Q: I am 56 years old and fall under Base Closure and Realignment Commission (BRAC). I will have approximately 600+ hours of rolled over leave. I plan on working for another organization when my organization is gone in September due to BRAC. I would like to know if it is possible to take that leave and put it into my TSP account for catch up? I just started putting money into my TSP account recently so there is not very much there. A: No, you can’t direct a leave payout into your TSP account. All of your contributions must come…
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 CSRS employee and am going to retire in May 2012 from federal service/military service (Air National Guard) at age 55. When I retire, I want to withdraw all TSP contributions I made as a CSRS employee. I have 3 questions that I would like to get the answers to: Will I have to pay taxes on the amount (currently a little over $55,000)? Are there any penalties I will have to pay when I request a full withdrawal of these funds? What is the tax rate that I would be expected to pay if I have…
Q: I am 65 and plan to retire soon. I would like to stay in the TSP as a FERS retiree. However, the inability to withdraw money while taking a monthly distribution has me considering transferring to an IRA. Do you see any possibility that the TSP will change the inability to withdraw money as necessary while having monthly distributions? A: Of course it’s possible. If you decide to roll over your balance, you would be smart to try to duplicate, as closely as possible, the advantages of the TSP in your IRA account. That means using low-cost index funds…
Q: I have $37,000 in my TSP L-Fund plus a $21,000 cash value on my life insurance policy. I plan to leave the USPS with 32 years of CSRS service at the age of 58. I have had a financial adviser suggest I put the combined money into an annuity-life insurance combination he says will give me a better rate of return over a period of time, without the $40 life insurance premium, for transfer of wealth to my family. I have put the extra money into the TSP to use for extra expenses after retirement (new roof, newer car,…
Q: I am a retired CSRS post office employee. I am 65 1/2 years old and have left my funds in TSP. How long before I have to start withdrawing the funds? I plan to rollover my deposit to my IRA with my postal credit union. A: You’ll have to start withdrawing funds by April 1 of the year following the year in which you reach age 70 1/2. You can’t rollover your Required Minimum Distribution (RMD) to an IRA, however, since that would defeat the purpose of the RMD, which is to collect taxes.
Q: I am 52 years old with 27 years with the Postal Service (FERS). How would it affect me if I accepted the Voluntary Early Retirement Authority (VERA)? Would I get the Social Security Supplement upon acceptance, and how would it affect my TSP, as I would need to start withdrawing it immediately upon accepting the VERA? A: Under this scenario, your TSP funds will be subject to the early withdrawal rules until you reach age 59 1/2. You could avoid the early withdrawal penalty, however, by initiating a series of Substantially Equal Periodic Payments (SEPP) under IRS code section…
Q: I owe back taxes to the IRS. Is there any way to transfer the money from my TSP balance back to the government? Most of the balance I have in my TSP account is the amount that was matching funds from the government. I just want to give it back to satisfy my tax debt and start all over again, and be square with the IRS. Can this be done? A: Not that I know of. You’ll have to either take a loan or a withdrawal and pay any taxes due before sending the money to the Treasury.
With the new year, change has come to the Thrift Savings Plan’s lifestyle funds, or L funds. One fund, L 2010, has been retired. Another, L 2050, is set to become available at the end of this month. The L funds are a set of five investment funds that are professionally designed with different asset allocations of TSP’s five underlying funds — the C, S, I, F and G funds. The allocations are automatically adjusted in relation to how soon an investor will retire. TSP recommends that you select the L Fund with a maturity date that most closely matches…
Q: I am a federal firefighter under CSRS Special Retirement due to retire in November of 2011 at age 50. At what age will I be able to collect on my TSP retirement? A: While you can access your TSP account any time after you retire, you’ll be subject to the early withdrawal penalty rules until you reach age 59 1/2, unless you qualify for one of the exceptions. See page 4 of the tax notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf for details.
Q: If you chose the monthly payments option on withdrawing your TSP, can you also take a one-time lump-sum payment? A: Once you’ve initiated monthly payments, which are considered a form of full withdrawal, you can’t take a partial withdrawal.