The Thrift Savings Plan’s website, www.tsp.gov, has posted a new income calculator. Well, it’s not entirely new, it’s mostly just remodeled. Now, instead of going directly to the old monthly payment calculator or the annuity payment calculator, you must go through a wizard that automatically runs both and compares the results. As much as I like the TSP and have endorsed its use, I have to say that I find this effort to be misguided and disappointing. I can’t imagine how the cost-benefit analysis was run to produce a green light for expending participant’s resources on what is an entirely…
Monthly Archives: September, 2013
Q. I am 49 years old and have 24 years of service with the Bureau of Prisons. If I retire at age 51 with 26 years of service and elect a life expectancy withdrawal from my Thrift Savings Plan account, would I be able to change to a specified amount at age 55 without a 10 percent penalty, or will I have to wait until age 59½ to change my withdrawal option to avoid the 10 percent penalty? A. To meet the 72(t) exemption to the early withdrawal penalty, your series of payments cannot change until it has been completed —…
Q. After entering retirement from CSRS, are Thrift Savings Plan funds withdrawn classified as income in addition to the 20 percent accessed at the time of withdrawal from the TSP account. Are there ways to avoid double taxation if they are taxed twice other than rolling over into an IRA or Roth IRA? A. The traditional TSP funds you withdraw are classified as ordinary income on your tax return. They are not subject to double taxation. The 20 percent withheld from your payment(s) is a deposit against your tax liability. If the distribution is not a required minimum distribution and you…
Q. I will have 30 years of service and be 54 years old when I take early retirement in January. Since I will turn 55 in August 2014, will I be able to withdraw without penalty from my TSP even though my minimum retirement age is 56? A. As long as you separate from covered service during or after the calendar year in which you reach age 55, you will avoid the early withdrawal penalty on withdrawals taken after you separate. Your MRA has nothing to do with it.
Q. I’m an active-duty Army officer who finally this July got around to transferring 100 percent of my funds (all in G) into the L2040 lifecycle funds given that they have a much better rate of return and reasonable amount of risk. The total value of my G Fund before transfer was $133,700, composed of $126,468 of contributions and only $7,232 of unrealized gain. After transfer, the total value of my account remained the same — approximately $133,700. However, it showed that only $91,368 had been used to buy shares in the L2040 fund. Presumably, the difference of $42,332 would be…
Q. I’m eligible to retire CSRS Offset in a few months. I was considering a Thrift Savings Plan loan prior to retiring to pay off other bills. I understand that upon retirement/separation, I would receive a Form 1099 for taxable income. Is this something I should consider? A. If you don’t repay your outstanding loan balance within 90 days of separation from service, the amount due will be declared a taxable distribution and will be treated as though you took the money from your account on the date of the declaration. I believe that you should always consider all reasonable options when it…
Q. Can I withdraw money from my IRA in December and have it applied to my 2014 required minimum distribution? A. No.
Q. I have a Vanguard 500 Traditional IRA and Roth IRA. Can I transfer these funds into my Thrift Savings Plan? If yes, what forms should I use to make this transfer? A. You may transfer your IRA money into your TSP account, if it is all pretax money, using Form TSP-60. You may not move your Roth IRA money into the TSP.
Q. I am retiring in the near future and I want to take my Thrift Savings Plan balance which is approximately $175,000 to $180,000 and purchase an annuity from MetLife. My concern is if MetLife were to fold. I think my state (Massachusetts) will insure me up to $100,000 in that event. I believe that is per insurance company. So would it be wise to split that total ($175,000-$180,000) and purchase an annuity from two different companies, so as not to exceed the 100,000 limit? A. I’m not confirming your statements about the limits of protection in a particular state,…
Q. Can the money in my Thrift Savings Plan account be lost if I am sued? A. I’m not an attorney, but as I understand it, the answer depends upon the state and the nature of the suit. Check with an attorney for advice.