Q. I am 70 years old and still employed by the federal government. When I am 70½, I understand I must take a required minimum distribution from my traditional IRA/401s, but not clear if this applies to my Thrift Savings Plan account. Can you please tell me what the rules are for those who are 70 and over but still working for the government insofar as taking a required distribution from my TSP account? Can I wait until I retire from government? A. You may wait until you retire. You may also be able to transfer your IRA/401k balances into the TSP…
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 plan on withdrawing a six-figure sum from my Thrift Savings Plan after Nov. 30, when I am 59½. If I withdraw the money in 2013, will it count toward my earnings as far as taxes are concerned? If so, should I wait until 2014? I plan on retiring in May 2014. A. To the extent that they come from your traditional TSP balance, your withdrawals are added to your tax return for the year in which the payment is constructively received. You should consult a competent tax adviser for guidance on when it will be best to take your…
Q. Do you feel it would be wise to transfer my Thrift Savings Plan funds from the L2030 to the G Fund during this government shutdown? Isn’t money in the G Fund more secure, while the L2030 is prone fluctuations in the market? Is the market likely to take a big hit during the shutdown? My balance is $109,000, all in the L2030, and I still have about 20 years until retirement but may not stay federal the whole time. A. If you want to try to time the market, you’re on your own. The safest and smartest thing to do is to…
Q. The Dow Jones was down on Sept. 30 by 128.57 points, yet the S Fund only decreased from 31.0512 to 31.0038. Why such a small drop in S Fund? I called the Thrift Savings Plan and no good answers. A. Because the S Fund isn’t the Dow Jones Industrial Average. Different markets often do different things at the same time.
Q. I anticipate retiring within the next six to 12 months with 34 years of service and a projected $350,000 Thrift Savings Plan balance (diversified in the L Fund). In the latest meeting with my financial adviser, he recommended that, upon retirement, I consider taking a portion of my TSP balance and purchasing a product that would guarantee an income stream at a minimum percentage of growth over time regardless of the bond or stock market performance. He called it a GWIB (??) He pointed out that there are numerous products to choose from and they all offer different benefits. In general, can…
Q. My husband is retiring from the Postal Service on Nov. 1. We have $850,000 in tax-free municipal funds (all AAA rated and paying over 5 percent), and another $200,000 in natural gas and oil limited partnerships and some preferred stocks in energy companies that I recently inherited. I would like to live on the interest from these investments, leaving the principal alone. My husband is 62 and we want to wait until he is 66 to receive his Social Security payments. (Waiting until 70 is out of the question as both parents were stricken with Alzheimer’s disease at an early age.…
Q. I’m planning on a FERS retirement at the end of December 2014. At that time, I’ll have already met the minimum retirement age and will have credit for 32 years of service. I’ve read that I can withdraw funds from the Thrift Savings Plan without an early withdrawal penalty upon my retirement, and that approximately 20 percent will be withheld for federal taxes, but what I don’t know and can’t seem to find is the amount of money that will need to be paid to my state of residence, West Virginia. My plan is to use the money in…
Q. I have a loan balance of $18,366. I’m 56 years old and plan to retire in three months. Am I subject to the 10 percent penalty if I do not repay the loan? A. No.
Q. I work for the Postal Service. I have 30 years of service. I will have to take a discontinued retirement today. I will turn 55 in December. My minimum retirement age is 56. I understand from a previous question that I qualify to receive my Thrift Savings Plan without penalty because I am retiring in the year that I will turn 55. Will I be able to start withdrawing this money from TSP without penalty when I retire? Or in December, when I turn 55? Or at my MRA of 56? A. Your MRA has nothing to do with…
Q. Could you tell me how the G Fund did during the last three big market crashes? A. The G Fund’s value increases (and has increased) every month. It is not affected by market fluctuations.