Q. What happens to the FERS benefits and Thrift Savings Plan account if a former federal employee renounces his U.S. citizenship? A. Renouncing U.S. citizenship, on its own, does not affect the ability to maintain and manage a TSP account.
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. Should I consider paying off the balance of my mortgage (approximately $300,000) using a full withdrawal of my Thrift Savings Plan upon retirement if the mortgage payment is more than the TSP annuity anticipated and the balance is adequate to make the payoff? A. I can’t tell you if you should, but if I were responsible for managing your retirement plan, I wouldn’t recommend it.
Q. I’m thinking about going to do a GS job after my four years is up in the military. If you go from military to GS, can you keep adding money to your TSP? A. You will begin a civilian TSP account as a civilian employee.
Q. Will it be possible to convert a normal Thrift Savings Program account to the new Roth option? I understand that the taxes due would have to be deducted, but I’m curious as to whether or not it is even possible. A. This is not allowed.
Q. My mom, who doesn’t know English, turned 70½ on Aug. 4, 2011. She has IRAs at two different places: Vanguard and Bank of America. My mom has already satisfied her 2011 Vanguard required minimum distribution before April 1, 2012, because it was her first RMD. The Vanguard 2011 RMD was calculated by Vanguard and mailed to my mom, by the way. Was she also required to take a Bank of America RMD? If so, oh no! What’s the best way to proceed? A. In general, an RMD must be calculated for each IRA, and the total RMD for all…
Q. I have about 10 percent of my TSP invested in the International Fund and about 90 percent invested in the G fund. I do not want to take payments for the International Fund because it is down so much. Can I just take payments from the G fund and wait until the International Fund recovers, or do I have to take a proportional amount form each fund? A. Any distributions will come from your investment funds proportionally. You may rebalance after the withdrawal is made, however.
Q. I am confused by your statement May 29 that the postmaster who is considering “early retirement” after 24 years would be subject to a TSP early withdrawal penalty. My understanding is that if one is 55 years of age and retires, he/she can access his/her TSP funds without a penalty. Because this person is 55½, he or she would not be subject to a penalty. The authority you cite on page 7 appears to support my understanding. Have I misread your thoughts here as written? A. You’re right. Thanks for bringing this to my attention. There was a typo in…
Q. I plan on retiring in 2014 but would like to leave my Thrift Savings Plan alone unless I need it or until I turn 59 (which would be 2015). I’m looking at around $180,000 to draw from. I think I would like to start with a small amount, say $500 a month, to see how that works until my Social Security kicks in at 66. Is there any problem adjusting the monthly amount I would want? A. You may adjust your monthly payment amount once each year, in January.
Q. I’ve been doing some estimates for retirement with the TSP calculator. I plan on leaving my money in G Fund after retirement, and for interest, I’ve been putting 3 percent. Is that a conservative enough amount? A. The calculator is unrealistic in that: 1. It assumes that a constant rate of investment return will be earned each and every year, like clockwork; 2. You can predict what this rate will be; 3. You know how long you’re going to live; 4. Inflation isn’t a factor. Each of these assumptions is absurd. I think that the calculator is, at best,…
Q. If I retire at the end of August, and had not previously taken advantage of TSP catch-up, can I max out the tax benefit by having the balance of my annual allowable TSP contribution limit, plus the full retirement catch-up amount all taken out of the last close-out check for unused annual leave and sick leave? I’m in senior-level service, so I get 50 percent of unused sick leave.) A. You may set your Thrift Savings Plan deferral amount as high as you like, within the limits of your paycheck amount. Once the annual deferral limit, including catch-up, is…