Monthly Archives: August, 2013

Q. I will be retiring under FERS at age 56 (born 1959) with 31 years of service with the Postal Service. If I withdraw my total Thrift Savings Plan account ($500,000) the day I retire, will I be charged an early withdrawal penalty and/or other penalty fees I’m not aware of? A. No.

Q. Thank you for your answer on my question of investing my 100 percent G Fund into an L Fund. You recommended choosing an L that corresponds to my life expectancy. I expect to retire in about a year, will have about $500,000 outside of the fund after I transfer my 401(k) into the fund. My FERS will be about $1,000 a month, and I will defer drawing Social Security until after 67, maybe wait until 70 (I am 64). The issue is life expectancy. Our family tends to live into its 90s. I am thinking that the L2020 may…

Q. I am 31 years old and have five years of federal service. I am a GS-12, Step 3. I contribute 7 percent to the Thrift Savings Plan but have not done anything with the allocation: 100 percent to the G Fund. I have tried to determine the best allocation on my own, but there is too much information out there. I know that I need to do something now. I was thinking about 40 percent C Fund, 30 percent S Fund, 15 percent I Fund, 10 percent F Fund and 5 percent G Fund. Would this be a good start to set…

Q. I am 62 years of age and have been in civil service for 12 years. Can I withdraw a portion of my Thrift Savings Plan funds prior to retiring and leave the rest in? If so, I realize I will have to pay tax on the amount withdrawn (but not sure how much), but will I have to pay a penalty?  Also, can you direct me on where to go to do a withdrawal? I am currently in Okinawa working for the Marines. A. You may take one age-based, in-service withdrawal, which will not be subject to an early withdrawal…

Q. If I retire early at 50 years of age with 30 years of service under FERS, I understand I’d have to wait until my minimum retirement age to receive the special retirement supplement. What reductions would I have in my retirement annuity? Would I be able to receive monthly Thrift Savings Plan annuity at age 50? A. Mike: You may use your TSP money to buy an immediate annuity and receive monthly income payments at any age, once you are separated from service. Reg: If your agency offers you a Voluntary Early Retirement Authority, there wouldn’t be any age-based…

I took a look at returns for the various Thrift Savings Plan funds for the 12 months ending June 30, and here’s what I found: * The returns on equity investments — nearly 21 percent for the C Fund, 26 percent for the S Fund and 19 percent for the I Fund — have been ahead of the long-term average. * The negative 0.5 percent return on debt investments — the F Fund — has lagged the long-term average. * The relationship between these two asset classes — debt and equity — is what I would expect: When equity is…

Q. I have $100,000 in my Thrift Savings Plan account. What will I receive, after early withdrawal penalties, if I close the account? A. The minimum federal tax withholding is 20 percent, but you can elect a higher rate, so the maximum you’ll receive is $80,000. The early withdrawal penalty won’t be due, along with whatever tax you actually owe on the withdrawal, until you file your taxes in April of the year following the year of the withdrawal. See the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for details.

Q. My mother recently passed away and her teacher retirement account provided a lump-sum benefit to my sister and myself. As a surviving beneficiary other than a spouse, I can take the payment as a rollover to an inherited IRA. I would like to put this money into my Thrift Savings Plan account. Can I transfer the proceeds directly from the teacher retirement to my TSP? A. Inherited money can’t be transferred into your TSP account.