Q. I’m recently retired from the federal government. I have currently made no changes to my TSP, leaving everything in my account. Is it generally a good idea to leave your funds in the TSP or should I consider rolling it over to an IRA? Also, what is your opinion of a variable annuity? A. It is generally better to leave your money in the TSP as long as possible. It is the best retirement investment environment there is. In my experience, variable annuities are one of the WORST investment propositions you’ll find. Avoid them unless a trustworthy (competent and…
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 am a 50-year-old federal employee looking for a fee-only financial planner to check my finances to see if I am on track to retire when I reach 65. I am not looking for someone to manage my finances — only to check my plan and maybe someone to check in with once ever couple of years. Is this expensive — where do I find someone who is very familiar with the FERS and federal retirement specifically in my area? A. That’s what I do. You may visit www.variplan.com for more information.
Q. If I am still working full time for the Veterans Affairs Department at 70½, do I have to take a minimum distribution from my TSP account? A. You don’t have to begin distributions from your TSP until you stop working for the government.
Q. I am 54 years old with 33 years of federal service, 27 in the Postal Service and six as a military buyback. If the USPS offers voluntary early retirement, Iwould take it; but I have an outstanding loan with my TSP and not enough cash or credit for a loan to pay it off. How would this work? May I use my TSP to pay it back, and would I be able to withdraw funds from TSP, even with the 10 percent tax penalty? How does TSP figure what has been paid in and what is interest accrued, and…
Q. I cashed out $12,000 from my TSP in 2011 and listed it on my tax return as income — and paid income tax on it. Now H&R block is saying I was supposed to pay a penalty on the withdrawal. About five years ago, I cashed out about $10,0000 and don’t remember paying a penalty. I called the IRS and they were clueless. I am 56 years old and don’t retire for about four to five years. I am again contributing to my TSP. Do you know if I was supposed to pay a penalty to the IRS? A.…
Q. I am a federal employee with substantial student loan debt. In an effort to maintain my taxable income as low as possible (I am on an income-based repayment), I contribute the maximum allowable amount to my Thrift Savings account. I would, however, like to contribute additional monies to a traditional IRA account but am uncertain if the tax code allows someone to “double dip” by contributing to more than one nontaxable account. The discussions I have read about this issue are inconsistent. I hope you can provide some insight, A. It is possible to contribute to both, but your…
Q. Can I opt to use (say 10 percent ) of my TSP account monthly as a supplement with my FERS retirement to help me meet my debt obligations into my retirement? A. You may request monthly payments from your TSP account after you retire, but you are limited to a fixed dollar amount each month (which may be changed once each year) or payments automatically computed based on your life expectancy (which vary in both dollar amount and percentage each year).
Q. For Army employees: Have you heard anything regarding the Voluntary Separation Incentive Program and pretax payment? Or is there anything before Congress? What are the pros and cons to employees having their money from a VSIP benefit going to TSP? What would they need to do to ensure that money goes to TSP? A. A VSIP is not eligible for deferral to the TSP.
Q. I am civil service, with more than 17 years of federal service, in FERS, and approaching 59½ and would like to withdraw 50-75 percent of my TSP and roll the full amount over into my Roth IRA account. I would leave 25 percent in my TSP and let it continue to grow for my remaining time in federal service. How do I go about doing this, if I can? Does this make financial sense to do this? I plan on retiring at age 62; Dec. 31, 2014. A. You may take an age-based in service withdrawal once you reach…
Q. Is the term TSP Life Annuity synonymous with a Met Life Annuity? If I choose IV. Withdrawal Elections Monthly Payments is that subject to required minimum distribution? What happens to any money in the account when I die? They don’t ask for beneficiary information. A. As far as I’m concerned, TSP Life Annuity and MetLife Annuity are the same thing. You may elect fixed monthly payment or have the TSP compute your payments. In either case, you’ll be subject to the required minimum distribution rules, which require that a certain amount be withdrawn from your account each year, once…