Monthly Archives: February, 2014

Partial withdrawal, Part II

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Q. I retired from an air traffic control job at age 53. I am receiving monthly payments based on my life expectancy. I will be age 55 in April. Can I take a partial withdrawal? If not, are there any options? I need to access more funds. Will there be a tax penalty on the amount I have received? Will my partial withdrawal be penalty-free now that I am 55? Are there other options, such as increased monthly payments? A. You may not take a partial withdrawal once monthly payments have begun. You may increase your monthly payment amount using…

Partial TSP withdrawal

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Q. I am 60 and had to retire early due to disability. I am receiving Social Security disability and a small annuity. Can I take a small amount — say, $10,000 — from my account but then start monthly draws when/if it becomes necessary? Should I leave all of my money in this account or do a rollover into a regular or Roth IRA? A. Yes, as long as you have not previously used your single partial withdrawal. I think you should retain your Thrift Savings Plan account for as long as possible.

Survivor benefits

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Q. My husband and I both work for the Postal Service. He is retiring March 1 under CSRS. I have 25 years in working for the Postal Service and have at least eight years left to retire (FERS). We elected not to take the survivor benefits because I’m still working at the Postal Service and I will have him on my medical plan. We have two insurance policies on both of us in case of death. But I’m not sure if I understand the point of survivor benefits. Do you have any numbers on the pros and cons of survivor…

TSP allocation

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Q. I work for the Defense Department. I have $75 biweekly going into the G Fund. I am in my early 30s and want to build my money. I don’t see it moving much in the G Fund, and I have been investing for four years. I can afford to invest $100 biweekly but don’t know what fund to put my money in for it to grow. My annual income is $38,780. A. Given your circumstances, I suggest that you invest all of your Thrift Savings Plan money in the L 2050 Fund for the foreseeable future.

TSP loan

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Q. Regarding my TSP loan, I have a balance due of approximately $9,500 with a payoff date in just over two years paying $175 every two weeks. I also contribute 5 percent to my Thrift Savings Plan, which is approximately $160 per pay period. I would love to pay off my TSP loan sooner so that I could then concentrate on paying off other debt that I have (two years left on auto loan; balance of $12,000 at 2 percent). I can’t afford for my net pay to decrease anymore right now, so I am wondering if it would make…

Roth IRA transfers and taxes

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Q. Can one transfer money from CSRS voluntary contribution (post-tax money) to a private Roth IRA without tax obligations? Can the interest be transferred to the Thrift Savings Plan? Is the amount transferred at retirement part of the maximum allowed ($23,000) for someone over 50? A. Yes, the VC post-tax money can be moved into a Roth IRA without tax. Yes, the earnings can be moved into the TSP, tax-deferred. No, the amount transferred is not considered a contribution.

Converting traditional TSP to Roth 401(k)

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Q. I am an active-duty military officer with 17 years of service. I would like to convert my traditional Thrift Savings Plan account to a Roth 401(k) and pay taxes now. I want to see if it is possible to transfer my balance to a traditional 401(k) with my civilian investment company and then convert that account to the Roth 401(k). Additionally, I want to minimize my taxes by doing this during my deployment this year, because I will be receiving tax-free pay for most of this year. Is this allowed and/or possible? I would love to pay zero or…

TSP withdrawals without penalty

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Q. I am a FERS employee with a retirement date of May 2018. I will reach my minimum retirement age of 56 at that time, with 36 years of service. Am I eligible, at that point, to receive nonpenalized withdrawals, either payments or lump sum from my Thrift Savings Plan account? Or do I have to wait until I reach age 59½ to not be penalized? A. You will be exempt from the early withdrawal penalty under those circumstances.

Lump-sum and monthly TSP withdrawals

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Q. I anticipate starting monthly withdrawals from the Thrift Savings Plan in the near future. Sometime after this, I would like to make a one-time lump-sum withdrawal from TSP to pay for my daughter’s wedding. Can I do this? Can I make a lump-sum withdrawal while taking monthly payments, or am I limited to one or the other? A. You can take the lump-sum partial withdrawal before starting the monthly payments, but not after.

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