Q. Once retired and taking distribution withdrawals from my TSP account, will I have control of which investment(s) in my TSP account the distribution withdrawal comes out of? An example would be G fund versus one of the stock index funds? A. Your withdrawal be pro-rated across all the funds held in your account at the time the withdrawal is processed.
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. The current annuity provider for our TSP balance is MetLife. If Metlife goes into bankruptcy, what will happen to those people who have purchased an annuity from Metlife? If there is a chance that I could lose my annuity because of this company going under, what would you suggest I do with my TSP balance when i do retire? A. Your annuity might be paid in full or in part or not at all. It depends upon what happens. Your annuity could be paid out of available funds even in the event of bankruptcy. Your annuity could be sold…
Q. I am a U.S. Postal Service employee covered by CSRS and I have a fellow employee covered by FERS with the same question. Aside from the “catch-up contribution,” is it possible for me to make a one-time contribution to my TSP account. For example, I would like to take the amount of my federal income tax refund and add it into my TSP. I realize that I have already paid income taxes on this money and won’t enjoy the full tax benefits of a “pretax” contribution. I am more interested in building up my TSP balance. FYI, I am…
Q. You say neither a first-of-year, lump-sum leave payment nor a first-of-year, last paycheck qualifies as earned income for IRA purposes that same year. Considering IRA contributions are based on W2 wages, why wouldn’t the Internal Revenue Service accept these as earned income, since they are reported on that year’s W2 form, and taxed in the same year as the proposed IRA contribution? A. I suggest that you review IRS Publication 590 for guidance on this issue.
As a retirement investment adviser, I find the Thrift Savings Plan’s five basic funds to be the best examples of their kinds anywhere: • The C Fund is invested in the diversified group of stocks included in the Standard & Poor’s 500 Index and represents a diversified investment in the stock of large U.S. companies. • The S Fund provides investors with exposure to the performance of medium and small U.S. company stock. • The I Fund invests in the stock of companies in Europe, Asia and the Far East, the most developed foreign markets. • The G Fund is…
Q: If I retire at the end of 2010 and receive my lump sum A/L payment in 2011, will I be able to put money into an IRA or a TSP in 2011 even though I did not actually work that year? Would the lump-sum payment in 2011 be considered earned income? A: No. The payment is considered deferred compensation and is not a basis for contribution to an IRA or the TSP.
Q: What happens to IRA basis when a Traditional IRA is rolled into TSP and there was a basis of $18,000 that was put into IRA after taxes? A: In order to transfer an IRA balance into the TSP, you must sign a statement saying that it contains no basis. If you did this, you basis is lost and all withdrawals from the TSP are taxable income.
Q: Is it possible to obtain the various recommended asset allocation models that you mentioned in your column of Feb. 8, 2010? That was an excellent article! A: Our allocation models are proprietary and intended for use as part of an integrated management process. You will find a useful set of TSP allocation models at www.tsp.gov in the L Funds section. Use the starting allocation for each of the L Funds as a guide.
Q: I retired as a FERS annuitant Feb. 1, 2006, when I was 62. If I am rehired, will my current FERS gross annuity before taxes be deducted from the new gross salary before taxes? If I have the maximum for retirement, including the over 50 extra amount, deducted and invested in the TSP, am I matched by the federal government and vested from day one for as long as I decide to work? I left my TSP with the federal government and I have not taking anything from the TSP. I’m working as a federal contractor. A: Your TSP…
Q. Can I take advantage of an traditional IRA under these circumstances. I am retired, with a pension from my former job plus Social Security distributions. I am 70.25 years old (limit 70.5). If I am eligible to start an IRA, then how long must it remain to avoid any withdrawal penalties? And what fees are involved during withdrawals? I understand that I would only be eligible to make a one-time catch up contribution of $6,000. This move is an effort to reduce the taxes due for 2009. A. You are not eligible to contribute to an IRA unless you…