Browsing: Tax

Q. I inherited part of a TSP account and got a check, with tax already withheld. Do I still have to pay state tax as well? I’m from Pennsylvania, and the TSP account is from my uncle who lived in Florida.

Q. I heard that if you have a Roth TSP and make withdrawals before 59½, the exception under the Defending Public Safety Employees’ Retirement Act does not apply to the earnings portion of the Roth TSP. (I know if you transfer money to a an outside Traditional IRA or Roth IRA, you lose exception). I am a federal agent who qualifies as a public safety employee, and I’m retiring at age 56. I have money in both a traditional TSP and Roth TSP. I plan to start withdrawing upon retirement. Will I be penalized for having a Roth TSP?

Q. I plan on retiring next August at 57 years old. I would like to buy an immediate annuity but do not want to buy the MetLife FERS annuity. Their interest rates for the annuity are extremely low compared to other annuities. When I retire at 57 years old, can I buy another annuity and avoid paying 20 percent upfront tax when buying that annuity? Also, can I get my payments without the 10 percent penalty for not being 59½?

Q. I am separating from a covered law enforcement position after age 50, but before I attain retirement eligibility. I have an outstanding TSP loan that will become an early distribution. My understanding is that I will not be subject to the 10 percent penalty, but will pay income taxes on it. Can you confirm if this is correct? Also, I have a military TSP and will continue to contribute to it. Can I assume the loan repayment using those funds to avoid the distribution?

Q. I am a federal employee who plans to retire with 30 years of service when I hit the 30-year mark in the year when I am 54 years old. Something that I have read that you talked about was that if I retire in the year when I am 55, then I can fully withdraw my TSP funds. I don’t become eligible to receive a retirement until I hit 56 years and two months. Will my early or deferred retirement allow or not allow me to take advantage of the “no tax penalty” rule that allows for full withdrawals when…

Q. After 20 years of marriage, my wife and I have decided to divorce. Both of us became civil servants after our marriage and have TSP accounts. The settlement that we agreed upon has me paying her roughly $100,000 from my TSP account to her TSP account. In researching how to achieve this, I have only found direction on what the court order contains and the process the TSP takes to execute the court order. The brochure explaining this also states: “The party who must pay Federal income tax on the distribution will receive tax reporting and withholding information from…

Q. I will be 70½ years old in October 2017. I was planning to take a full withdrawal of my TSP account so I can set up trust funds for my grandchildren. I was told this was a bad idea, due to taxes in Virginia. What do you think? A. The alternative is to leave your TSP in place, make the trusts the beneficiaries of the account and contribute the required minimum distributions to the trusts as they are taken. This will allow you (and your grandchildren) to reap the unique benefits of the TSP for as long as you…

Q. I understand TSP does not withhold state taxes from periodic payments, but what I don’t understand is how those state (Ohio, specifically) taxes get paid. Does that mean I will have to pay estimated tax four times a year?

Q. I retired from the U.S. Postal Service in February 2015 at age 57, with 30 years and three months of service (3 years with the military). I did not withdraw any funds from my TSP account. My plans are to withdraw all funds in April 2017 when I reach 59½ years old to pay off debts and purchase income-producing real estate. Are there any tax ramifications and any penalties I would have to pay?

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