Q: How do we get a copy of your firm’s calculator versus the one TSP provides? It would be great to have a look at this to see where we would stand. A: It’s not from a calculator, it’s the result of my firm’s proprietary probability analysis.
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.
As a Thrift Savings Plan participant, you have a vested interest in your account’s ability to produce a reliable stream of income that will support your lifestyle in retirement. Unfortunately, TSP doesn’t guarantee a stream of income in exchange for your contributions. What many TSP investors seek is a way to predict how much they can expect to receive in retirement for each dollar they invest today. Unfortunately, this value is impossible to accurately predict. The best you can do is to try to estimate it — which is, it turns out, a difficult task. The problem is there are a…
Q: I am a firefighter about to be forced to retire at 57 years old because of the mandatory retirement age. I plan on taking out my Thrift Savings Plan earnings to buy my house when I retire. Do I still have to pay the 10 percent penalty for withdrawing from my TSP before turning 59 1/2 even though I was forced to retire because of my age? A: Because you are retiring during or after the year in which you reach age 55, your subsequent TSP withdrawals will not be subject to the early withdrawal penalty.
Q: I plan on withdrawing money from my Thrift Savings Plan account for a residential loan. Can I continue my contributions and receive matching funds during the repayment period? Also, is it required that repayment is done through payroll deduction? As I intend to pay back the loan in 20 months from my wife’s income, I prefer to pay directly by check each month. A: You may continue to contribute and receive matching contributions while repaying your loan. Your loan must be repaid through payroll deduction.
Q: I am currently on military leave without pay from the U.S. Postal Service and have been on active duty with the Air Force for about 12 months. When I was with the USPS, I was contributing 5 percent to the Thrift Savings Plan and receiving the available agency matching funds. During my period of active duty, I have been contributing 10 percent to the TSP with no matching funds. What are the rules or regulations with regards to agency matching funds upon my return to the USPS? Specifically, would I be eligible for any agency matching contributions during the…
Q: I am 57 years old and plan to retire in two years. I have basic Federal Employees Group Life Insurance plus two times optional coverage. My total annual premium is nearly $1,900 for roughly $400,000 of insurance. Equivalent coverage in the open market is considerably cheaper. Is there any advantage to retaining my FEGLI coverage as I approach retirement? A: The major benefit, assuming that you are insurable at more attractive rates on the retail market, is that if you retire with basic FEGLI coverage, you can, once you reach age 65, retain 25 percent of that coverage, at…
Q: I am a federal employee with $60,000 in my nondeductible individual retirement account. I plan to convert it to a Roth IRA this year. I also have $120,000 in my traditional IRA which I do not plan to convert to Roth this year. To avoid the Roth conversion aggregation rule, my plan is to roll the $120,000 into my Thrift Savings Plan account before converting my nondeductible account to a Roth IRA. This way, the $120,000 will not be subject to the Roth conversion aggregation rule this year. Is this a valid way to avoid the rule? A: I…
Q: I retired with a Federal Employees Retirement System Thrift Savings Plan account and am 60 years old. I would like to make a partial withdrawal and understand it will be taxed 20 percent by the federal government. At the end of the year, they will send a 1099 form to be used for federal income filing. I still have two children in college and am currently paying for that. Will I be able to recoup some of the income tax paid from my withdrawal if all works out on my federal tax form (education credits)? Or is this tax…
Q: I have a question about withdrawing money from my Thrift Savings Plan account. I would like to know as many details as possible, to include penalties and how long it takes to receive my funds, as well as if I’m allowed to deposit a lump sum in the future to make up for what I took out. A: You’ll find the information your looking for at http://www.tsp.gov.
Q: I am a federal employee with a fairly complicated work history. The Office of Personnel Management tells me that to obtain full credit for all of my time served, I owe approximately $60,000 in deposits and redeposits. It’s worth it to me to pay that amount, because it means the difference between 34 years of service and about 20 years of service if I were to retire now. I just turned 59 1/2. What I would like to do is withdraw the money from my Thrift Savings Plan account and send it directly to OPM to pay off my…