Q. I am a FERS retiree. I receive a small annuity and Medicare; both are taxed. This year, however, I made a partial distribution from my TSP account (federal taxes of $17,000 were withheld). As I prepared my taxes I found that the TSP withdrawal combined with my annuity and Medicare puts me in a higher tax bracket, and now I owe $10,000 more in taxes. How do I offset this obligation if the TSP taxes were already paid? Can I file the TSP distribution separately or transfer it to a Roth account? A. The $17,000 was not tax; it was…
Yearly Archives: 2014
Q. I came to federal service late in my career. I am approaching my five-year anniversary and am a term employee subject to a July 1, 2015, departure. I have several small investments in IRA Variable annuities and a college annuity with TIAA-CREF. None of these other funds have much in them, but between the TSP and these other funds, there is approximately $150,000 in assets. My reading in your columns and others leads me to the conclusion that I should consolidate into my TSP to the extent possible, even though my time is short. My costs with my IRAs…
Q. As a federal employee nearing retirement, I love the TSP! I’ve been a dedicated saver, and my account has done well. But I’m flummoxed by the limited withdrawal options. I’d really like to keep all my savings in the TSP when I retire, but I won’t be able to. I’ll need to take out a large chunk (maybe as much as $200,000 or more) & open an IRA somewhere else, unfortunately at much higher management fees. Because every now & then, I know I’ll need $5,000 or $10,000 — to get the house painted, or buy a car, or…
Q. When I retire at age 64, I would like to take a lump sum from my TSP ($20K) for a down payment on a home. How will I be taxed on that? A. The amount withdrawn from your Traditional TSP account will be included in your tax return for the year as ordinary income.
Q. I have about $100,000 in a Vanguard account from my old employer. Since I can’t contribute anything to that account, can I drop those funds into my TSP and get better return? A. Yes, you may and probably should transfer the pre-tax part of these funds into your TSP account.
Q. If I go out on FERS disability, will I still be able to make contributions to my TSP while on disability? If so, will there be matching contributions? A. You may not make TSP contributions from FERS disability retirement income payments.
Q. I am 50 years old and have been employed with the federal government for more than 20 years. I have an outstanding TSP loan with a balance of around $14,000 from about three years ago. Each month I have difficulty paying all of my bills. I have no problem proving negative cash flow due to years of frozen pay, furloughs, increases in the cost of living including energy, food prices, medical expenses and prior debt. I see no circumstances where these costs will decrease nor do I see my income increasing in the foreseeable future. I need to take…
Q. I am 69 years old and made a small early withdrawal from my TSP. I am thinking of retiring within the next two years and wondered if I should roll part of my TSP earnings into a Roth IRA. What are your suggestions? What type of Roth should I choose, and what amount should I roll over? A. Nothing in your note indicates that there is a good reason for doing this. You will certainly incur higher investment expenses, lose access to the G Fund, and pay taxes at today’s rate. What do you expect to gain in return?…
Q. I am a 49-year-old FERS employee, and I have been contributing to my TSP account for the last 8 years. I am contributing 100 percent to the G Funds because I was told that is safer, but I don’t see my money growing fast enough, and to be honest I don’t really understand the different options available to me. I have at least 13 more years of service before retirement and need to see my money grow faster. Please advise where should I be contributing my money. The options I have are: G Fund Government Securities F Fund Fixed Income…
Q. I’m 58 yrs old with 34 years at the Postal Service. I have about $400,000 in my TSP account. I’m not ready to retire, but I would like to take a one-time withdrawal from my account to use for down payment of a house ($100,000). Is that money subject to a penalty? Do I have to pay it back? Or is it just treated like ordinary income? A. You may take a loan up to the TSP loan limit, which will not be taxed if you repay it on time. You may take an in-service hardship withdrawal if you…