Q. I am a federal civilian under the FERS system with less than 10 years of civil service. I am also a military reservist with 25 years of military service. I am not yet 50 years old and I do not intend to retire or separate from federal service in the next few years. I want to cease contribution to and close my TSP account, withdraw the entire amount immediately by rolling it over into a tradional IRA not associated with the government. I am unconcerned about any penalty I may have to pay. I could not find in any…
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 read your article in the Federal Times and found it very enlightening and maybe an answer to my money concern. I have approximately $50,000.00 in a Funds account and I have approximately $92,000.00 in TSP. I have 32 years in the federal government under CSRS plus about 11 months’ sick leave and 240 hours annual leave. I am interested in retiring from the government and working for private industry in a less paying, less stressful job. I am interested in finding out from you if it would benefit my wife and I financially to purchase or rent a…
Q. I am a FERS retiree from the federal government in March 2011. I received the VERA/VSIP in a lump sum of $25,000 ($18,000 after taxes). In July, I withdrew a lump sum from my TSP to pay off my mortgage, that amount was also taxed. Since the lump sums I received were taxed already, how is it that I have to claim them as income? I am preparing my 2011 taxes and those lump-sum payments make it appear that I earned more than $100,000 in 2011. It seems to me that I am paying taxes twice on the money.…
Q. I am a FERS employee, with 27 years of service, making $126,000. My wife focuses on raising our son, but does some substitute teaching making about $2,000 per year. Can I max out my TSP at $22,000 and max out a Roth IRA for myself at $6,000 and put an additional $6,000 into my wife’s Roth IRA? I do not understand IRS Pub 590. A. The answer will depend upon your Modified Adjusted Gross Income for the year of the contribution. If you don’t understand the tax rules and how they apply to you, you should hire a trustworthy…
Q. I’m in FERS with about 15 years until I’m eligible for retirement. When I increase my TSP contribution, my taxable income is reduced and the amount of federal tax withheld is obviously reduced as well. How would I go about calculating the “sweet spot” in my TSP contribution amount to get the most benefit in reference to the amount of taxes being withheld. Is there a law of diminishing returns here or is more always going to be better? A. Sorry, but I’m not at all sure what you mean by “most benefit in reference to the amount of…
Q. I am a CSRS employee with more than 36 years of service. I have also been contributing to a TSP account. I plan to retire in June 2013. Should I start contributing to a Roth IRA or continue contributing to my TSP? A. “Should I…” is not a question that I can answer through this forum. Whoever is responsible for managing your investment portfolio and delivering the results you expect should be the one to decide.
Q: When I am filing my simple taxes, do I need to include my 5 percent Thrift Savings Plan contributions as an investment anywhere in my return? I did not receive any IRS Form 1099s from the TSP, but want to ensure I do the right thing. A: Your TSP contributions do not need to be reported as an investment. The contributions are reported to you on your W-2.
Q: I am a Federal Employees Retirement System employee retiring on April 30, under the Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay at age 55. Can I take some or all of my Thrift Savings Plan balance and transfer it to a self-directed individual retirement account? What is the process for doing that? What are the estimated costs and penalties? A: You may roll over your TSP assets to an IRA following separation at at 55 with no penalty. Use Form TSP-77 to request a partial withdrawal or Form TSP-70 to request a full withdrawal of your account assets.
Q: I’m tired of moving funds all over the place trying to maximize my money in the Thrift Savings Plan. I have done so-so — retired federal law enforcement, 30 years of service, now 51 years old. I am going to start withdrawing funds at 59 1/2. I want to maximize my value in eight or nine years. I know it is hard to have the best of both worlds (safety of funds vs. maximized rate of return) — what are your thoughts? A: I can’t possibly give you reliable investment advice through this forum, without the appropriate understanding, research…
Q: I plan on retiring at 62 from the Federal Employees Retirement System. Will I be penalized for withdrawing money from my Thrift Savings Plan account at that age? A: No.