following with my retirement account, which the Thrift Savings Plan does not allow: I want to be able to withdraw small amounts of funds from time to time from my retirement account, generally limited to a portion of the gains earned by the account. TSP allows a one-time in-service withdrawal. I want to have the ability to make transfers between funds. TSP limits transfers to two per month, but if the first is into equities and the second is into the G Fund, effectively that means only one transfer into equities a month.…
Q. I plan on retiring in 2014 with 30 years of service at age 57½. Can I withdraw my Thrift Savings Plan without penalty? A. Once you retire, yes.
Q. I am planning on retiring at age 56½. I am a CSRS employee. If I take my Thrift Savings Plan balance and roll it over to an IRA, can I start withdrawing it immediately, or do I have to wait until I am 59½ years old? A. The rules are different for IRAs than they are for the TSP. Under the scenario you propose, you will be exempt from the early withdrawal penalty for distributions taken from your TSP account because you retired during or after the year in which you will reach age 55. There is no similar…