Q. When was the Thrift Savings Program added to CSRS? I have CSRS and FERS retirement components. And I don’t recall a TSP for CSRS during the late 1970s and early ’80s. A. TSP was established by Congress in the Federal Employees’ Retirement System Act of 1986.
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 retired at age 52 from the Postal Service. When can I fully withdraw my money without a penalty? If I decide to receive monthly checks, when can I begin receiving them without any penalties? A. Unless you qualify for one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf, you’ll have to wait until you reach age 59½ to avoid the early withdrawal penalty.
Q. So if I follow all the rules related to my current Thrift Savings Plan account, and I begin making systematic withdrawals under the annuity factor method at age 55: 1. Can I contribute to my new employer’s 401(k) while drawing from my TSP? (I may want to take a downscaled job and subsidize the lower income with my TSP distributions.) 2. Are any Internal Revenue Service restrictions in place regarding my Roth IRA because I am taking distributions from my 401(k) at age 55? A. Yes, you may contribute to a 401(k) while taking distributions from your TSP account,…
Q. I will have approximately $550,000 in my Thrift Savings Plan when I retire this year at age 60. In addition, I have other investments and will be receiving a federal pension. Using a 4 percent investment withdrawal rate and anticipating future Social Security benefits, my income will exceed expenses by 20 percent, so I may dial back the 4 percent to something less. Considering this and with a willingness to accept a moderate amount of risk, what would be an appropriate TSP fund allocation for a younger retired person? A. I can’t tell you what is right for you…
Q. I am a FERS employee who will turn 70 in September. I fully expect to be working at 70½. Will I be required to take the minimum withdrawal from my Thrift Savings Plan account if I’m still working? A. As long as you are still working for the federal government, distributions from your TSP account will not be required.
Q. What types of funds can be used to buy back military service time (nonqualified, qualified, Thrift Savings Plan account funds, IRA funds)? A. Only after-tax money can be used, so you can’t use TSP, IRA or 401(k) money for this unless you withdraw it and pay the tax bill first.
Q. I will have over 30 years of service when I reach my minimum retirement age of 57. If I retire and start withdrawing Thrift Savings Plan money, will I pay an extra tax for taking out payments before age 59½? A. No.
Q. Can I withdraw my total funds from the Thrift Savings Plan without penalty at age 62? A. Yes.
Q. Should I keep my money in the Thrift Savings Plan after I retire or put it in an IRA? What would be best to make the most interest? A. Stick with the TSP. You can’t beat the G Fund for risk-free interest.
Q. I am being considered for disability retirement in the coming months. My application is pending consideration from the Office of Personnel Management. I am a GS-14 FERS employee, 54 years old, with about 32 years of service. I have approximately $250,000 in the Thrift Savings Plan, and my allocations are as follows: 15 percent C, 15 percent S and 70 percent I. I realize that is somewhat aggressive, but it has been like that for about seven years or so, and I have been hopeful of the international home run. Regrettably, this hasn’t necessarily come to fruition. I will…