Q: If offered voluntary retirement at age 49 with 25.5 years of service, would an individual be able to not take a 72t withdrawal of their TSP starting at a later age, say 53 or even 56, or would they have to start the 72t withdrawal when early retirement is taken? A: The 72t withdrawals can start any time after you separate from service.
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: With all of the debate concerning the debt ceiling, what is the safest allocation for money in my TSP. Should I put everything into the G fund, or is there a danger of the government taking that to cover its debt? A: The best allocation for your TSP account is the one that supports your lifetime financial objectives with the minimum of risk. You’ll have to do the necessary analysis to determine which allocation this is. The debt ceiling really shouldn’t be a factor in your investment strategy.
Q: I am looking at retirement in about 18 months. I am in CSRS offset. I’ll have 31.5 years total service and about 1,500 unused hours of sick leave. I left the government for about 10 years from June 1982 to February 1991 and took my retirement out. I owe about $25,000, but not real sure. I can repay it out of IRA and 401(k) accounts, I just don’t want to pay taxes on the withdrawals, since I cannot roll the IRA from the original withdrawal back into the CSRS retirement. Any thoughts? A: Rules are rules. To the extent…
Q: I am a postal clerk. I am 51 and I put 10 percent into TSP. I have traditional IRA (American Funds Growth of America , Income Fund of America, High Income Trust and Capital Income Builder.) Their reports claim the return is a better rate of interest than an unmanaged S&P 500 fund. Management fees are 0.6 percent. Am I better off rolling this IRA into my TSP account? A: Yes. The TSP has lower expenses and a better expected risk/return profile than these managed funds. As their prospectus clearly states, their past performance claims are irrelevant to the…
There is a new version of the interactive Ballpark Estimate calculator, for use in estimating how much you’ll need to save for retirement, available. The calculator has been around for a while and is produced by the Employee Benefits Research Institute, a nonprofit organization dedicated to studying retirement in America. The EBRI recently updated the calculator, which is available through a link at the Thrift Savings Plan’s website, under the Planning and Tools tab. Back in 2007, I dedicated a column to the perils of using the calculator to plan for retirement. At that time, I was unenthusiastic about the…
Q: I am 57 and hope to retire at 62. I have FERS and I put in 25 percent. My husband says I should stop contributing to FERS because this would increase my income for Social Security benefits reporting. Do you advise this? A: First, I assume that you’re talking about contributing to the Thrift Savings Plan, since the FERS question you posed makes no sense at all. Second, your husband is misinformed. Your TSP contributions escape current federal and state income tax, but not Social Security and Medicare contributions. You should continue to contribute as much as you can…
Q: Currently I’m a FERS employee at the U.S. Postal Service and I may be going on active duty for an extended period. I currently contribute the maximum to TSP through the civilian side of TSP. On active duty, I could continue my contributions up to the IRS maximum of $16,500, but I don’t know if I should. The Post Office matches 5 percent (providing I put in that much). I would lose that contribution for the year I’m away. I know I have 30 days when I come back from active duty to catch up to the full $16,500…
Q: I will turn age 70½ this year. I have non-Roth IRA accounts apart from my TSP account with the federal government and will be required to start taking withdrawals from those accounts. However, the majority of my retirement savings is with my federal TSP account and I am continuing my participation in this plan while still employed. I plan to continue my employment with the federal government for several more years and have no retirement plans in the near future. I do not wish to make any withdrawals from my TSP account while still employed by the federal government.…
Q: I will retire Dec. 31 and would like to begin monthly payments from my TSP account in January. I have read that you have to have your withdrawal form completed and sent by Dec. 14 to take effect in January, but I cannot determine which form to fill out to start monthly payments: TSP- 70 to be completed for full or partial payments or TSP-73 to be completed to make a change to your monthly TSP payments. A: Use form TSP-70 to start monthly distributions.
Q: I am 51 years old and will not be able to retire from federal service until I am 65. I have 100 percent of my TSP account invested in the C Fund. I would like to diversify my account to include slightly more risk, such as the International (I) fund. Are you able to provide me general stock market guidelines in which it is best to complete this action? A: As always, I recommend that you select the asset allocation scheme that meets your needs with the minimum of risk and then implement that allocation in your account as…