Q: When I am filing my simple taxes, do I need to include my 5 percent Thrift Savings Plan contributions as an investment anywhere in my return? I did not receive any IRS Form 1099s from the TSP, but want to ensure I do the right thing. A: Your TSP contributions do not need to be reported as an investment. The contributions are reported to you on your W-2.
Yearly Archives: 2012
Q: I am a Federal Employees Retirement System employee retiring on April 30, under the Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay at age 55. Can I take some or all of my Thrift Savings Plan balance and transfer it to a self-directed individual retirement account? What is the process for doing that? What are the estimated costs and penalties? A: You may roll over your TSP assets to an IRA following separation at at 55 with no penalty. Use Form TSP-77 to request a partial withdrawal or Form TSP-70 to request a full withdrawal of your account assets.
Q: I’m tired of moving funds all over the place trying to maximize my money in the Thrift Savings Plan. I have done so-so — retired federal law enforcement, 30 years of service, now 51 years old. I am going to start withdrawing funds at 59 1/2. I want to maximize my value in eight or nine years. I know it is hard to have the best of both worlds (safety of funds vs. maximized rate of return) — what are your thoughts? A: I can’t possibly give you reliable investment advice through this forum, without the appropriate understanding, research…
Q: I plan on retiring at 62 from the Federal Employees Retirement System. Will I be penalized for withdrawing money from my Thrift Savings Plan account at that age? A: No.
Q: I have a question concerning the following paragraph from your Feb. 20 column in Federal Times: I find it disappointing that it appears that you will not be able to manage, or withdraw, money selectively between the two options. Your contribution allocation and any interfund transfers you direct will apply to both options. Any withdrawals will be taken, pro rata, from both options. You may, however, split a rollover distribution between traditional and Roth IRA accounts. Specifically, I am puzzled by the statement in the second sentence. As I understand the general concept with “tax deferred” individual retirement accounts…
Q: I have looked all over the Thrift Savings Plan website and cannot find the button to push that says I am retiring and want to start collecting my money. I am almost 62 and intend to retire in 191 days. I have figured out that I want to begin receiving my money on a monthly basis and can only change that election once a year. The online calculator tells me that amount is good for 60 years and four months. It does not tell me how far off the minimum distribution I am. But where is the button? A:…
Q: I have two Roth questions. First, I max out my TSP contributions and would contribute more if allowed. Am I right to view Roth contributions as a good means of essentially increasing my retirement contributions by pre-paying the taxes I’ll pay in retirement? Second, after I retire, will I be allowed to transfer the Roth balance of my TSP account to an existing Roth IRA and leave my non-Roth balance in the TSP? A: “Yes” to the first question and “It appears so” to the second.
Q: I work for the postal service. If there is an early out I would jump at the chance. I would like to use the funds in my TSP to pay off our house and all our other bills. I am 53, my husband is 57. If I transfer the funds to an IRA in his name, when could they be withdrawn without paying a 10-percent penalty. Is this even possible? A: You can’t transfer or roll over your TSP funds to another person’s IRA.
Q: Monthly payments are considered a full withdrawal, but are they still in TSP and eligible to be invested in any of the accounts that are offered where interest can be accrued from them? A: Monthly payments are taken, pro-rata, from your invested TSP funds each month. Money in your TSP account remains invested, according to your direction, until it is distributed.
Q: I’m curious as to why you are unconvinced that paying tax on Roth TSP contributions now and then withdrawing your balance tax-free is not necessarily a better option than deferring tax payments on traditional TSP contributions and then withdrawing the balance at a lower tax rate. I used the following assumptions: Annual contributions – $17,000 Tax rate – working 18 percent Tax rate – retirement 14 percent Interest rate (all years) 6 percent Compounding periods 26 Years of service 25 I show identical balances after 25 years. I then assume 35 years of equal monthly withdrawals (6 percent annual…