Q. What are tax and/or RMD consequences to a federal employee under FERS who is currently 70 1/2 years old and who does not plan to retire for 2-5 years, but is considering transferring a significant portion (three-quarters) of their TSP to a private insurance-company annuity? The annuity does qualify as an IRA. The federal employee does not plan to access the funds until retirement. Can the employee continue to work for federal government without taking an RMD or paying any taxes on the transfer?
A. Your TSP account will not be subject to RMD until you retire, or otherwise separate, from federal service. An IRA account is subject to RMD when you reach age 70 1/2, whether, or not, you are still working.