Q. In our divorce settlement, my wife wants to have her marital share available to spend on housing. What would the total penalty amount on her portion be? A. If there’s no exception for a court order, an early withdrawal will generate a penalty equal to 10 percent of the earnings withdrawn. Consult a tax accountant for advice.
Yearly Archives: 2013
Q. I’ve been with the federal government going on 27 years and am a FERS employee. I don’t have much in my Thrift Savings Plan — barely over $30,000. Shouldn’t I have more? Due to my grade level, I can only contribute 1 percent, maybe 2 percent. How should I distribute the percentage to get the most out of it? Should I put in 50 percent into the G Fund, 10 percent into the F Fund, 10 percent into the C Fund and so on? Where should my percentage go that will give me the best return on my investment?…
Q. Should I put some or all my TSP money into a Roth TSP? I’m almost 30, make around $59,000 a year and want to make aggressive choices so my money can grow. What should I do? A. The answer depends entirely upon your predictions about your future income tax rates.
Q. Can Thrift Savings Plan funds be rolled into an IRA? A. TSP cash can be rolled over to an IRA. The fund shares themselves cannot.
Q. I have about $260,000 in my Thrift Savings Plan account and just turned 67. We don’t need extra income right now. I’ve read your advice to others concerning leaving the money in TSP and withdrawing the minimum to satisfy requirements. Assuming nothing changes between now and then, is that still your recommendation concerning the requirement for withdrawal at 70½? Second, must I take action beyond designating order of precedence to ensure the appropriate next of kin receive the account balance when I die? A. My recommendation is simple: Delay drawing down your TSP for as long as possible. It’s not a matter of…
Q. I am a military member retiring in January 2014. I will have approximately $57,000 invested in my Thrift Savings Plan account when I retire. If I decide to withdraw my account in one lump sum, how much will I pay in taxes? I’ve heard that I would be taxed up to 30 percent of my balance at time of withdrawal, which would leave me with about $39,900 after taxes. Is this accurate? A. Your check will be reduced by 20 percent for mandatory federal tax withholding. This is just a deposit against your federal tax liability, however, which you won’t determine…
Q. Is 9.45 percent a good return? I received my Thrift Savings Plan fourth-quarter statement, and my last 12-month return is 9.45 percent. What is the best distribution as of today for a better return? A. Whether 9.45 percent is good or bad entirely depends upon what you need to achieve your goals. If you only needed 9 percent, then I guess it’s good. If you needed 10 percent, then it’s not so good. If you don’t know what you needed, then you’re feeling your way around in the dark. Guessing which asset allocation will produce a better return starting…
Q. I am retiring in June under CSRS at age 54 after 31 years of service (Air Traffic Provision). I have been working outside of the country for the past three years as a loaned executive and have had to pay my CSRS benefits out of pocket to keep my CSRS entitlement while outside of the country. During this period, I have not been able to contribute money into the Thrift Savings Plan since my salary is paid by the out of country organization where I am assigned. I will only return to the Federal Aviation Association for one month…
Q. What would be the tax rate on a TSP taxable distribution due to an unpaid loan stemming from a transfer of function/work? My human resources office did not make appropriate change in time and left me with a balance amount (lump sum) I could not afford to pay back in order to continue loan payment. Now I’ll have to pay taxes on a taxable distribution of $11,680. Just trying to figure out how much I’ll owe. I’m hoping my refund will cover the taxes due. A. The distribution will be included on your tax return as ordinary income, and…
Q. I turned 62 in December. I am 100 percent disabled from combat wounds. I worked federally for a while and saved $102,000 in a G Fund under FERS. I’m about to start losing my home as my wife will have to retire this year. Without her income, we won’t be able to afford the mortgage (but no credit card or other debt on the house.) What percentage at age 62 does a 100 percent disabled vet have to pay when withdrawing savings in full? I think it’s stating 20 percent, but that doesn’t seem reasonable. Am I reading it wrong? I want…