Q. I retired from the Department of the Interior on Dec. 31, 1997, and left my Thrift Savings Plan intact until 2003, when I rolled it into a traditional IRA. On the paperwork for the rollover transaction, I find no reference to TSP contributions versus TSP account balance. As I approach age 70½ next year, I realize that I need to know what my contribution (or basis) was. I have filed with the Internal Revenue Service for a tax extension in the hope that I can retrieve contribution/basis info from TSP archives and accurately represent the TSP account in my total IRA…
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. Can a federal employee move a Roth IRA into a traditional TSP? A. No. You may not move Roth IRA money into a traditional TSP account.
Q. TSP explains in its brochure that dividends are already incorporated into the share price. This seems illogical to me, as I believe the definition of a dividend is a cash payout of a certain stock share price at a certain time of the year. Does the Thrift Savings Plan definition mean that the share price of the S, C or I Fund is artificially inflated? A. No, it means the dividends that are paid by the stocks owned by the funds are retained by the fund and increase the net asset value of the fund. The share price reflects…
The latest fad in retirement planning is to know your “number” — the amount of money you’ll need to have saved in order to retire. Is there really such a magic number for your retirement? If there is, can it be determined? If so, how much should you be willing to pay to find it? These are the kinds of questions you should ask every time someone pitches a financial service or product. Think of determining such a number for the value of your retirement savings portfolio as shooting an arrow from a bow. You’re standing in an exposed hilltop field,…
Q. I am a federal employee with more than 34 years of service under CSRS. I am planning on retiring Jan. 3, 2013. The amounts I earn in pay period 26 (Dec. 16-29, 2012) and pay period 27 (Dec. 30, 2012-Jan. 12, 2013) will not be paid to me until after Jan. 1, 2013, and will therefore be shown as taxable income on my 2013 W-2. Can I designate 100 percent of my net earnings for those two pay periods to my Thrift Savings Plan to reduce my taxable income for 2013 and maximize my TSP account? A. You may defer…
Q. My husband and I are federal retirees (both 65). We are buying a second home. We are contemplating withdrawing our down payment (50 percent; $130,000) from our Thrift Savings Plans. We are trying to determine the best way to handle the tax issue. Does it make more sense taxwise to withdraw a large amount (130,000) and incur the 20 percent tax hit, or make a lower down payment (20 percent; $52,000) and request an annuity of $1,000 per month, thereby reducing our yearly tax liability? We are currently in the 25percent tax bracket. A. The only way to answer this question responsibly…
Q. I am in the military and have a Thrift Savings Plan account set up. I put 10 percent of my paycheck a month into that account. Can I also put $5,000 into a Roth IRA if I am already doing the TSP, or is it a max contribution of $5,000 between them? A. Your eligibility to contribute to a Roth IRA will depend upon a number of factors, including your age, marital status, income and eligibility to participate in an employer-sponsored retirement plan, like TSP. See IRS Publication 590 for details, or ask your tax preparer for help in…
Q. As I read the information in the retirement pamphlets, it states that “a blood or adopted relative closer than first cousins (this includes children, siblings and a parent) are presumed to have an insurable interest.” If I retire in good health, could I elect an insurable interest survivor benefit for my adult son or daughter (blood relatives) even though they are not my dependent or disabled? A. Yes.
Q. I am 62 and last year (taxable 2011) withdrew my Thrift Savings Plan in a lump sum. Taxes of 20 percent were taken out. But on computing taxes this year, I was a bit surprised with the resulting tax bite. Adding in the lump sum doubled my income and pushed me into the 28 percent bracket. I know we no longer have income averaging, but is there anything I might have missed that might smooth out this one-year spike in income? A. Not that I’m immediately aware of, but you should run the question past your tax preparer.
Q. I’ve been putting about $2,500 a year into the G and F funds. Should I continue to do that, or switch to an L Fund or perhaps a Roth? I’m 25 with four years of service in? A. Sorry, but we don’t give individual investment advice through this forum. Your asset allocation seems very conservative for your age, however.