Q. I was contributing to the Thrift Savings Plan since 2002, when the program started, until 2009. I don’t contribute now on a monthly basis because I am not a government employee yet. I still put in money from time to time, like rolling over a 401(k) from a previous job. I have close to six figures in my plan. I plan on working for another 20 years, hopefully in the government sector soon. I currently have all my money in the G Fund. I have always been nervous to put money into those other funds. Can you provide me tips on…
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 want to withdraw some money from my Thrift Savings Plan. I need transportation, home repairs and needs for my child. I have a husband who is unreliable, not responsible and does not work, and our marriage is on the rocks. Is there any way I can withdraw money from my TSP without his consent? A. The rules depend upon your employment status, retirement system and the amount and type of withdrawal you take. If you are still an active federal employee, spouse’s rights affect your in-service withdrawal. If you are a married FERS participant or a member of the uniformed…
Q. I am a federal civilian with 20 years of service (12 to 15 years to go). I have more than $200,000 in my 401(k) plan. The new Roth IRA option sounds appealing to me, since I’d rather pay tax on my retirement money now, while I’m employed. If I start changing some of my biweekly allocations to the Roth option, am I negating the benefits of the Roth by contributing less to the “big pot” of my existing 401(k), reducing the compounding interest? I don’t want to end up robbing Peter to pay Paul. A. Directing your contributions to…
Q. I am a young federal employee with three years of service with the Department of Agriculture. I have contributed 10 percent (5 percent matched) into my traditional Thrift Savings Plan. As I understand, I would lose the 5 percent government-matched money if I move all of my contributions to Roth TSP. Would it be best to open an additional Roth TSP to my traditional TSP, or structure it differently? A. You will not lose your matching contributions if you shift your contributions to the Roth TSP.
Q. I live in Alabama. I’m 32 and have worked about six years in the federal system. I am vested, and just left to work with a contractor. I have $7,400 in my Thrift Savings Plan account and want to do a full withdrawal. If I do the withdrawal, do I get that number since I’m vested, or only what I’ve contributed? Also, when or if I withdraw it, I know I will have 20 percent withheld. Will it hurt my tax return next year? If so, how do I avoid that? A. You may withdraw your vested balance. That’s…
Q. I am in my early 20s and have just left a federal job. I am trying to decide what to do with my Thrift Savings Plan money. I’m leaning toward rolling it over to an IRA but do not understand where to start. Where do you get the forms to do this? Is it a good idea? (Cashing it out would have been my next option.) A. The best thing you could do with it is to leave it in the TSP and manage it there for as long as possible. In fact, if you have IRA, 401(k) or…
Q. Can you still transfer your Thrift Savings Plan balance between funds after you have retired and started receiving monthly payments based on life expectancy or a specific dollar amount? A. Yes.
Q. The Internal Revenue Service deferral limitation for 401(k) accounts is based upon a dollar limitation, which is the same for government and service members who contribute to the Thrift Savings Plan. For federal employees wanting to maximize their TSP contributions, this is a simple process on Form TSP-1: You merely take the current IRS limit ($17,000) and divide it by the number of pay periods (26) and you get the amount you should withhold in each pay period ($653.84). If you receive a step increase, or get promoted, or anything else that changes your pay, there are no effects…
Q. I served six years in the military and was honorably discharged in 2005. I can’t remember if I had a Thrift Savings Plan or not. Who can I contact? I’m receiving disability benefits through the Veterans Affairs Department. Would they know? A. Start by contacting the TSP (www.tsp.gov).
The most fundamental task in retirement planning is the management of risk. It is critical to identify sources of unacceptable, or catastrophic, risk and to neutralize these risks by either eliminating them or insuring against them, if possible. One potentially catastrophic risk often overlooked by federal employees is liability for damages stemming from their performance on the job. Any federal employee can be the target of a lawsuit filed by a private party for alleged violations of their legal rights. Most at risk are managers and employees who have frequent dealings with the public, such as those at the Department…