Q. Last year, I took out $3,000 from my 401(k) and paid my 20 percent penalty. This year, I went to do my taxes and expected to pay the additional 10 percent penalty of $300. I do my taxes on freetaxusa.com, and my refund was supposed to be $1,800 after I entered my W-2. But as soon as I entered my $3,000 distribution, it knocked it down to $1,300. I have no other factors involved as far as why I would be charged more than the initial $300 I expected. Do you think there is something wrong and they are…
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 57-year-old retiree. I retired two years ago. Our daughter is getting married, and I would like to help her with $15,000 for the wedding coming up later this year. We have just over $100,000 in our Thrift Savings Plan account. We know we can only make a one-time withdrawal before we’re 59½ years of age without a penalty. So if we make a one-time partial withdrawal this year, we will not be able to make another withdrawal without penalty charges until after we are 59½. Would it be wiser to take out a $15,000 loan or make a partial TSP…
Q. When calculating the required minimum distribution for the 2011 tax form, do you use the Individual Retirement Account balance ending Dec. 31, 2010? A. Yes, although under certain circumstances, adjustments may be required. See IRS Publication 590 for details.
Q. I am a Civil Service Retirement System employee, hired in 1979 and contemplating retiring April 3, 2013. 1. I will be subject to the windfall elimination provision because I earned 40 credits of Social Security eligibility prior to my federal employment. But my spouse is also eligible for Social Security and started receiving Social Security benefits of more than $1,900 a month (gross) starting last month (January 2012), whereas the Social Security Administration has estimated that my Social Security benefits would be approximately $385 a month (gross). Would I be eligible for spousal Social Security benefits? 2. A financial planner…
Q. I’m an Air National Guard military technician, and I’ll be retiring this July at my minimum retirement age of 56. I plan on making monthly withdrawals from my Federal Employees Retirement System Thrift Savings Plan at that time. I know I won’t have to pay a penalty on these FERS TSP withdrawals, but do I have to wait until the age of 59½ to start withdrawals without paying the penalty? Can I roll my military TSP into my FERS TSP when I retire? A. You may combine your military and civilian TSP accounts. Visit www.tsp.gov and search for form…
Q. Is it possible to look at the historical rates of return of the various Thrift Savings Plan funds and predict an allocation for a nominal return of 6 percent, or am I better off looking into the Life Cycle funds and trying to predict the return from there? (Past performance of the L Fund income just falls short of 6 percent). My goal is to make an average of 6 percent per year on my current TSP balance to reach my retirement goal. A. Yes, it’s possible. But you shouldn’t rely on a prediction based on so little data.…
Q. I am a federal employee and would like to have Mike Miles’ contact information at Variplan LLC. I am interested in hiring him for financial planning, retirement benefits counseling, etc. If you have his phone number and email address, I would appreciate it. A. Email is best: mmiles@variplan.com.
Q. I am 59 years old, and will be 60 in July. I will have 42 years of government service in October, at which time I plan to retire. I am weighing my options. If my agency offers a buyout, should I leave in the spring or stay for my 80 percent? I am not sure how much I’ll be losing, but I am so close now. I’m just not sure what to do. I certainly could use the $25,000 (minus approximately $8,000 in taxes). Please give me your ideas. A. You are asking for specific analysis and advice, which I…
Q. I will be retiring this year under the Civil Service Retirement System at age 56 with 33.75 years of service. I read an article on the Voluntary Contribution Program. Can I roll my Thrift Savings Program into the VCP prior to retirement and then roll it into an Individual Retirement Account to save being taxed? A. No. The VCP only accepts after-tax contributions. You may roll your VCP balance into an IRA or Roth IRA, however.
Q. Can I roll my Thrift Savings Plan over to an Individual Retirement Account when I retire? I have at least four more years to go. I will be 57 with 30 years in. I am under the Federal Employees Retirement System. I can’t believe I can’t touch my money unless I am 59.5. Why is it taking so long to get our retirement annuity? I will retire as a GS-6 Step 9. A. Yes, you may roll your TSP money into an IRA after you retire.