Q. I am 37 years old, invested 100 percent in L2030. I have 25 years left to work, and I’m happy with 5 percent growth. I’m afraid of sequestration effects, so I’m planning to move 100 percent into G fund this week. I will move it back into L2030 after sequestration, when it posts three months of positive share price gain. Good plan or bad? A. Bad.
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. My husband has a substantial sum in his private company’s 401(k). I am the beneficiary on this account. If he dies and the money goes to me, may I put that money into my Thrift Savings Program, since that money is all pretax? A. Good question! If it winds up in a 401(k) or IRA solely in your name (not in a beneficiary account), it is eligible to be moved into your TSP account.
Q. I am an air traffic controller who is retiring in two months at age 48. I have an outstanding Thrift Savings Plan loan for about $9,000. What happens if I don’t pay this off before I retire? Do I pay the 10 percent penalty, along with it being shown as income? Does this affect my monthly withdrawal from TSP using the 72(t) rule? Also, can I take a one-time partial lump-sum withdrawal and pay the 10 percent penalty without it affecting my monthly withdrawal? A. If you don’t repay the loan within the grace period after you retire, it will…
Q. I am 65 years old and will collect my first Social Security retirement check this month. I have been employed by the federal government for the past nine years; therefore, I have been enrolled in the Thrift Savings Program. If I retired today, my TSP benefit would be approximately $400 a month. Will my Social Security or TSP benefit be penalized because I am drawing benefits from both accounts? A. It is possible that the taxes you owe on your SS benefits could affected by your annual income, including TSP distributions. See www.irs.gov/uac/Are-Your-Social-Security-Benefits-Taxable%3F for more info.
Q. The Thrift Savings Plan allows contributions this year of $17,500 plus a $5,500 catch-up, whether to Roth or traditional IRA. Internal Revenue Service rules also allow (for certain income brackets) a Roth contribution of $5,000 plus $1,000 catch-up. Can a person over the age of 55 make the $6,000 Roth contribution allowed under IRS rules to a secondary Roth IRA and still make the difference ($13,000) in a contribution to the TSP? A. You are always free to make the full Roth TSP contribution. It’s your eligibility to make the Roth IRA contribution that may be limited, depending upon your tax…
Q. I am separating from the military in January 2014. From there, I will be pursuing my education. I will be 60 in 2042. My Thrift Savings Plan is 100 percent G Fund. I stopped my TSP contribution and started the Roth TSP because I like the idea of not paying tax when retirement comes. I am aware that the account needs to be in place for five years and can only be withdrawn at age 59½, and that the money is deducted from taxed income. Is this a wise decision? Since my traditional TSP can’t be transferred to TSP…
Q. I am covered under CSRS. Can I still open an external Roth account and contribute the $6,000 maximum (plus catch-up)? If so, how would contributing to the Roth TSP interact with contributing to the external Roth? A. The limits for the two are separate, but your eligibility to contribute to a Roth IRA depends upon your tax return for the year. If your income is too high, your Roth IRA contribution eligibility will be phased out. There’s a worksheet in IRS Publication 590 that will help you determine your eligibility.
Q. I’ve been retired a couple of years now and I’ve transferred the money I had sitting in the G Fund to one of the L funds. I chose the L 2020 fund, mainly because I’ll turn 70 in five years and will be forced to start withdrawing the required minimum distribution. I’ve read that you suggested putting money into the L Fund that closely corresponds to one’s life expectancy. Does that mean how long I plan to live, or is that determined by a doctor or some other expert? A. If you’ve had a full physical exam within the…
Q. It is my plan to continue working past age 70½, which will allow me to not take minimum distributions until after I separate from service. However, I have found nothing that speaks to continuing contributions beyond 70½. I would like to continue contributing if possible. What can you tell me about that? A. You may continue to contribute up to the usual limits until you separate from covered service.
Q. I appreciated your Feb. 4 article concerning the advantages of the Thrift Savings Plan vs. more costly private products. I am unclear, however, about the options (and their advisability) when it comes time to retire from federal service. Recognizing that rules allow distribution without penalty at 59½ and require some distribution from any IRA at 70, is continuation in the TSP an option which would allow the retiree to access the account as desired, or must the TSP account be moved to a private instrument? A. I have written about this topic on more than one occasion. You may…