Q. Is it possible to do partial transfer of Thrift Savings Plan funds once you leave the government? Could I transfer 50 percent of my TSP funds into an IRA and retain the other 50 percent in my TSP account? A. Yes, as long as you haven’t already exhausted your single TSP partial withdrawal allowance.
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. Can I maximize my Roth TSP contribution ($17,000) and also contribute to a regular Roth mutual fund up to the $5,500 limit? A. Depends upon your marital status and income. Check IRS Publication 590 or ask your tax accountant for the answer.
Q. I will be retiring with 20 years active-duty military in two years and am thinking about tapping into my Thrift Savings Plan for a 20 percent down payment on a home. I realize withdrawing early includes penalties I don’t want to pay. Would taking out a TSP loan be my best option? I’d like to use about $30,000 toward my retirement home, and the interest rates seem low enough I wouldn’t take that much of a hit. A. If you can repay it, a loan would be a reasonable way to avoid the early withdrawal penalty.
Q. I will be age 54 at retirement. As a retired federal law enforcement officer, am I exempt from the 10 percent penalty for early withdrawal from my Thrift Savings Plan at retirement? I keep reading public safety personnel are exempt, but it reads as applying to state or municipality, but my status is federal. A. No, your LEO status does not exempt you from the early withdrawal penalty.
Q. When the Thrift Savings Plan calculates my Personal Investment Performance, are the matching funds that the government deposits considered part of the investment, or are they considered part of the investment return? For example, if my PIP for the past year is 10 percent, did I actually earn 10 percent on all of the money in the account, or is it only 10 percent because the government added to my balance? A. From the TSP website: “Personal Investment Performance (PIP) — The rate of return earned by your entire account during the 12-month period ending on the date indicated on…
Q. To preface, I am a twenty-something Defense Department civilian who will be furloughed the 11 days if Congress does not act. In June, I will have a $5,000 windfall from CD at maturity. I wanted to know the best possible option for this money. So far, I thought of fully funding my Roth IRA and saving the rest, adding to my emergency fund savings (which stands at about $25,000), funding my Thrift Savings Plan, or just investing in a taxable account (mutual fund, ETF, etc.) What do you recommend? A. Your question is like telling me that you’re flying an airplane…
Q. I plan to take a $50,000 residential loan from my Thrift Savings Plan account. Am I limited to repaying $17,000 a year (the contribution amount), or could I pay back $25,000 a year from my salary? A. You may repay the loan as quickly as you like.
Q. I have an inherited IRA with $50,000 (from my 75-year-old father). It is in a managed asset account. I have to take a required minimum distribution on a yearly basis. Can I transfer this money into my Thrift Savings Plan account and request RMD on yearly basis? A. No.
Q. I was wondering if the federal government will match my Roth TSP contributions like they do the Traditional Thrift Savings Plan contributions? A. Yes, but the matching will go into your traditional TSP account.
Q. When I retire at age 57, can I withdraw a small portion of my Thrift Savings Plan, pay the 20 percent penalty and leave the remainder as set monthly payments with the tax as three dependents? A. If you retire at 57, you may take a partial withdrawal, if you haven’t already taken one, with no early withdrawal penalty. You may also take a full withdrawal as a series of monthly payments. Check the table on Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for information on tax withholding requirements.