Q. I recently took a VERA retirement from federal service at age 55. My understanding is that the 10 percent withdrawal penalty does not apply to subsequent TSP withdrawals. Originally, I chose a monthly fixed dollar amount of a full withdrawal that could be changed during open season, but with the TSP Modernization Act I can start and stop installments, as well as change withholding. Originally, I had planned to withdraw the full amount of my TSP over 5 years, but last month I chose a lesser amount to take out and TSP sent me a letter that my TSP…
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Q. Can you explain what impact (if any) your TSP savings have on your Social Security payments when you retire? Can it result in receiving a smaller check? A. Neither the size of your TSP account, nor distributions you receive from it, will affect your Social Security benefit amount.
Q. I am divorced and my ex received a lump sum payment from my TSP account. When can she begin receiving benefits? She is 62 years old now. Are her benefits in anyway tied to my age and retirement? A. Once her share has been removed from your TSP account and distributed to her, it is hers to do with as she chooses. Her options are no longer connected with your age.
Q. I am scheduled for full/voluntary retirement in February 2023. I currently have my TSP contribution at 100 percent in the L2030 fund. I am getting a little nervous about the volatility of the market, so I am inclined to do something like reallocate to 50 percent L2030 and 50 percent G Fund just to try and mitigate any potential losses. Of course, I would like to increase my current $253,000 balance, but wouldn’t be averse to it not increasing that much by retirement. Conversely, I would hate to see a loss on what I have and not be able to…
Q. I was offered VERA at office. I would like to accept, but have a TSP loan balance for a home loan that won’t get paid by the 90-day deadline. My retirement is set for July 2020. When I separate and still have outstanding balance, how will I get taxed and at what percentage rate? I was not due to retire until May 2027. Also, will it affect annuity payments, and how long do I have to pay the loan back? A. Any unpaid balance will be declared a taxable distribution and added to your tax return for that year as ordinary income. The tax…
Q. I will turn 60 next year and plan to retire with 30 years of service. I am invested in the L2020 Fund. Upon retiring, can I stay there or do I need to move my money? A. You may keep your TSP account, and manage it as you like, for life.
Q. I will be 62 next year and am a CSRS Offset employee. I would like to know if I can apply at that time for Social Security benefits and retire afterwards (within a few months), and whether a salary is reduced as it is with the pension. A. You may apply for Social Security benefits while you are still working. Your earned income will not be reduced by the offset provision of your retirement system.
Q. I have 43 years of service: 22 years under CSRS, which includes 4 years military active duty that I “ bought back,” as well as 21 years under FERS. There was no break in service. Will my 4 years of active duty, in which I paid Social Security, give me essentially 25 years of “ substantial earnings” towards the WEP provision? A. It depends upon how much you earned year. The schedule of annual earnings required to qualify as “substantial” is available at https://www.ssa.gov/pubs/EN-05-10045.pdf. You can compare the earnings for year as listed in your Social Security benefit statement…
Q. When I retire, if I use the funds from my Roth TSP to buy an annuity, are the monthly proceeds tax free? A. If Roth funds are used to buy a life annuity, and the annuity is designated a Roth IRA annuity, the payments will be tax free.
Q. I retired from the military in 2009 with 20 years of active service, then entered federal service in 2009-2012. I resigned for 1.5 years due to medical, then returned to federal service in 2014 to present. So, if I depart in 2020, I would have 10 years of federal service. What is my path to collect a pension for time served and how am I impacted by the minimum retirement age? I am born in 1966. If I want to depart federal service before my MRA, can I resign and defer annuity until 62 to forego penalty? If so,…