Q. I have more than 20 years of service as a federal law enforcement officer and will turn 55 in 2014. I plan to retire under FERS from my agency this year, before my age 55, and immediately (with no break in service) become re-employed on a full-time basis with another federal agency. I understand that my salary during the period of re-employment will be offset by the amount of my FERS annuity, and that retirement deductions (including Thrift Savings Plan contributions) will be made from my re-employment salary. I understand further that I would earn a supplemental annuity upon termination…
Monthly Archives: April, 2013
Q. Your April 1 Money Matters article identifies the exception to the 10 percent penalty for early distributions for separation from federal service during or after the calendar year one reaches age 55. My question relates to funds transferred to my Thrift Savings Plan account from a former employer’s 401(k) plan. Does the exception apply to all funds contained in my TSP account, or just those funds contributed to the TSP in the normal course of my federal service employment — i.e., not counting funds transferred from a prior 401(k) account? A. It applies to the contents of your TSP account,…
Q. The guidance on partial withdrawals from the Thrift Savings Plan is somewhat confusing if you have both a traditional and Roth portion. It says that withdrawals will be prorated between the two. However, is it possible to solely roll over the Roth portion into another Roth and still leave the entire traditional portion in tact? Or, since these are two distinct types of investments, can the Roth be rolled over into a Roth and the traditional be rolled over into a traditional in amounts, say $5,000 of one and $10,000, even if the balances are not in this same 1:2 ratio?…
Q. I’m retiring June 1. I’m 62 and will be 63 in September. I’m in CSRS Offset with 36 years and five months. Accrued sick leave will give me 37 years and six months. I’d like to hold off on taking Social Security. I might work when the dust settles in retirement. I have 35 years of covered Social Security earnings, so no windfall elimination provision reduction, just the CSRS Offset. Would it be wiser to take an annual 4 percent draw from the Thrift Savings Plan, wait until I’m 66 and then take Social Security? I have $205,000 in…
Q. In the divorce proceeding, I have to give my ex-spouse 57 percent of my Thrift Savings Plan, which is about $128,000; 57 percent of my pension comes out to $2,800 monthly. When the money is withdrawn from my TSP, is it taxable? If so, how much? Is the tax withdrawn before he gets it? Or does he have to file taxes at the end of the year? He is 64 years old. We live in Pennsylvania. A. I can’t give you tax advice since I’m not a CPA. I suggest you check Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf and…
Q. I am making payments to buy back my military deposit, and I will also be making a redeposit of FERS funds. Can I transfer funds from the Thrift Savings Plan to military buyback and FERS? After all, these are both accounts for retirement and not money I’d be using now. A. This is not allowed since your TSP money is pretax and your deposits must be made with post-tax money.
Q. I have money going into G, F and C funds. I recently changed my distribution to 65 percent and 35 percent for G and F funds, respectively. With C Fund losing money, how can I transfer my existing C Fund balance into the F Fund so I’ll stop losing money from my existing C Fund? I see the procedure to change distribution between the funds. I don’t see a procedure to transfer all of my existing balance from one particular fund into another fund. A. I’m a financial planner. This is a question for the Thrift Savings Plan’s website…
Q. When I retire, I will be 59½ and will have 30 years of service at the Postal Service. I will not have any earned income from that point on. I understand federal and state taxes will be taken out of my FERS annuity and any money I take out of my Thrift Savings Plan. Will I also have Social Security deducted from these two sources? Also, will my special retirement supplement and — when I turn 62, my SSI benefit — also be subject to federal and state taxes? A. Mike: Your TSP withdrawals are subject to income taxation,…
Q. When was the Thrift Savings Program added to CSRS? I have CSRS and FERS retirement components. And I don’t recall a TSP for CSRS during the late 1970s and early ’80s. A. TSP was established by Congress in the Federal Employees’ Retirement System Act of 1986.
Q. I retired at age 52 from the Postal Service. When can I fully withdraw my money without a penalty? If I decide to receive monthly checks, when can I begin receiving them without any penalties? A. Unless you qualify for one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf, you’ll have to wait until you reach age 59½ to avoid the early withdrawal penalty.