Q. I am a FERS retiree and following your advice, I have not touched my TSP. This year I must start Required Minimum Distributions and am thinking of having TSP to buy an annuity. The news says “the Fed” may raise rates soon. Will that raise the TSP Annuity Interest Rate?
Q. Will TSP allow me to purchase one annuity from MetLife and a second annuity from a different provider? The state I live in only insures annuities up to $250,000 and I’d like the remainder of my TSP balance to be insured by purchasing a second annuity from a different provider. Are there any strategies I could employ to accomplish my goal of insuring the entire TSP balance that I’d like to use to purchase these annuities?
Q. What sources of income are considered in calculating the substantial income that is defined for purposes of reducing the Windfall Elimination Provision? W-2 wages? Self-employment wages reported on a 941? Contract wages reported on a 1099? State teacher retirement pension? One time lump-sum supplemental pension amounts? A. Any earnings which were subject to Social Security taxes count. Check your Social Security statement for a history of these earnings.
Q. When must I begin making my required minimum distribution? Since I turn 70-1/2 late in the month of April, I’m not sure about the requirement. A. If you’re separated from federal service, your first distribution, for tax year 2015, will be due by April 1, 2016. If you’re still working, then it won’t be due until after you retire.
Q. If I separate from government service after 10 years at age 35, can I withdraw a chunk of my TSP and ask for annuity payments of 10 years or more to avoid the withdrawal penalties? A. In order to withdraw without penalty, you must meet one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
Q. My question has to do with choosing to withdraw my TSP account upon retirement. I understand I can leave my balance with the government and either choose equal payments for my expected lifespan or have the government purchase an annuity on my behalf. What I do not understand is the difference between choosing equal payments for the rest of my life and purchasing an annuity solely for myself? What are the pros and cons for each? I also don’t understand why I am also given a choice to choose a survivor benefit with my wife as the beneficiary should…
Q. I retired 2+ years ago under FERS with a substantial TSP account that I have not touched. I am looking at purchasing an annuity through TSP versus regular payments based on life expectancy (essentially the IRS required minimum withdrawals that I must start next year). I understand how the RMD is taxed. How will the annuity be taxed? Is there a source that explains the calculation?