Q: If I retire from the Postal Service this next year, can I draw monthly payments from my TSP account before I am 59 1/2 without penalty? A: Yes, if you: 1. Retired during or after the year in which you reached age 55; or 2. Take them as series of Substantially Equal Periodic Payments under IRS rules; or 3. Meet one of the other exceptions to the penalty outlined in the notice you’ll find at www.tsp.gov/forms/octax92-32.pdf — Mike Miles
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 just retired under the early out option from the U.S. Postal Service, and want to start regular monthly withdrawals from the Thrift Savings Plan, until the MetLife annuity index rate goes up somewhat. Can I, at that point, change from monthly payments to an immediate annuity option, without any kind of penalty? I am 52 years of age. A: Yes. — Mike Miles
Q: There is a possibility that I may have to accept the early out with the U.S. Postal Service. If I do, can I make a loan from my Thrift Savings Plan before I retire? Will I be able to continue to pay it back monthly even though I am retired from the USPS? Or will I have to pay the complete amount back before I retire? Are there any penalties for this? Do I have the choice of not paying it back, and if I choose not to, will I be charged penalties as if I withdrew that amount?…
Q: My husband is 67 years old. He mentioned recently that he thinks he would like to work another five years before retiring from the federal government. I have a question regarding his Thrift Savings Plan. I have read the questions on the TSP Web site, and it sounds to me that as long as he has not separated from federal service, he is not required to take any distributions from TSP. Am I reading that correctly? If not, how is his TSP affected if he continues to work past the age of 70½? Can he still contribute to TSP?…
Q: I’m planning to retire this calendar year and want to leave my Thrift Savings Plan as is. Will I be able to take TSP distributions at will, or am I only allowed to take a one-time distribution (roll-over)? A: You’re only allowed to take a partial distribution one time. You may also elect a full distribution in the form of adjustable monthly payments and a final single payment, however. — Mike Miles
Q: I have an IRA from a previous employer that is not performing too well. The Thrift Savings Plan seems to be rebounding rather nicely over the past several months. Should I move the IRA into the TSP? Can this be done without any penalties? A: The TSP is a better investment environment than any retail IRA account I have ever seen, and I generally recommend that eligible investors move their IRA money into the TSP whenever possible. You are eligible if your IRA account contains no after-tax money — money from non-deductible contributions. Check with your IRA custodian to…
Q: If after I retire, I want to combine my Thrift Savings Plan and a 401(k) that I have, can I do this? Even if I create a 401(k) after I retire and then, several year later, want to combine these? Can I pull the 401(k) into TSP? A: Yes, yes and yes. — Mike Miles
Q: Could you elaborate on a couple of statements you made in your “Mistakes to Avoid” column that appeared in the July 13 issue of Federal Times? At mistake No. 2, “not having enough insurance,” you said “Once you are retired, long-term care insurance is a prudent thing to consider.” Many feds signed up for the federal long-term care insurance program when it first became available years ago. Are you saying that most of us workers don’t need to get long-term care coverage until we’re actually retired? You stated “Many people follow this rule of thumb: ‘It’s generally safe to…
Q: I plan to retire in early 2010 and I am thinking about getting long-term care before leaving. With the government plan going up significantly, do you advice looking at private plan? I understand, John Hancock offers both. A: I always recommend that you compare your employer’s benefits to the retail or other options you may have available. When it comes to long-term care insurance, there are potential advantages of an individual policy over the FLTCIP, depending upon your circumstances. — Mike Miles
Q: I am thinking about dropping my long-term care, or if I keep any, going to a company not associated with the Office of Personnel Management and the government plan. I feel they were not truthful and are in breach of contract with the raise in the premium. I paid the higher premium with the understanding that I would never have an increase. If they were not truthful with this, then I do not trust them for anything in the future; including any benefits when/if I try to collect them. Is it better to keep my current long-term care until…