Q. I am a federal air technician with the Air National Guard. I have 34 years in the Guard and 27 years as a federal full-time technician. I am in FERS and have a minimum retirement age of 56. I will be 53 this year. It has been communicated to me that I will probably not be retained this year, meaning that Dec. 31, 2014, I will be involuntarily retired, thus losing my full (technician) and part-time (traditional Guard) employment. When can I begin collecting my retirement pay, Social Security, Thrift Savings Plan? Are there any penalties if I was…
Author Mike Miles
Mike Miles
Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.
Q. I am 47, have been investing for seven years, have reached maximum contributions at a total of $115,328.22 and will eventually retire at 63. Recently, there is talk in the stock market of a global sell-off. I have had all of my investments in the S Fund and doing quite well. As of Jan. 23, I’ve shifted my contribution of 100 percent from S to G. Was this a financially dumb move? A. Not if you’ve guessed right. Only time will tell. For what it’s worth, if we’re talking about your entire portfolio here, you should be invested in…
Q. During the retirement process, how do you move the Postal Service Thrift Savings Plan account to a private, individual IRA so that there are no taxes? A. After you’ve retired, you use Form TSP-70 to request a direct rollover to an IRA.
Q. I’m a CSRS employee nearing retirement. I have read numerous articles touting the advantages of opening a Voluntary Contributions Program account with up to 10 percent of your lifetime civil service earnings and then converting it to a Roth IRA at retirement. In your professional experience, would you recommend qualified individuals follow this approach? Are there potential pitfalls I’m unaware of? A. I certainly recommend that you consider it. I don’t know of any pitfalls other than botching up the transactions and violating some rule. I suggest that you pursue it with the help of a qualified tax adviser…
Q. I retired under a Voluntary Early Retirement Authority from the Department of Agriculture in July at age 56. I chose to receive monthly payments from my Thrift Savings Plan account. I would like to pay off my mortgage and a student loan. The only thing I can come up with is to transfer my TSP funds into an IRA and withdraw from the IRA. If I roll my TSP funds into a traditional IRA and make withdrawals before 59½, will I be subject to the 10 percent early withdrawal penalty? A. Yes, I believe you will, but you should…
Q. Is it OK to transfer an established 72(t) program from one institution to another? A. As long as you don’t disturb the series of payments, I believe you can. But you should consult your tax preparer before you do it, to be sure.
Q. We have applied for an age-based withdrawal from our Thrift Savings Plan account (husband works for the Postal Service) in the amount of $16,000. However, we found out that the tax was simply too high. We have already received the check, but we are now considering canceling it. Is this allowed? A. You can ask the TSP to be sure, but I don’t think it can be canceled. You have constructively received the payment. You may be able to roll the money over to an IRA to further defer the tax, however. There is a window of 60 days…
Q. I currently have all of my Thrift Savings Plan investments in the S Fund, and I see that it is now losing money. Should I move my money today or this week, or wait and try to recap what I lost (Loss is recent, I think over this past weekend)? A. The person responsible for managing your investment strategy will have to make this call. I can’t tell you how to work the controls if I don’t know where you’re going, what you’re driving or how much gas you have in the tank. I can tell you that a…
Q. I will be 55 this month and plan to retire in November with 33 years of service under CSRS. Do I have to wait until I am 59½ to withdraw from my Thrift Savings Plan? A. Not if you wait until you’re retired to request the withdrawal.
Q. Will the Thrift Savings Plan allow for in-plan Roth rollovers? If so, how will they work and who will benefit from these rollovers? A. No.