Q. I understood that the Federal Retirement Thrift Investment Board is supposed to file an annual report with Congress on the state of the Thrift Savings Plan. When I look at the FRTIB Reading Room, there are annual reports for 2010 and 2011 but not for 2012. There is a report on the financial literacy efforts of the TSP for 2012, but this report does not discuss the state of the TSP. Do you know when the annual report for 2012 will be released? A. I do not. This is up to the FRTIB.
Yearly Archives: 2013
Q. Why do the Thrift Savings Plan publications say age 59½ is the earliest someone can receive TSP monies without a penalty, yet I read in your responses to questions that as long as someone retires in the year in which they reach 55 or later, there’s no penalty? I heard someone else at work yesterday who plans on retiring under MRA+10 saying he has to wait until 59½ so he won’t incur a penalty. Why are there two different prevailing understandings? A. The standard rule applies the early withdrawal penalty to those who have not yet reached age 59½. There…
Q. I am an air traffic controller who will be forced to retire in May 2016 when I turn 56 with 28½ years of service time. If I retire anytime between Jan. 1, 2015 (the year I turn 55) and May 2016, will I be able to take out a lump sum and monthly payments from my Thrift Savings Plan without the 10 percent tax penalty? Do I have to follow the life expectancy requirement for receiving monthly payments, or am I free to set the payment amount as I wish and adjust it once a year? A. Since you…
Q. I am a civilian employee. I have FERS and the Thrift Savings Plan. Is there any provision that would allow me to cash out my TSP for it to be applied directly to my federal student loans without any type of penalty? A. Check the list of exceptions on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. Student loan repayment is not the basis for an exception to the early withdrawal penalty.
Q. Regarding “Government default and TSP rollover” posted Oct. 15: He asked whether he should roll over his account to USAA and you said you wouldn’t. Could you explain more on why you wouldn’t and the benefits of leaving it in the Thrift Savings Plan account? A. The TSP’s lower costs and access to the G Fund make it the best retirement investing vehicle available anywhere. You can configure portfolios with better risk-adjusted expected rates of return in the TSP than anywhere else. Of course, using the TSP’s attributes to your advantage is requisite to the choice.
Q. I have seen quite a few questions (and answers) about how to request that Thrift Savings Plan loan payments be suspended during the government shutdown, but no detailed information about exactly how to continue to make payments should one want to do that. When during the regular pay cycle should one send in a payment check with the appropriate form? When we go back to work, and if back pay is given, will the loan payments for the entire period of furlough, or perhaps the last pay period only, be taken out? How long of a period of nonpayment may…
Q. As a current furloughed government employee, can I withdraw money from my IRA and not be taxed the additional 10 percent under the exception: being unemployed and paying for health insurance premiums? A. From IRS Publication 590: Even if you are under age 59½, you may not have to pay the 10 percent additional tax on distributions during the year that are not more than the amount you paid during the year for medical insurance for yourself, your spouse and your dependents. You will not have to pay the tax on these amounts if all of the following conditions…
Q. My co-worker told me she moved all of her funds to the G Fund. She has 16 years in service and is 45 years old. How will she know when it is time to move these funds back into more aggressive funds? I was giving this some thought for myself but did not know how to decide when would be the right time to move these funds back to more aggressive funds. I’m staying put for now since I don’t plan on taking anything out for another 10 years or more. A. You should ask her this question. Portfolio management is…
Q. In answering this question, assume a heavy investment in the G Fund. If the nation’s debt ceiling is not raised and a debt crisis follows, can we assume that Thrift Savings Plan participants can move out of the G Fund and back to stocks without any restrictions? In other words, while recognizing that the G Fund will be made “whole” eventually, will there be an artificial time delay or other restriction before a TSP participant can move from G to a more balanced position? A. We’ll have to see what happens if and when the time comes.
Q. Isn’t the S Fund based on the Dow Jones U.S. Completion? According to the Thrift Savings Plan website, it mirrors the DJ U.S. Completion. Yet, on Sept. 30, the S Fund only decreased from 31.0512 to 31.0038. Why such a small drop in S Fund? The S Fund that mirrors the Dow Jones U.S. Completion was down -3.55 (-0.38 percent) on Sept. 30, the day before the government shutdown. A. You’re confused and comparing one index to another. On Sept. 27, the Dow Jones U.S. Completion Total Stock Market Index closed at 924.37. On Sept. 30, 2013, it closed at 922.99…