Monthly Archives: March, 2014

Choosing the right L Fund

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Q. I have been serving in the military for almost 11 years and have contributed 10 percent of my base pay ever since joining. Unfortunately, all of those contributions have been to the G Fund. I am looking to increase my earnings and do not plan to pull from this account until 65. I am currently 28. Should I move all of my allocations to an L 2050 fund to increase these earnings, or manage it myself in the different Fund options? Any expertise in this matter would be greatly appreciated. A. Assuming that you are early in your career…

TSP catch up contributions after IRA rollover

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Q. Yesterday, I read your article dated May 20, 2013, “How to be a good pension fund manager.” I wish I had read it before I moved money from my TSP to an outside IRA last year. I wish I had taken some other steps as well. I now want to add back cash to my Thrift Savings Plan before I retire. I could retire at the end of November 2014. Can I do that with catch up contributions? My major disappointment is with the TSP staff and the absence of an onsite adviser in human resources. Does it benefit…

USAA Roth and TSP contributions

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Q. I took my tax info to a professional to have them done this year. I’ve maxed out my Roth IRA with USAA. I’ve also contributed about $2500 to a traditional TSP as a uniformed service member. I’m being told I’ll be penalized for my contributions to my Roth account since I have an employer-based retirement plan. Is this accurate? Can I only contribute a total of $5500 for both accounts? I’ve always been told to contribute to both. A. The TSP contribution limit is fixed and not contingent on any other factor. Your eligibility to contribute to a Roth…

IRS penalty on partial TSP withdrawal

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Q. I am a FERS employee (6c law enforcement coverage) planning to retire in January 2015 after 31 years in federal law enforcement. I plan to build my retirement home soon after and have need of a partial withdrawal from my Thrift Savings Plan at retirement. Is this partial withdrawal subject to the 10 percent IRS tax under the one time withdrawal provision, and if so, do I have any option to avoid that penalty while still accessing about a third of my account? A: If you retire during or after the year in which you reach age 55, you…

TSP early withdrawal penalties

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Q. I just turned 57 in January and am planning on retiring on June 1, 2014. I am CSRS and currently working with the U.S. Postal Service. I was hired by the Postal Service in March 1982 and have met my minimum retirement age and time in service. I also have 4 years prior military service in the Navy from 1976 to 1980 on active duty. Will I be penalized if I make a TSP withdrawal prior to turning age 59 1/2 years of age? A. No. You will have retired after the calendar year in which you reached age…

Taxes on TSP withdrawls

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Q. I plan on retiring in 30 days. When I decide to draw my money out of the TSP, full withdrawal with monthly payments, am I taxed only on the monthly payments? And can I change fund allocation after I make a full withdrawal with monthly payments? A. Every dollar that is withdrawn from your TSP account and not rolled over will be considered ordinary income for tax purposes in the year in which it is constructively received. You may continue to manage your account balance as usual, including making changes to your account asset allocation, while you are receiving…

TSP stock shares

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Q. I am a Postal employee contributing to the 2030 Life Cycle Fund. I would like to know when my stock market shares are purchased. Is it before the market opens on payday Friday, during that day or after the market closes that Friday? A. The purchased is made using the end of day valuation on the day the contribution is received by the TSP. Ask your payroll office when their TSP contributions are processed.

Annuity with qualified funds

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Q. So I’m retiring early, age 55, on the early out offer effective on July 31, 2014. I will begin monthly withdrawals from the Thrift plan at the rate of 20K per year as soon as I can, hopefully beginning in September 2014. I will receive my pension payment of 25K, and beginning in November 2014, I qualify to begin receiving the supplemental payment of slightly over 10K because I turn 56 on October 30, 2014. I like the idea of eventually converting to an immediate fixed annuity at some point after I’ve managed my own distributions for a lengthy…

Buying an annuity with qualified funds

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Q. I’m retiring early, age 55, on the early out offer effective on July 31, 2014. I will begin monthly withdrawals from the Thrift plan at the rate of 20K per year as soon as I can, hopefully beginning in September 2014. I will receive my pension payment of 25K, and, beginning in November 2014, I qualify to begin receiving the supplemental payment of slightly over 10K because I turn 56 on October 30, 2014. I like the idea of eventually converting to an immediate fixed annuity at some point after I’ve managed my own distributions for a lengthy period…

TSP timing

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Q. I am a Postal employee contributing to the 2030 Life Cycle Fund. I would like to know when my stock market shares are purchased. Is it before the market opens on payday Friday, during that day or after the market closes that Friday?

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