Browsing: TSP withdrawal

Q. One of my concerns with respect to withdrawals from the TSP is the inability to choose the fund you are withdrawing from since any money you removed is taken from all current funds in the same percentage as they exist in the TSP account. Ideally I would like a few years’ buffer of expected expenses in the G fund with the bulk of my TSP in equities, so if the markets have a bad year or two I don’t have to lock in those losses and could draw strictly from the G fund until the markets recover. Will a…

Q. I’ve heard conflicting reports about TSP withdrawal and would like to get an answer about my particular situation: I have 22 years with the Bureau of Prisons, and I’m eligible to retire any time. I will be 55 years old this year, but I want to work until 2016 (mandatory retirement age of 57). Can I withdraw a portion of my TSP while I’m working to pay off some debt (which is not a hardship case) and take the penalty, and at the same time, leave the rest in the TSP until I separate from the BOP? A. No, the only…

Q. My name is Tom Archer. I currently work for a federal agency and plan to retire at age 57 under the FERS program. I did not buy back my military service, so I will only have 17 years with my current agency. If I fully withdraw my TSP funds at that time, what, if any, penalty will I incur? A. None.

Q. Is it possible to take a partial withdrawal from the TSP, say $100,000, and then reinvest the majority of the withdrawal into a separate IRA within the 60-day limit? I would like to buy another house, using cash from my TSP account, then take a home equity loan on 70 percent appraised value and reinvest this money back into a separate IRA. My hope is to reduce taxes. I am 62 and retired. A. Yes.

Q. If a Thrift Savings Plan in-service withdrawal is used to purchase rental (investment) property, are federal taxes on the TSP in-service withdrawal deferred until the rental property is sold? A. No. The withdrawal will be considered ordinary income in the year it is distributed.

Q. A friend is close to being 59 1/2 and is seeking to either take a loan from his Thrift Savings Plan or make an in-service withdrawal. Does an in-service withdrawal count as one of the two that he can make once in retirement? Or long as he works will he still have two left for when he starts retirement? A. An age-based in-service withdrawal counts as his single lifetime partial withdrawal.

Q. When I retire at age 64, I would like to take a lump sum from my TSP ($20K) for a down payment on a home. How will I be taxed on that? A. The amount withdrawn from your Traditional TSP account will be included in your tax return for the year as ordinary income.

Why shouldn’t you trust your money to a broker or agent who claims to be able to successfully pick winning stocks or funds? Let’s say you have $100,000 to invest. An investment manager – a mutual fund manager, stock broker or private account manager – will offer, for a fee, to manage your money. That is called active professional investment management. The typical fee for this management is 1 percent of the account’s balance per year, but this rate can vary widely and often runs up to 1.5 to 2 percent. Mutual fund managers typically take their fee daily, while…

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