Q. All of my Thrift Savings Plan deposits are in the G Fund. I am a CSRS retiree. Since most of these funds are interest earned on federal bonds, are my withdrawals taxable by the state? I know they are federally taxable. I believe my contributions (which started in 1987) were both federal and state tax deferred, but I can’t recall with certainty. I called the Montana State Revenue once on this and they said they aren’t state-taxable, but I have my doubts. A. You should consult a qualified tax preparer for the answer. In general, your withdrawals are taxable, unless your…
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 retired and made a voluntary contribution to CSRS and then rolled it over to a Roth IRA in 2012, prior to my retirement. Now I’m interested in what I need to do, if anything, on my 2012 tax returns regarding this rollover. Will the Office of Personnel Management be sending me a Form 1099-R? Any advice on how to report on my 1040 will be helpful. Pub 590 (tax year 2011) says that “you do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan.” A. We…
Q. I’m trying to understand why the Thrift Savings Plan calculator that allows “monthly” or “lifetime” projections automatically defaults to the required minimum distribution amount at age 70½ when my (expected) withdrawals are more than the Internal Revenue Service RMD limit. Which takes precedence: the IRS RMD which produces a significantly smaller amount of TSP payout, or the amount I wish to take out? A. You must take at least the RMD amount each year to avoid a substantial penalty.
Q. I understand that some states do not tax CSRS or FERS pensions. I also understand that there are some states that do not tax or only partially tax Thrift Savings Plan withdrawals. Would you please list the states that have income tax and that fully or partially tax TSP withdrawals? A. Nope. You’ll have to do that research yourself. I suggest you start by directing your Web browser to “google.com.” Or, I’m pretty sure that Kiplinger.com can provide this info.
Q. I am looking to establish residency abroad after retirement, either in France or Germany. Is there any guidance on direct deposit of FERS and Social Security annuities, and Thrift Savings Plan distribution, to foreign banks? A. Direct deposits from your TSP account can only be made only to financial institutions in the United States.
Q. I notice that in several of your responses to people requesting guidance on how to allocate their Thrift Savings Plan account, you use as a ‘default’ answer to choose the L Fund that most closely corresponds to their life expectancy. The guidance on the TSP Web page advises the following: “Determine the date when, after leaving federal service, you will need the money that is in your TSP account. Then identify the L Fund that matches your target date.” If I’m 51 and plan to retire and begin tapping my TSP at age 59, according to the TSP guidance, I…
Q. My wife was RIFed in 2008 at age 48 with 28 years of service with a $7,000 Thrift Savings Plan balance and was placed on CSRS discontinued service retirement. She was re-employed by the government five months later with a different agency. Because she is a re-employed annuitant, she can no longer contribute to TSP and is covered by Social Security’s Old Age, Survivors and Disability Insurance only. Emails and telephone calls to TSP have proved less than helpful; TSP has advised her that the only action possible is to leave the fund as is. We both wanted to verify…
Q. I want to know what percentage I am paying in management fees and how they are being paid for my Thrift Savings Plan. I am invested in the C, S, and I funds. I am worried about fees eating into my profits. A. The TSP’s expenses have been the lowest you’ll find, anywhere. In fact, they’ve been so low in recent years that they’re almost zero. In 2012, the TSP’s expense ratio was 0.027 percent (or, a multiplier of 0.00027). So, for every $1,000 you had invested during 2012, you lost 27 cents to expenses for the year. These…
Q. I am working for Department of Agriculture-Natural Resources Conservation Service and anticipating retirement Jan. 14, 2014. My birthday is May 6, 1943. I would like to know the requirements and how to apply for the required minimum distribution. Is there some kind of window of the first and last opportunity to take the RMD? A. Under the circumstances you describe, you will have to take the first required minimum distribution from your TSP account for tax year 2014 by April 1, 2015. You can learn more about how to calculate and request the RMD by reading the notice at https://www.tsp.gov/PDF/formspubs/tsp-775.pdf
Q. I retired from the federal service in 2012. I understand that I cannot make any further contributions to the Thrift Savings Plan since I am no longer a federal employee, and that I cannot undertake a traditional or Roth IRA in 2013 unless I have wages. What I am not clear about is the spousal IRA. It appears to me that because my spouse is still working, I could contribute to a traditional IRA in 2013 as a nonworking spouse if he and I met the income and joint filing qualifications. If this is true, could I then transfer that spousal IRA…