Q. I am CSRS and eligible to retire now with 30 years at age 56. My salary excludes my wife and I from funding a Roth with more than $6,000 each year (except $22,500 allowable into new Roth TSP). Let’s say I put $25,000 into the Voluntary Contributions Program with the intention of making a one-time, lump-sum withdrawal as soon as possible and roll the original $25,000 into a private Roth IRA. I am told that doing so is a way to immediately fund a Roth that is not limited to my current $6,000 amount mentioned above. Do I understand this correctly,…
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. Are the Thrift Savings Plan and non-TSP Roth contribution limits exclusive? In other words, can I contribute the maximum to my TSP ($17,000 for 2012) and maximum ($5,000) to my non-TSP Roth IRA, so long as my adjusted gross income is below the limit imposed for the Roth? Or is the $17,000 limit imposed for both retirement vehicles combined? A. The two limits are separate.
Q. I am a CSRS employee with 38 years of government service. So far, I have my funds spread over all of the funds: 45 percent in G and 30 percent in F. Is this wise considering I intend to retire in fiscal year 2013? Also, is it wise to take funds from my Thrift Savings Plan and just pay off one of my two mortgages? The mortgage rates are 4.5 percent and 5 percent. I’d like to pay off the 5 percent mortgage, which is about $150,000. Is this wise? If not, why not? A. Your asset allocation makes no sense.…
Q. What Thrift Savings Plan options are available upon retirement other than purchase of an annuity? What rules govern TSP rollovers to an IRA? A. You may leave your money in the TSP and manage it there for life; you may take one partial withdrawal; you may take a full withdrawal as a lump sum or a series of monthly payments, or some combination of these. Internal Revenue Service rules govern rollovers to an IRA. Visit www.tsp.gov for more information.
Q. Can I select the date my TSP monthly withdrawal is deposited to my bank account, or is it the same date for everyone? A. You can’t specify the date.
Q. I retired from the Air Force in 2004 after 30 years of service. I was rehired into the civil service ranks in November 2004 and immediately started investing into the Thrift Savings Plan’s L2020 account. I just turned 58 and plan on retiring when I hit 60, maybe 62 if my health holds up. How long should I keep my investments in the L2020 account? As I get closer to retirement date, should I move it from L2020 to one of the individual funds? A. If you’re not sure about what to do, to support you goals with a…
Q. My retirement time frame under FERS is about 2035. Prior to joining the feds, I had virtually no retirement planning. But when I joined the feds at age 33, I started making diligent contributions to the Thrift Savings Plan. Six years later, my TSP account has hit a $110,000 balance. This year, I started a Roth IRA with a $5,000 contribution. I am married, and our income just slid slightly below the adjusted gross income ceiling for Roth IRA contributions, mostly because I contributed $17,000 into the traditional TSP. As I look now to the Roth TSP, I am considering for the…
Q. I have a Thrift Savings Plan account, and I have a retirement annuity with a company other than MetLife from previous employment. Can the two be merged into the MetLife program, or do I have to take my TSP account to the other annuity when I retire? Am I correct in assuming that if I place my TSP either way, there will not be a tax penalty, since it will be put directly into an annuity? A. Merging the two is probably not possible. You can either continue your TSP account, use the money to buy a TSP annuity…
Q. I’m a Postal Service employee who is very close to his retirement date. I was told that withdrawing 4 percent of my Thrift Savings Plan savings per year would last for a lifetime? Is this true? What if I die two years after I begin to draw and my benefits are left for my daughter who is only 38 now? Will she receive the money for a lifetime also? Or will she be paid only the balance? A. You can’t be sure that a 4 percent annual withdrawal rate will be safe. It depends upon a number of factors, including…
Q. I’m 60 years old and receiving a full Thrift Savings Plan annuity at set monthly payments. For 2013, I want to increase the payments using Form TSP 73 to cover anticipated expenses for a family wedding. The following year, I want to again submit TSP 73 to significantly lower my payment for 2014, as I will have some anticipated income and won’t need the extra money. Other than the $50 minimal monthly withdrawal amount, are there any dollar restrictions in setting the monthly withdrawal amounts year to year? A. Just to be clear, you are receiving automatic monthly payments from your…