Q. I want to make a one-time partial withdrawal from my TSP account. I realize this withdrawal is subject to the Virginia state and federal income taxes. Who should I contact to learn how much taxes, both federal and state, I have to pay? A. The withholding requirements are listed in the table on Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. You won’t know how much tax you’ll actually owe until you file your tax returns for the year, however.
Monthly Archives: July, 2014
Q. I am a retired law enforcement officer with 25 years of service. I retired from the Bureau of Prisons in December 2009 at age 48. I am receiving my pension and the supplemental annuity. I have $300,000 in my TSP account and want to start withdrawing it. What are my options to begin receiving money from the TSP without buying an annuity and not having to pay the 10 percent early withdrawal penalty? Can I take a one-time distribution of say $100,000 without penalty? Can I withdraw the whole amount without penalty? Can I take $2,400 per month out…
Q. I am a 57-year-old FERS employee with over 38 years of federal service (including seven years of military service which I bought back). I have approximately $470,000 in my TSP account and plan to retire in January 2015. Can I take an immediate one-time-only partial withdrawal when I retire and elect to receive a specific dollar amount of monthly distributions immediately thereafter and, in a few years, halt the monthly distributions and roll over my remaining TSP balance to an outside IRA? A. Yes
Q. I want a lump sum for a certain amount and monthly withdrawals (not full withdrawal) for 25 years. Can I do both in the same year? A. The TSP considers monthly payments to be a form of full withdrawal.
Q. How much is the TSP taxed upon retirement if pulled out all at once, and how does that affect you’re end-of-year taxes at the end of that year? A. Your withdrawal will be subject to a 20 percent mandatory federal tax withholding and the amount of your withdrawal will be added to your tax return for the year as ordinary income. The withholding is considered a deposit against your federal tax liability for the year.
Q. Can I take my money out of the TSP and pay the penalty? Is there any way to get all my money out without having to retire or quit? If so, can I then move it into another self-directed IRA? A. The only ways to remove money from your TSP account before reaching age 59-1/2 while you are still a federal employee are: a loan and/or an in-service financial-hardship withdrawal. Neither of these may be rolled into an IRA account.
Q. I am interested in buying a franchise. I am 61 and plan to retire in 2014. Can I withdraw my money without it being taxed for this type of investment? A. No.
Q. I am a 55-year-old Postal employee planning to retire sometime in the next year under CSRS. Many years ago, I purchased a $2,000 Vanguard IRA that has grown to more than $40,000. I also have a separate similarly valued Roth IRA. I know that I can begin penalty-free withdrawals from TSP after separation, but can I roll my Vanguard IRA into TSP? I also know that I cannot roll my Roth into TSP. My desire is to have the money accessible before 59-1/2 and to avoid having three pots to withdraw MRDs when I’m 70-1/2. Any suggestions? A. You…
Q. I am 67, and I plan to work two more years. I am collecting my Social Security. My TSP is invested in the G fund, and I panic every time I invest elsewhere and the market goes bust and I lose $6,000 in one day. Should I diversify or stay in the G fund so close to retirement? I have diversified in the past and lost $52,000 in 2008. A. It sounds like you’re not qualified to manage a retirement investment account. You should either stick to the G Fund, buy a TSP annuity or find a trustworthy investment…
Q. I will retire in two years. If I leave my money in the TSP, what happens when I reach 70-1/2 and I am forced to pay a certain percentage of my savings out every year due to my age. Does that mean I would have to pull all my TSP money out (pay taxes on it) to transfer it to another account in anticipation of the yearly deduction? A. If you begin monthly distributions using form TSP-70 during or before the year you reach age 70-1/2, the TSP will automatically distribute the required amount each year. There is no…