Monthly Archives: May, 2013

Q. When I retire at age 57, can I withdraw a small portion of my Thrift Savings Plan, pay the 20 percent penalty and leave the remainder as set monthly payments with the tax as three dependents? A. If you retire at 57, you may take a partial withdrawal, if you haven’t already taken one, with no early withdrawal penalty. You may also take a full withdrawal as a series of monthly payments. Check the table on Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for information on tax withholding requirements.

Q. I am a federal employee contributing to the Thrift Savings Plan. I have a traditional IRA, with a large brokerage firm, which I no longer contribute to. Would it make sense to transfer the IRA to TSP and possibly a Roth? A. The TSP is the best investment environment you’ll find, so you should maximize its use.

Q. My wife works for a dental office which has a profit-sharing plan. Only her employer makes contributions to this pretax plan. She will retire in one more year. We would like to do a direct rollover of her funds into my Thrift Savings Plan, so that all holdings can be distributed from this one account. However, I have been told by TSP personnel that the ownership of any plans to be transferred must be in my name, not my spouse’s name. Is there any legal way for getting her profit-sharing plan funds to transfer into my TSP account? For example, since I am 2½ years…

Q. I have a Thrift Savings Plan account, with about $35,000 in it. I need to make a down payment on a house I want to buy. I have already withdrawn $14,000 this year for other purposes. I probably will need to withdraw some more cash. What forms will I need to use? And what are the pros and cons of withdrawing this additional amount? A. You’ll find the forms you need at www.tsp.gov. The pros and cons of taking the money from the TSP will depend upon your circumstances.

Q. I read your article on how to be a good pension fund manager today and, in regard to moving your money from the Thrift Savings Plan after you retire, you left out the biggest obstacle to leaving it in: You cannot add another penny of contribution for the rest of your life. Also, in regard to better results outside of the TSP, would you say that if you can beat the market indexes, which TSP is based on, you can beat TSP. Join up with the American Association of Individual Investors, whose model portfolios have smoked the market averages…

If you own a Thrift Savings Plan account and plan to use it to fund your standard of living in retirement, you are a pension fund manager. As a pension fund manager, you are responsible for the standard of living your TSP account produces. This standard of living will depend heavily on the decisions you make in the course of managing your account. It is critical to recognize that a single stumble along the way — one bad outcome from one bad or overlooked decision — can cost you dearly later in life. The margin for error is razor thin,…

Q. As precaution for what I thought was going to be a market decline, in December, I moved $350,000 out of my Thrift Savings Plan accounts from the C, S, and I fund (60 percent, 20 percent, 20 percent) to the G Fund. The end of the year came and went with no crash. The government had several “doomsday” dates that kept me guessing on market reactions. All have come and gone and the market is still going strong. I didn’t change my paycheck allocations, so I’ve continued to put money into the above funds in the percentages shown, so at…

Q. I am facing furlough soon. I already have one Thrift Savings Plan loan. Can I withdraw money from my TSP on a hardship withdrawal basis because of the furlough? I realize, if I did, I would have to pay taxes on it, etc. A. The furlough alone does not qualify you for a hardship withdrawal. To qualify for a financial hardship withdrawal, you must have a financial need for at least one of the following reasons: * Negative monthly cash flow. * Medical expenses (including household improvements needed for medical care) that you have not paid and that are not…