Q: I am planning to retire at MRA +10. I will be 56 1/2 years old. Will I be allowed to draw month distributions from my TSP account without penalty? If so, does this include no early withdrawal penalty from the IRS? A: Under the current rules, you will be allowed access to your TSP account without penalty after you retire.
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Q: I am about five years from retirement under CSRS. I would like to take out a TSP loan to purchase a used car and to pay off a high-interest credit card balance. It seems to make sense to me since the interest rate is at 3.25 percent (G-fund). By being able to set the terms of the loan, I plan to have it paid off well before retiring. Does this make sense? What is the downside for my TSP account as I head toward retirement. A: You’ve explained your plan. I can’t tell you whether it’s the best option…
Q: I turn 49 in October. When can I start making catch-up payments to my TSP? Can I start the day after I turn 49, do I have to wait until Jan. 1, 2011 (since I turn 50 in 2011) or do I have to wait until I turn 50 in October of 2011? A: You can start them on or after January 1, 2011.
Q: I’m a FERS federal employee with almost 20 years of service. I’m 55 yrs of age and married. I’d like to retire in about seven years. At this stage, can you recommend a TSP allocation? A: The appropriate allocation will depend on your objectives and circumstances at the time, and can change through time. I can’t responsibly provide this kind of personal advice without the proper information and analysis.
The Thrift Savings Plan’s G Fund is in a class by itself. It is a government securities investment fund that guarantees against loss of principal while offering the returns of more risky, longer-term Treasury bonds. While the G Fund’s returns are similar to the yield provided by 10-year Treasury bonds, the G Fund is not comparable to a bond investment. Bonds and bond funds, like TSP’s F Fund, can and sometimes do lose money. Treasury bonds, for example, guarantee their interest payments and the value of the bond, if redeemed, at maturity. Along the way to maturity, however, the bonds…
Q: Regarding the Jan. 26 posting on “Forced into choosing TSP withdrawal options,” your final comment states: “An alternative would be to roll over your TSP to a low-cost IRA and then withdraw money as you please.” How is that possible if he is already 70 1/2. I’ve understood that an IRA is not available to purchase if you are already 70 1/2. A: You may roll your TSP balance to an IRA at any age.
Q: I am 70 and intend to retire Dec. 31 with FERS civil service since July 2001. Can I keep the TSP funds in an account and continue to earn whatever the fund may provide while also making minimum withdrawals to satisfy IRS withdrawal rules (whatever they may be). A: Yes, you may.
Q: My divorce Judgment and Decree of 2004 awarded me porrata share of FERS employee annuity, Thrift Savings Plan and Former Spouse Survivor Annuity. I remarried before age 55. My former spouse and I were married 21 3/4 years. Will I be eligible for any of these benefits? A: You should consult an attorney for the answer.
Q: I am retiring soon at age 50 and at some time in the future may decide to take a full TSP withdrawal under the substantially equal payments based on IRS life expectancy. I understand that I will have to continue to receive these payments for five years, or until age 59 ½, whichever is longer. Should anything happen to me while receiving these payments, will my surviving spouse be able to stop the payments and do as she pleases with the remaining account balance? She is the sole beneficiary. A: Yes.
Q: I have a question regarding borrowing against TSP and would like your opinion on the scenario as to whether it would be worth borrowing against TSP. I am 52 and have eight years as a FERS employee and I intend to do 12 more years for a total of 20 years before I retire. Currently, I contribute approx $600/pay period into TSP which currently totals to approx $100,000. I have about $20,000 in loans. My questions is: would it be sensible to borrow $20,000 against my TSP to pay off the loans? Or should I leave my TSP alone?…