Q. I am looking to establish residency abroad after retirement, either in France or Germany. Is there any guidance on direct deposit of FERS and Social Security annuities, and Thrift Savings Plan distribution, to foreign banks? A. Direct deposits from your TSP account can only be made only to financial institutions in the United States.
Monthly Archives: February, 2013
Q. I notice that in several of your responses to people requesting guidance on how to allocate their Thrift Savings Plan account, you use as a ‘default’ answer to choose the L Fund that most closely corresponds to their life expectancy. The guidance on the TSP Web page advises the following: “Determine the date when, after leaving federal service, you will need the money that is in your TSP account. Then identify the L Fund that matches your target date.” If I’m 51 and plan to retire and begin tapping my TSP at age 59, according to the TSP guidance, I…
Q. My wife was RIFed in 2008 at age 48 with 28 years of service with a $7,000 Thrift Savings Plan balance and was placed on CSRS discontinued service retirement. She was re-employed by the government five months later with a different agency. Because she is a re-employed annuitant, she can no longer contribute to TSP and is covered by Social Security’s Old Age, Survivors and Disability Insurance only. Emails and telephone calls to TSP have proved less than helpful; TSP has advised her that the only action possible is to leave the fund as is. We both wanted to verify…
Q. I want to know what percentage I am paying in management fees and how they are being paid for my Thrift Savings Plan. I am invested in the C, S, and I funds. I am worried about fees eating into my profits. A. The TSP’s expenses have been the lowest you’ll find, anywhere. In fact, they’ve been so low in recent years that they’re almost zero. In 2012, the TSP’s expense ratio was 0.027 percent (or, a multiplier of 0.00027). So, for every $1,000 you had invested during 2012, you lost 27 cents to expenses for the year. These…
Q. I am working for Department of Agriculture-Natural Resources Conservation Service and anticipating retirement Jan. 14, 2014. My birthday is May 6, 1943. I would like to know the requirements and how to apply for the required minimum distribution. Is there some kind of window of the first and last opportunity to take the RMD? A. Under the circumstances you describe, you will have to take the first required minimum distribution from your TSP account for tax year 2014 by April 1, 2015. You can learn more about how to calculate and request the RMD by reading the notice at https://www.tsp.gov/PDF/formspubs/tsp-775.pdf
Q. I retired from the federal service in 2012. I understand that I cannot make any further contributions to the Thrift Savings Plan since I am no longer a federal employee, and that I cannot undertake a traditional or Roth IRA in 2013 unless I have wages. What I am not clear about is the spousal IRA. It appears to me that because my spouse is still working, I could contribute to a traditional IRA in 2013 as a nonworking spouse if he and I met the income and joint filing qualifications. If this is true, could I then transfer that spousal IRA…
Q. I retired from the Transportation Security Administration on Aug. 1 under CSRS Offset. I was employed in the 1970s and 1980s and owe approximately $42,000 if I wish to buy back this time and get credit for it in my annuity. I was considering using my Thrift Savings Plan dollars for part of this buyback instead of taking the TSP as an annuity or lump sum. Is it possible to transfer the TSP balance to CSRS in some way so that I would not pay a withdrawal fee or taxes on it? (I am 66). A. No.
Q. I contribute to the Thrift Savings Plan where you don’t invest the money. What is the difference between the Roth IRA and TSP? Would you recommend that I look into the Roth IRA? A. The TSP is funded with pretax money, but when withdrawn, the money is taxed as ordinary income. The Roth TSP is funded with after-tax money, but the money is exempt from income when it is withdrawn. Everyone who is eligible to participate should consider the costs and benefits of both options, although it can be difficult or impossible to know in advance that one or…
Q. What is the definition for the Thrift Savings Plan early distribution exclusion “made as a result of total and permanent disability”? Does this mean that a retired military member with a Veterans Affairs Department-certified disability who is under age 55 is excluded from the 10 percent early withdrawal penalty? Specifically, I would like to withdraw my TSP in full upon military retirement at age 42 and will most likely have a portion of VA-certified disability based on injuries sustained on active duty. What justification is needed to report to the Internal Revenue Service when you file your taxes? A. I…
Did you know that the Thrift Savings Plan puts free money into the account of every investor? It’s true! And, I’m not talking about the automatic 1 percent or matching funds contributed to the accounts of FERS-covered employees. I’m talking about something different. Even participants covered by CSRS get this free money. Every participant gets it every day, every week, every year they maintain a TSP account. And the more money in the account, the more free money you earn. Technically, the money isn’t contributed to your account — it’s just not taken out of your account, as it would…