Q. I worked in the Veterans Affairs Department (CSRS) from 1981 until 1985 and then left federal service and withdrew my retirement. I re-entered federal service in 2007 (CSRS Offset) and have enough money in my Thrift Savings Plan to pay the redeposit for my time from 1981 until 1985. Can I switch over the tax-deferred TSP funds to CSRS without having to pay taxes on the transfer? I know I can make an age-based (age 67) in-service withdrawal into a qualified trust or an eligible retirement plan (as defined in IRC 402 (c) (8)). Is CSRS considered an “eligible…
Monthly Archives: October, 2013
Q. I’m retired from the military after 28 years. I have been working for the Defense Department since March 2008 and have 17 percent going into the Thrift Savings Plan. As of right now, I have 71 percent in the C Fund and 29 percent going into the S Fund. Should I leave the contributions where they are during the government shutdown? I have friends advising me to move 70 percent to the F Fund and 30 percent to the G Fund. Not sure if that is the right move. A. Neither of these asset allocations is remotely risk efficient.…
Q. I want to take a loan from my Thrift Savings Plan account to cover my bills during the shutdown. According to the TSP loan booklet, as long as the furlough last less than 30 days, this is not a problem. If the furlough lasts more than 30 days, the loan becomes a disbursement and is taxed, plus additional penalties assessed (10 percent) by the Internal Revenue Service. Is this true? How can one prepare for a furlough that lasts longer than 30 days? A. I don’t know where you read this, but it’s not true. If you’re in nonpay status, you…
Q. I took the Voluntary Early Retirement Authority on Jan. 31 at my minimum retirement age. I had 26 years at the Postal Service under FERS. After 16 years of marriage, I became a widow. The only income I have is my annuity and the special retirement supplement from the Office of Personnel Management. Will I be eligible to receive Social Security benefits from husband at 60, and will they end at 62? When I turn 62, my supplement will end. I have $190,000 in the L2020 fund. Would it be beneficial to me to start receiving money from my…
I regularly browse message boards and forums for and about Thrift Savings Plan participants. Unfortunately, what I’ve found is troubling. The range of understanding demonstrated by the questions people ask is incredibly wide. You can tell a lot about what people do and don’t know about the TSP and how to use it by the questions they ask. The high percentage of clueless questions concerns me since the effective use of the TSP will be the only thing standing between surviving and living for many career federal employees. The only thing more troubling to me than the questions some people…
Q. How will Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay affect my retirement benefits (annuity supplement, Social Security, pension and Thrift Savings Plan withdrawals)? I am an Air Force civilian GS-13, age 52, with 26 years of service under FERS. A. A VERA/VSIP will not affect the rules governing your TSP withdrawals. You will be subject to the early withdrawal penalty until you reach age 59½ unless you can qualify for one of the exceptions listed on the left side of Page 7 of this notice: https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
Q. What are the MetLife annual and/or one-time fees charged after annuity is purchased? A. The only fee is the initial cost of the annuity, which depends upon your age, the annuity you purchase and the interest rate index at the time of the purchase.
Q. I recently lost my job and withdrew my entire Thrift Savings Plan savings. I know that there is a 20 percent penalty for early withdrawal that they took out. Also, another 10 percent penalty that they hit you with at the end of the tax year. Is there any way I can lessen the blow? Are there any exemptions that I could put that money to, such as paying of my son’s college loans, home improvement or repairs? A. The 20 percent taken from the distribution was withholding against your federal tax liability for the year of the withdrawal. The…
Q. I have read Q&As on your site that refers to using one’s life expectancy as basis for selecting a particular L Fund. Per the Thrift Savings Plan site, L Fund investment mixes (and recommended strategy for selecting) are based on the time horizon vis-a-vis one’s projected retirement date — hopefully a different date than one’s life expectancy. Could you please explain the reference to life expectancy? A. Using your life expectancy to select an L Fund, rather than your retirement date, is my recommendation based on years of working with clients who are trying to safely maximize the standard…
Q. Should I move everything to the G Fund now that we are shut down and there is the possibility that the government could run out of money within the next few weeks, forcing an unprecedented default? A. That’s like telling me you’re driving and asking if you should hit the brakes! I don’t know where you’re going, when you need to be there, what you’re driving or how much gas you have in the tank. The person responsible for delivering you to your destination on time must make that decision based on their assessment of the situation and their…