Monthly Archives: September, 2013

Guaranteed income benefit?

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Q. I anticipate retiring within the next six to 12 months with 34 years of service and a projected $350,000 Thrift Savings Plan balance (diversified in the L Fund). In the latest meeting with my financial adviser, he recommended that, upon retirement, I consider taking a portion of my TSP balance and purchasing a product that would guarantee an income stream at a minimum percentage of growth over time regardless of the bond or stock market performance. He called it a GWIB (??) He pointed out that there are numerous products to choose from and they all offer different benefits. In general, can…

TSP distribution

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Q. My husband is retiring from the Postal Service on Nov. 1. We have $850,000 in tax-free municipal funds (all AAA rated and paying over 5 percent), and another $200,000 in natural gas and oil limited partnerships and some preferred stocks in energy companies that I recently inherited. I would like to live on the interest from these investments, leaving the principal alone. My husband is 62 and we want to wait until he is 66 to receive his Social Security payments. (Waiting until 70 is out of the question as both parents were stricken with Alzheimer’s disease at an early age.…

Payment to state required for TSP withdrawal?

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Q. I’m planning on a FERS retirement at the end of December 2014. At that time, I’ll have already met the minimum retirement age and will have credit for 32 years of service. I’ve read that I can withdraw funds from the Thrift Savings Plan without an early withdrawal penalty upon my retirement, and that approximately 20 percent will be withheld for federal taxes, but what I don’t know and can’t seem to find is the amount of money that will need to be paid to my state of residence, West Virginia. My plan is to use the money in…

TSP loan

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Q. I have a loan balance of $18,366. I’m 56 years old and plan to retire in three months. Am I subject to the 10 percent penalty if I do not repay the loan? A. No.

When to withdraw TSP without penalty

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Q. I work for the Postal Service. I have 30 years of service. I will have to take a discontinued retirement today. I will turn 55 in December. My minimum retirement age is 56. I understand from a previous question that I qualify to receive my Thrift Savings Plan without penalty because I am retiring in the year that I will turn 55.  Will I be able to start withdrawing this money from TSP without penalty when I retire? Or in December, when I turn 55? Or at my MRA of 56? A. Your MRA has nothing to do with…

G Fund

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Q. Could you tell me how the G Fund did during the last three big market crashes? A. The G Fund’s value increases (and has increased) every month. It is not affected by market fluctuations.

Managing and continuing deposits to TSP after retirement

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Q. I am covered under FERS. After I retire, may I: a). Continue to deposit funds into my Thrift Savings Plan? b). Move money among the various funds, e.g., from F to G, from C to L2040, etc.? A. After you retire, the only way to deposit funds to your TSP account is to transfer them in from an IRA or other qualified retirement plan. You may continue to manage your TSP investment, as in the past, for as long as you retain the account — potentially for life.

Roth TSP and law enforcement

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Q. I am a federal law enforcement officer. I recently read an article that discussed the downside of the Roth TSP for federal law enforcement officers and firefighters. Is this true? ************* Many of you are probably unaware of the serious pitfalls you will encounter if you opt to contribute to the Roth TSP.  For a federal law enforcement officer or firefighter, the Roth TSP is a poor choice. It wasn’t until this week that a reader posed a question to me that caused me to realize what a bad idea the Roth TSP is for many of us. The idea behind…

RMD

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Q. My husband is retired for seven years now and is 67 years old. So far, we haven’t needed to use this money. We are trying to keep our income below $70,000 per year to stay eligible for our state property tax freeze, which is a significant saving of $2,000 or more per year. 1. What percentage or dollar amount are we required to take out each year? 2. Did I read correctly on someone’s question that if we set up a 10-year timetable we do NOT have to pay taxes on that money? A. The required minimum distribution changes each year based…

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