Q. I have been a federal employee for 27 years, just long enough to have been one of the first forced into FERS. About seven years ago, I looked at my Thrift Savings Plan statement and learned that the prediction was that if I retired at age 62 and bought an annuity, I would have a pretty good monthly salary. Now, I notice that the prediction is that if I use my TSP savings, with about the same amount predicted for me at age 62, to buy a monthly annuity, that annuity will be about one-third of what was predicted seven…
Monthly Archives: May, 2013
Q. I borrowed $50,000 from my Thrift Savings Plan two years ago and have been paying it back biweekly. Will I be taxed on the money I borrowed? If so, when and how much? Also, I’m looking at retiring in three years. I will be 59 and have 33 years on the job. How much risk should I take in my TSP account? A. A loan is not taxable unless you fail to repay it on time. The amount of risk you take with your TSP assets should be matched to your specific financial goals and life circumstances. The right…
Q. I am a fully vested CSRS employee with the Environmental Protection Agency for 33 years at age 55. I have received my numbers, but I missed my first date to retire. How long does it take to receive my first full check? Should I take all of my Thrift Savings Plan out at once; leave about $10,000 in and roll it over to a Roth IRA; or leave it in the TSP? Is there a counselor at TSP to speak with about taxes and IRAs. A. You should leave your money in the TSP for as long as possible…
Q. I’m 25 years old, series 1811 and have been contributing 5 percent into the Thrift Savings Plan (FERS) for three years. Until last week, I was contributing 100 percent into the L2040 fund, but now I’m doing 65 percent into the S Fund and 35 percent into the I Fund. Since I still have about 32 years until mandatory retirement, do you think I am making the right TSP choices now, and do you have any recommendations? A. Your allocation is risk-inefficient. You could reconfigure it to deliver similar expected growth with much less volatility. If you don’t know…
Q. I will be retiring at the end of this year with 37 years and 10 months of service. I am a CSRS employee and will be 57 years old in September. My annual annuity would be $81,958. I will have a little over $200,000 in my Thrift Savings Plan account. Is it smartest to take the spousal annuity or take out a life insurance policy on myself to sustain my wife once I pass away? My annual annuity will be reduced by around $7,900 a year if I chose the spousal annuity. Which would be the wisest? A. This isn’t your choice…
Q. I have a 401(k), several CD IRAs and several mutual fund IRAs. I will turn 70 the end of November. Do I have to withdraw a minimum amount from each account, or can I withdraw the required minimum amount from one of the accounts as long as it totals the amount I must withdraw next year?
Q. I will most likely be medically separated from the military next year after 25 years of service. I have bone cancer that is incurable but manageable — 50 percent life expectancy is 10 years. I am 47, so if I live 10 years, I would be 57 and still ineligible to withdrawal my Thrift Savings Plan. Are there exceptions for terminal disease that allow you to withdraw early without penalty? A. The list of available exemptions appears on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
Q. I have been in the Foreign Service since 1986 and am being involuntarily retired for expiration of my time in class on Sept. 30, 2014. I will be 49 years old at the time. Even with an involuntary retirement, do I still get penalized for any lump-sum payment I take from the Thrift Savings Plan? I know annuities and equal payments are not penalized. A. There is no exception to the early withdrawal penalty for involuntary retirement.
Q. I was recently informed that I fell under the Federal Erroneous Retirement Coverage Corrections Act and had an option to select CSRS Offset. I was also told that the 1 percent and matching in my Thrift Savings Plan would be removed if I selected CSRS Offset. My human resources office told me that it would be the exact amount that was put into my TSP. If it made money, I would be able to keep the difference; if it lost money, I would have to make up the difference. So I selected CSRS Offset. Now they are beginning to remove the 1 percent by…
Q. If I start taking my retirement now at 62 — FERS, Thrift Savings Plan payments and Social Security — and end up being picked back up at some point in federal service: I understand my FERS benefits would be cut by the amount I make in a new job. What about TSP payments? Are they exempt from penalties of re-employment? A. If you are rehired, your automatic monthly payments will stop and you will be subject to the in-service withdrawal rules.