Q. The following question/answer was recently posted. Where can I find the full information to support the answer? Are there penalties involved? Q. I will be 55 this month and plan to retire in November with 33 years of service under CSRS. Do I have to wait until I am 59½ to withdraw from my Thrift Savings Plan? A. Not if you wait until you’re retired to request the withdrawal. A. Check Page 7 of this notice: https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
Monthly Archives: February, 2014
Q. I will turn 70½ after Feb. 19, and will retire from my full-time position at the end of the month. I have notified Social Security, the state retirement funds in two states where I worked, and my fund in a private approved pension fund with accounts from two other universities of my intention to retire at the end of February and to start receiving distributions in March 2014. Is there anything else that I need to do to avoid being hit with that horrid 50 percent penalty? I received an unsavory email from the Wisconsin Employee Trust Fund scolding…
Negativity towards bonds, particularly Treasury bonds, has been peaking lately. For TSP investors, this may often mean avoiding the F Fund, which represents the aggregate United States bond market, and is the only bond fund available in the TSP. But what about the G Fund? While the G Fund’s return is based on that of Treasury bonds, your investment in the fund is otherwise unlike a bond investment. Bonds bear the risk of loss. The G Fund does not. It’s like cash that pays a high rate of interest, not like a bond that might produce a positive or a…
Q. I have 14 years of federal service and have always been in the C Fund 100 percent, currently with $230,000. For the past few years, I’ve contributed at 15 percent. I was not very attentive to my Thrift Savings Plan and, after 2008, was leery of moving after the big losses and getting into L2030. In 2013, the C Fund was amazing, but 2014 has been way down so far. How do I know the right time to transfer the whole thing to an L Fund, and is that the right thing? I will probably retire by 2035. A.…
Q. I’m a little unclear on the Roth IRA vs. Roth TSP differences. I’ve been told that I can’t contribute to a Roth IRA since my adjusted gross income (married, filing jointly) is too high. Does that same rule apply to the Roth TSP? It seems to me, if I can go with the Roth TSP and max it out at the 2014 maximum of $17,500, I can also max out the Veterans Affairs Department contribution (which goes to my traditional TSP). A. The Roth IRA contribution limits do not apply to Roth TSP contributions. Separate and distinct rules apply…
Q. I retired in July 2013 and have $500,000 in my Thrift Savings Plan. I need more money to support retirement and would like to take a lump sum of $30,000 out of TSP. I was thinking about taking the rest of the money as an allotment. Does this make sense? I have delayed my Social Security until I am 66 (I’m 64 now). My wife is taking her Social Security. A. Waiting to claim Social Security is probably a good idea unless you have a shorter than average life expectancy and are single. If your only other source of…
Q. I did a partial withdrawal from my Thrift Savings Plan last year at age 60. How do I report the income on my tax return? Is it strictly income? Are there no capital gains to report? If there are gains, how do I determine what the gains were? A. You will receive a 1099 reporting the distribution, which will be taxed entirely as ordinary income.
Q. I retired early from the post office last year. At the time, I had a two loans out on my Thrift Savings Plan account. Now the time has come to pay the piper and the tax bill is enormous. I just turned 56 in January. Is there any way to lessen the blow or offset any of the taxes and penalties from the unpaid loans I took out before retirement? Or at least something I can do, other than pay the full amount of early withdrawal and regular taxes? A. Assuming that it’s been more than 60 days since…
Q. I am a federal employee under CSRS and I plan to retire at age 55½. To minimize my debt, I plan to sell my current residence and relocate to a place where my income goes further. Unfortunately, my current residence is underwater by about $80,000. Would a good strategy be to withdraw the funds from TSP? A. I can’t tell you without knowing what other alternatives are available to you. If the $80,000 is a big part of your net worth, you should do what you can to avoid it and proceed very carefully.
Q. I was hired into federal service Sept. 28, 1992. At this point, shouldn’t the government have started contributing to a Thrift Savings Plan account in my name 1 percent of my salary automatically? Contributions didn’t begin until I manually enrolled in TSP a year later. This seems to be the bit from the TSP website that applies to me: “If you are a FERS participant and were hired before Aug. 1, 2010: * The TSP would have begun receiving automatic contributions equal to 1% of your pay from your agency — beginning with your first pay period. If you…