Monthly Archives: April, 2013

Q. My husband is putting in papers to retire after 40 years in civil service. He wants me to sign a paper saying that I agree not to accept his retirement if he dies before me. He said it would be less costly to get a good life insurance policy. We are both 61 years old and in good health. I have asthma and take medication for cholesterol. I have 21 years with the public school system. I hope to retire in the next year or two. Is it a good idea for me to sign this paper? He doesn’t…

Q. I am retiring from active duty in about six months. Almost one-third of my Thrift Savings Plan balance is from combat-zone tax-exempt contributions. I am looking to possibly roll my TSP into my next employer’s 401(k). What happens to the CZTE amount? How do I keep this amount tax exempt, and what are my options for this amount at retirement? A. Given that the TSP is the best retirement investment environment you will find, I urge you to consider maintaining your TSP account and maximizing its use for as long as possible. Unless there are some extraordinary circumstances, you…

Q. I am 57 years old. I have about a year and three months with the Defense Department (FERS). I am in the process of buying back 14.8 years of service, and I plan to retire in about 12 years. Will the buyback help with the Thrift Savings Plan? What is a good TSP investment option for someone in my situation? A. I’m not sure how the buyback will help your TSP account, since you will not be entitled to any additional contributions as a result. The investment strategy that you choose should be based on more information that you’ve…

Q. I am 60 years old and, for seven years, have been separated from 21 years of federal service. I have never made any withdrawals from my Thrift Savings Plan account. I am interested in making a partial withdrawal for home improvement projects. I understand a one-time partial withdrawal leaving the rest in TSP for later is allowed, but does one-time mean that if I make a one-time partial withdrawal now, I will not be allowed to make a full withdrawal of the remaining money later when I am fully retired to perhaps pay off the mortgage? Will I only be allowed monthly…

Q. You have suggested that individuals invest their TSP funds in the life cycle fund most closely approximating their life expectancy. Would that still apply to a CSRS employee who does not anticipate accessing funds until age 70½? A. Yes, but keep in mind that this was my advice to those who are not sure what else to do.

Q. I am 70½ years old and about to retire under CSRS. If I use my Thrift Savings Plan account to purchase a MetLife annuity, how are the required minimum distributions handled? A. Life annuity payments satisfy the RMD for the amount of money used to buy the annuity.

Q. If I contribute $40,000 to my Roth TSP account, it grows to $60,000 and I subsequently leave government service and roll that Roth TSP into a Roth IRA, wouldn’t I be able to immediately withdraw up to $40,000 without tax or penalty, even though I’m less than 59½ and have not had either account for more than five years? A. Yes, it is possible to withdraw your contributions at any time without tax or penalty.

Q. Does section 902 in HR 8 (American Taxpayer Relief Act of 2012), which states that “Amounts in applicable retirement plans may be transferred to designated Roth accounts without distribution,” apply to the Thrift Savings Plan? A. You may transfer amounts from other employer-sponsored Roth retirement plans into the TSP. This does not apply to Roth IRAs, however.

The Thrift Savings Plan is intended to fund retirement living expenses, but it might be necessary to tap it early to meet unexpected expenses. Frozen pay, furloughs, reductions-in-force and earlier-than-expected retirement can throw a monkey wrench into the best of plans. Of course, reducing your spending to avoid invading your TSP account should be your first tactic. A loan is another option, but there are limits on the amount you can take, and it must be repaid in installments. Sometimes a loan just won’t do the job. So, how do you get at that TSP money? If you have reached…