Browsing: retirement

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 non-career SES (presidential appointee). How many years must I work in the federal government to be eligible for a FERS-FRAE pension and for the entire 5 percent federal contribution to my TSP if I am involuntarily separated? A. Most FERS participants are vested in Agency Automatic (1 percent) Contributions after completing 3 years of service. FERS employees in congressional and certain noncareer positions become vested in Agency Automatic (1 percent) Contributions after 2 years of service. BRS members become vested in Service Automatic (1 percent) Contributions after 2 years of service. If you leave government service before…

Q. Does it make since to invest in more than one TSP L Fund? I will be retiring within the next 5 to 10 years. I have a portfolio value of $420,000. I moved all of my money from 75 percent C stock fund and 25 percent F bond fund to 100 percent G fund trying to protect my assets during the first week of January to plan for a market correction. The market is still doing well and I regret that I moved all money to the G fund. I am going to move all money to the L2030 fund,…

Q. My late husband was a FERS retiree when he passed in 2017. I am also a federal employee, but am under CSRS. I’m planning to retire soon, and am wondering if I have our TSP funds in the correct L Funds. I was told it should correspond to your retirement year, but just read that it should be based on my life expectancy. Which is accurate? Also, is it correct that if I withdraw from my husband’s TSP it would not be subject to the 10 percent penalty? A. There is no “accurate” or correct way to choose an…

Q. I am currently working, have both a Traditional and Roth TSP but will be subject to required minimum distribution upon retirement. The five-year Roth requirement will not be satisfied by the time I retire. I would like to transfer the entire Roth account, both qualified and nonqualified, to an outside Roth IRA before I retire to avoid paying RMD on the Roth portion. Can I do this without penalty, or am I limited to transferring the qualified portion only?  A. Rolling money over from the TSP to an IRA should be free from any penalty, if you do it…

Q. I am 58 years old and seeking retirement soon after my 62nd birthday. I would like to withdraw my Thrift Savings Plan when I am 59 1/2, in a lump sum. How much will I have to pay in penalties and taxes?   A. It sounds like you will be taking an age-based, in-service withdrawal. The amount withdrawn from your Traditional account will be taxed as Ordinary Income. There will be no penalty for early withdrawal.

Q. I am retiring from federal service at my MRA of 56 with 30 years of service. I plan to continue to work as a support service contractor to my federal agency. Can I withdraw money from my Thrift Savings Plan savings without penalty while I am working as a support service contractor? I know I will have to pay income tax on my withdrawals, but wanted assurance that my withdrawals will not be subject to a penalty since I meet MRA and years of service requirements. A. Under the circumstances you describe, your TSP distributions will be exempt from the…

Q. I retired from the U.S. Postal Service at the end of 2018 with 31 ½ years of service. I met my minimum retirement age at 56, so I believe I wouldn’t be taxed a 10 percent penalty if I withdrew from my TSP before age 59 ½. I would like to withdrawal a partial lump from my TSP. Would I be taxed for that withdrawal? A. If you receive a TSP distribution before you reach age 59 ½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of…

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