Browsing: IRA

Q. I retired after 43 years under CSRS last year. Because of my sick leave balance (3,800), my CSRS annuity is 83 percent of my working salary. My wife will be retiring at the end of this year with 20 years under FERS. Her net pay will drop from just under $2,600 a month to under $900 with her basic FERS annuity. Besides our TSP (Traditional & Roth), we also have two small traditional IRAs and two good size Roth IRA accounts. I have reached the minimum 40 credits for Social Security; however, because of the WEP, it would be under…

Q. I’m a CSRS employee with an active Voluntary Contributions Program account. My year-end contributions statement of 12/31/2019 shows a total earned interest of $32,076 since I opened the account. If I convert the entire balance of my VCP account to a Roth IRA, will I be responsible for paying taxes on the $32,076 earned interest at the time of conversion? A. The conversion will be reported as taxable ordinary income for the year in which it is constructively received. Interest refunded to you is subject to a mandatory 20 percent tax withholding. However, if the interest on the voluntary contributions account is…

Q. I am retiring in April after 30 years and 9 months of federal service with the Department of State. I intend to do Separate Equal Periodic Payments of $2,500 a month. Do I request the full year’s amount for this year ($30,000) or is it just the 8 months that I am retired ($20,000)? A. The rules governing 72(t) withdrawals are complex and, in some instances, unclear. You should seek the guidance of a CPA before initiating these withdrawals.

Q. I’m a CSRS employee with an active TSP account, but I have not contributed to my account through payroll deductions in several years. I’m over 60 years old and eligible for catch-up contributions. Can I make a one-time cash contribution this year and, if so, what is the maximum amount? I’d like to move funds from a low-paying IRA savings account into TSP for better returns. A. You may not make a lump-sum cash contribution to your TSP account. Your options are payroll deferral or transfer of qualified funds from an IRA account.

Q. I have a couple nickels in the Thrift Savings Plan and I am very concerned about a turnaround that I believe is coming. Where to do I information as to how much of my TSP can be moved to another IRA or secured account for better growth? Will it hurt me to remove most and leave a little? Where I find answers about moving my current funds, and starting a fresh minimalist account? A. The rules governing the TSP are available at www.tsp.gov. There is no need to move your money out of the TSP to secure it against…

Q. My wife has a TSP and an IRA. She starts distributions this year since she has turned 70. From what I understand, she could add the account balances from both as of Dec. 31, 2018, calculate the minimum distribution, and take the entire distribution required from one account, the TSP. She does not have to take it from both accounts, correct? A. She may not aggregate her TSP and IRA RMDs. Each must be taken from the applicable account.

Q. I have designated my two daughters as beneficiaries with 50/50 split to my TSP account. One of them works for the federal government and has her own TSP account. The other daughter works in private industry. If I pass away, would they be able to inherit my TSP savings right away and roll over to their own 401(k) or IRA accounts? Would my other daughter be able to roll the payment into her own TSP account ? Do they have to pay any upfront tax when they roll over the payments to their 401(k) or IRA account? A. Your…

Q. My brother, and only sibling, died recently. I am the executor and beneficiary of his estate. He never married, nor did he have children. I am inheriting: $770,000 from an employer 401(k) managed by Vanguard; $73,000 from a past 403(b) pension; and $320,000 in life insurance proceeds. I am 59, receive a military pension ($60,000/year), and am employed full time by the federal government. I have $500,000 in the TSP. Can any of the inherited funds be rolled into my TSP? Can any or all of the inherited funds be combined into a single fund? What would you do? A. The TSP…

Q. My ex-husband has given me the forms to receive money from his TSP account, but what form do I use to roll it over into my IRA account?  A. The distribution request form should contain a section where you can direct the proceeds to be paid to your IRA custodian for your benefit. If not, you’ll have to roll the funds over yourself using your IRA custodian’s deposit form.

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