Q. I may be in the wrong retirement system (CSRS). If I am, are there any companies that can guide me to decide between CSRS offset and FERS under the Federal Erroneous Retirement Coverage Corrections Act? A. Yes. I have capabilities and experience in this area (I provided decision support in one of the largest FERCCA cases on record) and will be happy to discuss your situation with you. You may contact me directly through www.variplan.com.
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. Have you heard anything regarding an increase to the maximum Thrift Savings Plan annual contribution ($17,000)? A. You should expect the TSP deferral limit to track the 401(k) deferral limit, which is indexed to inflation with a $500 minimum increase. Any increase for 2013 won’t be announced until later this year, usually in October.
Q. During a retirement seminar, I was told that federal employees who retire during the year they turn 55 but before age 59½ have a one-time opportunity to withdraw funds from the Thrift Savings Plan without paying the 10 percent tax penalty. Is this correct? If so, how should this withdrawal be reported to the Internal Revenue Service so that the penalty is not assessed? I am a retired federal law enforcement officer, which may or may not be relevant. A. This is bunk. If you retire during or after the calendar year in which you reach age 55, any and…
Q. I am 56 years old with 38 years of service including military time which I bought. I am under FERS. I am seriously contemplating retiring any day now. Can I, at this age of 56, withdraw from my Thrift Savings Plan? What are the penalties, if any? What about the 20 percent that TSP automatically deducts? Also, what about the federal taxes? A. Under the circumstances you describe, your post-retirement TSP withdrawals will be exempt from the early withdrawal penalty. Your withdrawals will be subject to federal income taxes for the year of the withdrawal, and there may be withholding…
Q. I have an IRA that guarantees me a 4.50 percent interest rate. I can roll over IRAs anytime. Very little fees if any. It is a variable annuity that I purchased in 1983 that has granted me the fixed income. I am thinking of rolling over my Thrift Savings Plan and only taking the required minimum distribution at the end of each year. I can take out money without any penalty except for taxes. There is also a good death benefit. There are no surrender fees. What are your thoughts? I am already 75 years old. A. The phrases…
Q. Can active employees do an in-service transfer of any portion of their Thrift Savings Plan? A. Yes, if you qualify for a hardship or an age-based in-service withdrawal. Visit www.tsp.com for details.
Q. I am CSRS and will be retiring next year. I will be making a contribution (after-tax) to the Voluntary Contributions Program before retiring. I have an existing Roth IRA (after-tax), reflecting contributions I have made over the years. I do not have a traditional IRA (pretax). I do, however, have money in the Thrift Savings Plan (pretax). I plan on converting the VCP contributions (after-tax) to my Roth IRA (after-tax) at retirement. Any interest earned (pretax) in the VCP will be transferred to the TSP at retirement. After doing some research on this and reading IRS Pub 590, it…
Q. I am separated from federal service, and I want to roll my Thrift Savings Plan funds over into two or three separate IRAs at one or more brokerage houses. Am I allowed to make two or three partial withdrawals and roll each portion into separate IRAs? Are there time restrictions such as only being permitted to make one such transfer in a 12-month period? A. You are not allowed to take multiple partial withdrawals from your TSP account. You may roll the money over to an IRA and then roll over partial withdrawals from there to additional IRA accounts.
Q. I’ve worked for the Postal Service since 2001. There is $29,000 in my Thrift Savings Plan. I was on the 3 fund for all of those years. I would like to make some changes hoping to bring in more. I am 37 years old. I just changed it to 30 percent S and 70 percent G, but I am sure that is not good. Could you assist me? A. Why did you choose this inefficient allocation? If you’re not sure which allocation best suits your needs, try the L Fund with the maturity that most closely matches your life…
Q. Can a wife roll over her 401(k) distribution into her husband’s Thrift Savings Plan account? A. No.