Q. I’m planning to retire Jan. 2 and would like your suggestions as to what to do with the $165,000 in my Thrift Savings Plan account. I thought about transferring the money from the TSP, buying an IRA and letting it remain there for a couple of years since do not think I will need the money at the present time. I am 63 years old and covered under CSRS. Any suggestions as to what to do with the money and the best company or companies to purchase an IRA would be greatly appreciated. A. The TSP is the best…
Yearly Archives: 2013
Q. I will be retiring in January. I have approximately $180,000 the G Fund. Should I consider the one-time withdrawal to a money market account that is FDIC-insured so I can have some liquidity in my cash flow? Could you recommend such a fund? Could you recommend any restructuring of my Thrift Savings Plan to accommodate current federal reductions in the stimulus program? A. Yes, should consider taking a withdrawal from your TSP account to provide needed liquidity, but only if no other resources are available to do the job. The best place for liquid cash reserves in this economy…
Q. I’m a 32-year FERS employee, 60 years old and about to retire in February 2014. I would like to take out some funds from my Thrift Savings Plan. Should I request an age-based, in-service withdrawal or take a partial withdrawal after I retire? A. Either will count as your single lifetime partial withdrawal. Will the tax cost for the withdrawal be significantly lower if the money is withdrawn in 2013? If so, you should consider taking the withdrawal now. If not, it will not really matter when you take it in 2014. If you need the money now but…
Q. I am a CSRS employee. I have decided to take the Voluntary Separation Incentive Payment and should be off the rolls by March 31. I am told that I can put in 10 percent of my basic total federal wages (could be in excess of $200,000) into the Voluntary Contribution Program and I should withdraw all of it when I retire. I am also told that I can deposit this withdrawn VCP money into a Roth IRA, which is the main reason I want to do this. Are my assumptions true? If it is, how can I open a…
Q. Can I roll over a Thrift Savings Plan distribution that I received last week to a Roth IRA? A. Yes, as long as it’s not a required minimum distribution. Your tax preparer is responsible for making sure that you obey the applicable rules, however. Self-preparation of all but the simplest tax return can be hazardous to your financial health.
Q. Are TSP lump-sum withdrawals considered earned income for the purposes of the earned income test for FERS disability retirement? A. TSP withdrawals are not considered earned income.
Q. Can the Thrift Savings Plan withhold state income taxes from a monthly payment (scheduled withdrawal)? If yes, what is the procedure? A. No.
Q. A sad tale: I am 64 and still working for the Defense Department. For most of my career, I have left my money in the G Fund except for some short periods where some of it was in the C Fund. I now have $430,000 in the G Fund but just can’t find it in myself to diversify although I see that I have lost a lot of money over the years this way. Can you recommend a relatively safe future strategy that won’t keep me awake at night? A. Find a trustworthy and affordable adviser to help you.
Q. My IRA was started when active-duty personnel were permitted to contribute to an IRA with after-tax dollars. I am 66 and want to begin planning for the required minimum distribution with a little long-term projecting. Here is the dilemma. In trying to compute the cost basis and taxable amount, I have to distinguish between the military years “after-tax dollars invested” and the “before-tax dollars investments” contributed during my post-active-duty working years. I found out that for some of the active years, no IRS Form 8506 was filed (showing the contributions for some years). How can I substantiate for the IRS…
Q. Can a CD be transferred into the Thrift Savings Plan? A. No. Only cash can be transferred into the TSP.