Q: I am 69 and plan to continue working well into my 70s. Do I have to start my Thrift Savings Plan withdrawals at age 70 1/2 or can I wait until I retire? What are my options? A: You can wait until you retire to begin your withdrawals.
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 enlisted in the Marine Corps and signed up for the Thrift Savings Plan in 2004. I was severely injured in Iraq in 2005 and was retired from active service in 2006. I am now receiving Combat Related Special Compensation, Social Security and my compensation from the Veterans Administration. Can I continue to add to my TSP account as a military retiree? I’m only 23 years old and would love to add to it. A: You may only contribute to the TSP through federal payroll deduction or via transfer from an eligible outside retirement plan.
Q: I have a question regarding borrowing against my Thrift Savings Plan and would like your opinion on the scenario as to whether it would be worth it. I am 52 years old and have eight years as a Federal Employees Retirement System employee, and I intend to do 12 more years for a total of 20 years before I retire. Currently, I contribute approximately $600 each pay period into my TSP account, which currently totals about $100,000. I have about $20,000 in loans. Would it be sensible to borrow $20,000 against my TSP to pay off the loans? Or…
Q: A co-worker is trying to convince me that taking an annuity without survivor benefit is more cost-effective than with the survivor benefit. He says it is better to take the full benefit and buy an insurance policy to protect my wife when I die. Besides the health insurance aspect of that decision, I argue that the survivor benefit is the better choice. I believe you wrote an article on why it is better to take the survivor annuity. Would you please repeat that advice and would you also point to where I may find more information on this question?…
Q: I am currently in a Civil Service Retirement System 6C designated law enforcement officer position. Aside from my CSRS retirement benefits, of which I will reach the maximum annuity of 80 percent at the end of this year, I have also contributed to the Thrift Savings Plan. I am not planning on relying on my TSP funds to supplement my retirement. I know there are ways to avoid the 10 percent tax penalty for early withdrawals before turning 55 years old (taking the money in a monthly annuity, etc.). I would like to take all of my TSP out…
Q: Can I transfer funds outside federal Thrift Savings Plan system? I would like to invest in some stocks in private sector. I am still working under the old federal retirement system; I will be 63 in June and have 35 years of service. Are there any penalties? A: You may take one age-based in-service withdrawal and roll it over to any Individual Retirement Account, without penalty. Use Form TSP-75, which, along with detailed instructions, is available at www.tsp.gov.
Q: Your response to an earlier question on Voluntary Early Retirement Authority/Voluntary Separation Incentive Payments puzzles me. If a federal employee is eligible for a retirement annuity under the Federal Employees Retirement System despite the fact they are taking an VERA/VSIP, why would there be a penalty for “early” withdrawal of TSP? A: I think that I clearly stated a fact (“There is nothing in your question that will exempt you from the early withdrawal penalty.”) that answers your question.
Q: I like to make plans for my savings and would like to know whether the contribution limits will be increasing for the Thrift Savings Plan and the TSP Catch-up contribution plan for 2011 and 2012. A: The limits are indexed to inflation, and we won’t know whether they’ll be increasing until the inflation figures are in.
Q: I plan to take the Voluntary Early Retirement Authority/Voluntary Separation Incentive Payments at my organization. Because I will be 50 years old when I retire, I am entitled to the entire balance in my Thrift Savings Plan account; since I am retiring, does the penalty still apply? A: There is nothing in your question that will exempt you from the early withdrawal penalty.
Q: I have accumulated nontaxable (according to the Office of Personnel Management) retirement deductions that will be refunded to me shortly. I would like to roll this entire refund into a Roth Individual Retirement Account, but the “rollover information” letter they sent me is unclear. It states that I am permitted to roll over certain benefits into an IRA, but there is no mention of a Roth IRA. It also says that I can roll over the nontaxable amount into an IRA, but that I need to track the taxable and nontaxable ammounts. Because the entire amount is nontaxable, can…