Author militaryonline

Q: I am an Army reservist who will be 55 in September and will retire Dec. 31 because of the requlation that military officers can only perfrom 28 years of service; assuming I do not get promoted to colonel. When do I have to start withdrawing funds from my TSP? A: Under current law, you will have to start taking withdrawals from your TSP the year after the year in which you reach age 70 1/2, or when you retire, whichever is later.

Q: I retired under the Civil Service Retirement System in 2008. I am 57 and my wife is 56. The financial adviser at our credit union recommends that I transfer $100,000 (half of my Thrift Savings Plan balance) from my TSP account to purchase a variable annuity from Prudential. It is called a Spousal Highest Daily Lifetime 6 Plus. The brochure guarantees that a $100,000 investment will double to $200,000 after 10 years. What are the pros and cons of such a transfer? A: I won’t comment on the pros and/or cons of a specific investment product. I continue to…

About a year ago, I encouraged readers to maintain some exposure to the Thrift Savings Plan’s stock funds — the C, S and I funds — in their accounts. At that time, the value of shares in these funds was at its lowest level in many years. But since then, these funds have recovered a large chunk of their lost value by rising 50 percent or more from their lows. While still priced well below their peak 2007 levels, the funds have come a long way in a relatively short time. By my measurement, the broad domestic equity markets have…

Q: I turned 70 years old in November 2009. I intend to continue government service for at least another three years. At what age does the Thrift Spending Plan withdrawal become mandatory if you are still employed by the federal government. A: No, it will apply once you separate from service.

Q: Will the mandatory withdrawals be automatically sent to me in the year I become 70 1/2, or do I have to do something? A: You need to request a withdrawal, of some kind, and then the Thrift Savings Plan will make sure that your distributions meet the manadatory withdrawal requirement, subject to the TSP’s withdrawal rules. Visit www.tsp.gov for the details.

Q: If I retire at the end of the year and receive my last paycheck for the wages in the next year, could that income be used as the basis for contribution to an IRA? You recently said “no” for this option regarding receipt of lump-sum annual leave, but what about wages earned in 2010, but not received until 2011? A: That is earned income for 2010, deferred into 2011, so is not earned income for 2011.

Q: I am retiring in August at age 57 due to mandatory law enforcement officer’s coverage. I understand that you can choose to take a monthly withdrawal amount as low as $25 per month from your Thrift Savings Plan. I also understand that you can change this monthly withdrawal amount at a designated time each calendar year. After my retirement date, is there a set period of time in which I have to let the TSP know that I want to take a set monthly withdrawal amount? A: No, although you are subject to the IRS minimum withdrawal requirements beginning…

Q: I retired as a Federal Employees Retirement System annuitant Feb. 1, 2006 at age 62 plus a couple of weeks. If I am rehired, can you tell me:If I have the maximum withheld for retirement ,including the over 50 extra amount, deducted and invested in the TSP am I matched by the federal government for 5 percent plus the over 50 amount withheld? Are all government matches vested from Day One for as long as I decide to work? I left my TSP with the federal government, and I have not taken anything from the TSP. I currently work…

Q: If I retire at the end of 2010 and receive my lump sum annual leave payment in 2011; will I be able to put money into an IRA or the Thrift Saving Plan in 2011, even though I did not actually work that year? In other words, would the lump-sum payment in 2011 be considered earned income? A: No. The payment is considered deferred compensation and is not a basis for contribution to an IRA or the TSP.

Q: I am being removed from my civil service position because I am ineligible for a security clearance. I’m 53 with 10-plus years of service.  Can I withdraw my TSP funds? I’m aware of the tax penalty. A: After you separate from service, you’ll be able to withdraw your vested balance.

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