Q. I involuntary separated from federal employment due to a reduction in force at age 53. I receive a small FERS monthly annuity. I am now 59½, and I would like to withdraw $25,000 from my Thrift Savings Plan, which I have never touched. I will have to pay taxes, but will this withdrawal be subject to the 10 percent penalty at my age? A. No.
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 25 and now have the option to contribute to a Roth TSP. I have four years left on my military contract before I have the opportunity to get out. Seeing that my future with the military is somewhat questionable, would the Roth TSP still be a favorable option? A. Except for tax-free pay earned in a combat zone, I don’t see any reason to expect that contributions to the Roth TSP are somehow better than contributions to the traditional TSP. In fact, I recommend that you favor the traditional TSP over the Roth TSP unless your circumstances…
Q. You state that we should invest in the Thrift Savings Program based on goals for retirement. My goal is to have $1 million in my TSP account by the time I retire; $1.5 million to $2 million would be even better. My TSP account has about $350,000. What can I do to grow my TSP to $1.5M to $2M over the next 10 to 15 years, given that I will max out the contributions (TSP $17,500 and TSP catch-up $5,500) every year until then? A. There is no way to answer this since you’ve provided a very wide range…
Q. I am 47 years old and worked for the post office for three years. During that time, I bought back my military service time of eight years. Am I eligible to someday get that retirement for the 11 years? If not, will I be reimbursed what it cost to buy back my time? Is the Thrift Savings Plan a separate entity, and when can I start receiving that? I’m currently working away from the federal realm. A. Mike: The TSP is yours to maintain and manage for as long as you like. You may withdraw money from it whenever…
Q. I am a federal employee with the Department of Justice, non-law enforcement, and will have 30 years of service at age 54, approximately two years before my minimum retirement age. Can I leave the government before MRA with 30 years and still be eligible to receive my special retirement supplement and my FERS retirement without a penalty at my MRA? Would I still be able to collect my Thrift Savings Plan, without penalty at my MRA, or would I be required to wait until age 59½? A. Mike: If you separate from service before the calendar year in which…
Q. I have 10½ years of combined federal and military service and roughly $15,000 in my Thrift Savings Plan, 100 percent allocated to G Fund. I am 33 years old and nowhere near retirement. I plan on working another 22 years for the federal government and do not plan to start using my TSP until I am in my 60s. What would be the best way to allocate my contributions? I’ve had a few friends tell me to shift over to L funds. A. If you’re not sure what to do, then I recommend that you use the L Fund that most…
Q. My husband (retired FERS) turned 70 in March and has more than $200,000 in the Thrift Savings Plan. Our understanding is that he must begin withdrawal by April 2013. We owe $100,000 on our home. Is it better to take out enough to pay off the house or schedule the minimum monthly withdrawal? A. The smart move will depend upon your mortgage terms and how you manage the TSP money. If I were responsible for the outcome, I’d prefer to see you continue the mortgage, if it’s at a market fixed rate, and take the required minimum distribution from the TSP account.
Q. With the looks of it, the economy has been doing better. The “fiscal cliff” is concerning me. My wife and I both have about seven years and both put 10 percent into the L2040 Fund. I was thinking of moving both to a safer fund (G or F) for a while until a deal is in place and the economy is safe and stable. I was thinking of doing this to potentially avoid another year like 2008, or something like that if a deal is not made with the president and Congress. What are your thoughts of doing something like this…
Q. I will be taking the early-out offered by the Postal Service. I am a 54-year-old CSRS employee of 35 years. I have a Thrift Savings Plan account. Please give your opinion on the best option such as taking the MetLife annuity, joint with spouse, level or increasing, cash refund compared with simply leaving the money in TSP and getting monthly payments either by specific amounts or increasing by life expectancy. I don’t quite understand the difference in the two options. A. There is no “best” choice. Using your money buy an immediate annuity guarantees income for life. You give…
Q. I’ve been retired from the post office for a couple of years now and have left all of what’s in my Thrift Savings Plan account in the G Fund. I won’t be forced to take the required minimum distribution until about six years from now. Since I’m not an expert at investing in all of the different funds, I was wondering: Would it be a good idea to transfer my money into one of the L Funds until I have to start taking withdrawals? A. Yes.