Q: I retire on Dec. 31. How soon after I retire do I have to wait to take a partial withdrawal from my TSP account? A: There is no waiting period.
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’m an Air National Guard technician under FERS with 34 years service. My first nine years were active-duty Air Force service, which I have bought back. I have a personal loan through TSP that will still have a balance of about $6,000 when I intend to retire next July at my MRA of 56. I intend to depend significantly upon TSP, $2,500 a month, until I reach the age of 59 3/4, when my military Guard retirement will start paying out. At that point, I’ll minimize my TSP annuity. Will the outstanding loan balance have any effect on my…
Q: Is the TSP federally approved? The reason I need to know this is that I live in New York and when you are 59½ you are able to exclude $20,000 single, $40,000 married, of your annuity for New York tax purposes. A: This is a question about state tax law – whether the TSP meets a certain definition established by the state of New York – and is one for a New York CPA.
Q: I retire Dec. 31. How soon do I have to wait to take a partial withdrawal from my TSP account? A: If you’re age 59 1/2 or older and haven’t done so in the past, you may request an age-based, in-service withdrawal immediately. You may also request a load immediately. Otherwise, you’ll have to wait until you are separated from federal service to take a withdrawal.
Q: Does TSP use only one IRS table for calculating Minimum Required Distributions for TSP participants 70-plus years old? My wife is 17 years younger than I am, so we will want to use the IRS table for “Joint Life and Last Survivor Expectancy” (IRS Pub 590, Appendix C), which is available for people whose sole beneficiary is more than 10 years younger. However, my reading of the TSP website materials (pub TSP-775 “Important tax information about your TSP withdrawal and required minimum distributions”) indicates that TSP uses only the “Uniform Lifetime” table for everyone. Is that correct? If so,…
Q: I’m covered by FERS and my agency is offering an early out. I’m at my MRA of 56 with just under 25 years of service. If I separate from service, can I access my TSP, either in the form of a lump sum, monthly payment or a combination of these? And can I do so without the penalty usually levied if a person is under 59 1/2 years old? A: Since you are retiring from federal service during or after the calendar year in which you reached age 55, you will have access to your TSP account without suffering…
Q: At a recent retirement seminar the speaker stated that if you passed away, your spouse would be able to receive the balance of your TSP account, but your children would not. He stated it would go back to the government. Could you please tell me how this would work? My husband and I are both federal employees and both have TSP accounts. A: Not true. Your TSP is paid out according to your beneficiary designation. If your designation is not on file, your account will be distributed according the following statutory order of precedence: 1. To your widow or…
Q: In light of the current economic climate, I’m concerned about what to do with my TSP account. I’m hopeful you would be willing to share your thoughts concerning some of the investment advice services out there that purport to offer advice regarding TSP fund distribution for maximum returns. I’m concerned because I’m 55 with about 10 years left to go in the federal government and about $250,000 in my retirement TSP account and all of it in the G fund, and I don’t want to jeapordize my retirement, which isn’t far off. A: Market timing services are a sucker’s…
Q: I must withdraw (roll over) my TSP account beginning Feb. 25. Can I withdraw the funds to refinance my home? Would this use of my funds result in a higher tax liability than if I rolled over the funds into an investment fund? A: All funds distributions from the TSP are taxable unless they are considered a loan, or rolled over to another tax-deferred retirement account, such as an IRA. It doesn’t matter what you use the funds for. A Required Minimum Distribution may not be rolled over and must be included in your taxable income for the year.…
Q: I retired on April 30 and rolled my 401(k) into a traditional IRA. I also turned 74 on April 30. When must I begin withdrawing from my IRA? A: You must begin taking withdrawals this year.