Q. Can I take the 40 percent loss I take on my Social Security, because of windfall elimination, as a retirement investment loss on my federal income tax? A. No.
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 Civil Service Retirement System employee with 33 years of service, and I plan to retire June 3. Can I roll my Thrift Savings Plan into the Voluntary Contribution Program before I retire, and will I be required to pay tax on that money? Can I later roll the VCP into an Individual Retirement Account, and is it best to go into a Roth or traditional IRA? A. You may not transfer your TSP money into the VCP.
Q. I am currently a GS-9, Step 1. So let’s say that when I retire, I would be a GS-15. How will my Thrift Savings Plan withdrawals be affected by the tax bracket based on my current 15 percent and, let’s say, 28 percent. A. Your TSP withdrawals will not be affected by your tax bracket. Your tax bracket may be affected by your TSP withdrawals, however. When you withdraw money from TSP, the amount withdrawn during the year is added to your gross income for that year. It is considered ordinary income. If you withdraw enough money to increase your total…
Q. I reached my 70th birthday in November. When must I start taking payments from my account? A. If you are separated from federal service, you must take your first required minimum distribution by April 1, 2013. If you’re still a federal employee, you can wait until after you leave service.
Q. I am going through a divorce. My husband works for the federal government. If and when the account is split, can I take out partially or totally, the money in my account? If so, what percentage in taxes will I be required to pay? A. I suggest you review the material in the booklet at https://www.tsp.gov/PDF/formspubs/tspbk11.pdf.
Q. I reached age 70½ in 2011, therefore must make my initial required minimum distribution from my Thrift Savings Plan account before April 1. Which table should I use to determine my RMD? My spouse is my only beneficiary and is more than 10 years younger than me; so, it seemed to me that the appropriate table is the Joint and Last Survivor Table. However, two different TSP customer service representatives have informed me that I must use the Uniform Lifetime Table, and that only those who have established annuities within their accounts (which I have not done) are permitted…
Q. I retired at the end of 2011 as a Federal Employees Retirement System employee. To get most of my retirement, I needed to redeposit for several years of military service, and also for a period of prior federal service. Because I did not have the money to pay it at the time, nor did I want to remain working until I could amass that amount, I withdrew my Thrift Savings Plan at age 59½ and paid most of the money to the Office of Personnel Management. The amount it withheld for taxes was in excess of the amount I…
Q: I am considering leaving the federal government and have been contributing to TSP. Can I withdraw my contributions? A: Yes. You are free to withdraw your TSP assets after you retire. You may also be eligible to take withdrawals while you are still employed. Visit www.tsp.gov for the details.
Q: I am 47 and recently retired from active duty because of a 100-percent disability. In a nutshell, my financial sitrep: Roth IRA $60K; Uniformed service TSP $38K; debt $450K (house $400K, Credit Card $29K, Cars $21K), retirement and disability income is $6K per month; one spouse; no children. I am considering rolling the Roth IRA into the TSP and taking a partial withdrawal of $50K to pay off credit card and car loans. We’ve cut back but make little headway against the credit card. I am expected to live another 20-30 years but am unemployable per the Veterans Affairs…
Q. I am currently deployed and trying to read up on the upcoming Thrift Savings Plan Roth Individual Retirement Account. Will I be able to do an interfund transfer of my existing balance, as well as my contribution allocation, in the TSP from my other funds into the Roth IRA TSP? If so, will I be able to do so online, as I can with the other allocations/balances? A. We’ll find out exactly how the program works when the details are announced.