Q. Will the Thrift Savings Plan automatically withhold money toward my federal and state taxes each month if I choose monthly withdrawals at retirement? A. Federal withholding; yes. State withholding; no. See the table on Page 2 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for details.
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. Will you be allowed to withdraw the principal (not the interest earned) from your Roth TSP account after the five-year seasoning period and without any retirement age restrictions? Do the Internal Revenue Service’s rules on Roth 401(k) or a Roth IRA apply to Roth TSP? A. The early withdrawal penalty covers Roth distributions prior to age 59½.
Q. I have been working for the federal government for 10 years. I have contributed the max for most of that time to the Thrift Savings Plan/FERS. After a divorce, I have been battling debt in the form of school loans, credit cards, etc. In an attempt to pay off the debt, I pay approximately $700 per month. I have attempted and requested to decrease the annual percentage rate on some items, with little success. I have a fair amount in my TSP. I am debating whether to withdraw just the amount I need to pay off the debt (20…
Q. My husband has 15 years active-duty military and is working now as a NASA employee. It will cost about $20,000 to buy back his 15 years. Can we roll over money from our 401(k) into FERS and avoid penalties and taxes on that money? A. No.
Q. I am a 54-year-old letter carrier with 24 years postal and nine years military. According to Senate bill S.1789, will I be eligible for early retirement? What about the Social Security supplement? How does this affect my Thrift Savings Plan? Can I get that also? A. You will have access to your TSP account for retirement income as soon as you separate from service. You will be subject to the early withdrawal penalty until you reach age 59½ unless you qualify for one of the exceptions listed on page 4 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. Note that one of the…
Q. I will be retiring (CSRS) at the end of this year. I understand there are several options available with my account. However, I haven’t been able to find any clear/accurate information. Can I take it out as a lump sum? (Is there a negative to this?) As a retiree, can I leave it in place? (One article seemed to state that if a person does this, they receive a small monthly check of some sort.) A. You’ll find the information you need here: https://www.tsp.gov/planparticipation/withdrawals/accountOptions.shtml.
Q. What is the difference between “Year-to-date” and “Last 12 months” in the TSP Snapshot? A. Year-to-date covers the period from the last Jan. 1 to the present. Last 12 months covers the most recent 12-month period.
Q. I will become a 49-year-old federal employee this August. I currently contribute the Internal Revenue Service maximum of $17,000 annually to the Thrift Savings Program via bi-weekly payroll deductions. I plan to begin making catch-up contributions Jan. 1, 2013. Once the Roth TSP is available, can I designate beginning Jan. 1, 2013 catch-up contributions to the Roth TSP while maintaining the IRS maximum contributions to the Traditional TSP? A. You may split your pay deferral, including your catch-up contributions, between the traditional and the Roth TSP accounts.
Q. I haven’t seen any discussion on the employer contribution portion as it relates to the new Roth Thrift Savings Plan option. Is their contribution also part of the Roth TSP, or will it continue to be placed in the regular TSP? A. Employer contributions will flow into the traditional TSP.
Q. I have $200,000 in my Thrift Savings Plan and have just been approved for disability retirement from federal service. I’ll be separated from the agency in mid-May. I am 55 years old. I am not sure whether to roll my TSP into an IRA. I don’t want to start withdrawals from my TSP, but I don’t want to pay an investment firm big brokerage fees to manage an IRA. I have no debt but have a daughter in high school for another year. What should I do with my TSP? A. Keep it and manage it for as long…